Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

JPMorgan Whistleblower Gets Record $30M From CFTC

Your article was successfully shared with the contacts you provided.

The Commodity Futures Trading Commission has approved a record $30 million whistleblower award, it said Thursday.

The award was the result of information that helped the agency sanction JPMorgan Chase & Co. for failing to properly inform some wealthy clients about conflicts of interest behind its investment recommendations, according to an attorney involved in the matter.

The CFTC made the award public on Thursday without naming individuals or the bank.

According to the attorney, Edward Siedle, it was the culmination of a December 2015 settlement in which JPMorgan agreed to pay regulators a total of $367 million for failing to disclose that it was steering asset-management clients into investments that would be especially profitable to the bank.

That included $100 million that went to the CFTC — $40 million in penalties and $60 million in disgorgement.

The bank agreed to pay an additional $267 million at the time to the Securities and Exchange Commission, where a pair of preliminary whistle-blower awards totaling $61 million were authorized a year ago but still await final approval.

Aims to ‘Incentivize Whistle-Blowers’

The CFTC’s award is the fifth in the history of its program and eclipses a previous $10 million record announced in 2016. The latest award is also the CFTC’s first since July 2016, when it announced it was paying approximately $50,000 to an unidentified recipient for providing original information that led to a successful enforcement action.

“We hope that an award of this magnitude will incentivize whistle-blowers to come forward with valuable information and provide notice to market participants that individuals are reporting quality information about violations” of commodities-trading law, said CFTC Chairman J. Christopher Giancarlo.

Siedle acknowledged earlier Thursday that an unnamed client of his acted as a whistle-blower in obtaining the CFTC award. Siedle said he had also obtained a preliminary award from the SEC on behalf of the same client.

“Most would-be whistle-blowers overlook the fact that there’s a commodities element in most investment fraud,” Siedle said. “This award demonstrates that the CFTC is willing to act quickly on those complaints if contacted.”

Judy Burns, an SEC spokeswoman, declined to comment, as did Darin Oduyoye, a JPMorgan spokesman.

The CFTC and SEC operate separate whistle-blower programs under the Dodd-Frank law of 2010. Each can provide between 10 percent and 30 percent of recoveries to whistle-blowers, based on the value of the information they deliver. The agencies do not provide the names of whistle-blower award recipients or information that could help identify them.

The CFTC amended its program in May 2017 to harmonize it with the SEC’s and strengthen anti-retaliation protections for whistle-blowers who come forward.

JPMorgan acknowledged lapses in disclosing information to money-management clients about its preference for investing their assets in mutual funds and hedge funds managed by affiliates or a third party that shared its fees with the bank.

The largest U.S. bank by assets, it has said the omission was unintentional, and it has enhanced its disclosures.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.