Home Reward Announcements

Reward Announcements

Whistleblower Awaits Award in JPMorgan’s $614 Million Mortgage Fraud Settlement

0

The U.S. District Court for the Southern District of New York (Manhattan) unsealed a whistleblower lawsuit against financial services firm JPMorgan this week. The qui tam lawsuit, originally filed in January 2013 by Keith Edwards of Louisiana, accused JPMorgan of violations of the False Claim Act for mortgage fraud. In the settlement, JPMorgan acknowledged its wrongdoing and agreed to pay $614 million to the federal government.

Since 2002, JPMorgan originated thousands of residential home loans insured and guaranteed by the Federal Housing Administration and Department of Veterans Affairs that were not actually eligible based on the underwriting requirements of the relevant agency. JPMorgan falsely certified to the agencies that the loans met the required underwriting standard. When the loans defaulted, the government lost millions. An internal audit by JPMorgan revealed more than 500 loans improperly submitted to the FHA and VA for insurance, but JPMorgan did not notify the government about its discovery.

The percentage of money the government will pay to Edwards as a whistleblower reward has not yet been set. The False Claims Act provides for an award to the whistleblower of between 15 and 30 percent of the amount recovered by the government. Because the Justice Department intervened in the case, the relator is entitled to 15 to 25 percent. Edwards was employed by JPMorgan in Louisiana at the banks government insuring unit when he discovered the fraud.

The lawsuit is one of eight civil fraud cases brought by the Office of the U.S. Attorney for the Southern District of New York regarding improper residential mortgage lending by the nation’s banks. Citigroup, Deutsche Bank and Flagstar Bancorp have already agreed to pay settlements for their misconduct.

2014 has already been a busy year for fraud settlements by our nation’s banks. JPMorgan agreed to pay $2 billion to settle charges related to its failure to report the Ponzi scheme conducted by Bernard L. Madoff to the government. Bank of America recently settled with a group of mortgage securities investors for $8.5 billion. And Morgan Stanley agreed to pay $1.25 billion to the Federal Housing Finance Agency for its sale of mortgage securities to Fannie Mae and Freddie Mac.

McEldrew Young Purtell Merritt is a nationwide leader in the False Claims Act and has successfully represented clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

Photo Credit.

CFTC Issues Second Whistleblower Award

0
business lawyers Philadelphia PA

The U.S. Commodity Futures Trading Commission (CFTC) announced it will make its second whistleblower award yesterday in a press release. The amount will be approximately $290,000. As expected, no details about the nature of the case resulting in the award were released.

The CFTC whistleblower program was created under Dodd-Frank, so it is only about five years old. Dodd-Frank recently celebrated its fifth birthday and it is nice to see another win under the belt of the commodities regulator.

The CFTC has trailed the SEC program in both the number of tips and awards. The first and only prior reward was issued to a CFTC whistleblower last year in May (2014) for the amount of $240,000. This summer, the Director of the Whistleblower Office at the CFTC told Law360 in an interview that the number and size of awards was expected to increase as the CFTC would soon be handing out big payouts for big enforcement actions.

The SEC program has issued awards to nearly 20 whistleblowers so far with payouts ranging from several hundred thousand dollars to a high of $30 million. There have been four international whistleblowers who have received awards and I believe two compliance officers.

The CFTC has received approximately 10% of the tips that have been received by the SEC but they have been praised as high quality. The CFTC only regulates pursuant to the Commodity Exchange Act whereas the SEC has more roles, including the Securities Act, the “Exchange Act”, the ’40 Act and the Investment Advisers Act.

In part because of the success of the Dodd-Frank program, Congress is considering adding whistleblower incentives to other areas, such as auto safety. A House Subcommittee solicited testimony last week on the bill which passed the Senate unanimously and is now under consideration in the House. Partner Eric Young, a whistleblower attorney here at McEldrew Young Purtell Merritt, recently authored a piece on the legislation as it relates to Volkswagen which was published in TheHill.

Our CFTC whistleblower attorneys can assist you with answers to questions about this information as well as assistance reporting violations of the Commodity Exchange Act to the U.S. Government. To speak to an attorney, fill out our contact form or call 1-800-590-4116.

Photo Credit.

First Whistleblower Award Issued by CFTC

0

 

The Commodity Futures Trading Commission announced today that they are making a payment of approximately $240,000 to a whistleblower for information under the authority granted to it by the Dodd-Frank Act. It is the first award by the CFTC Whistleblower Program.

Additional details about the case and the individual paid were not released. They are committed to protecting the identity of people submitting tips and treat information as non-public and confidential, so we don’t expect to hear more about the specific case from them. Sometimes, based on the timing of announcements, it is possible to speculate about the underlying enforcement action. The CFTC probably collected between $800,000 and $2.4 million because of the tip.

The CFTC program receives tips about violations of its regulations and the Commodity Exchange Act. It had rejected approximately 25 applications for awards through the end of 2013.

The CFTC receives fewer tips than the other programs. It received 138 submissions of Form TCR in Fiscal Year 2013 compared to the approximately 3,000 tips received by the Securities and Exchange Commission.

The SEC paid its first award to a whistleblower in August 2012. The initial payment was for $50,000. In April, they announced payment of an additional $150,000 to the individual after collecting additional funds from one of the defendants in the case. The follow up award represented 30 percent of the $500,000 collected, the maximum the agency is allowed to pay.

The first mandatory award under 26 U.S.C. § 7623(b) by the Internal Revenue Service program went to a Young Law Group (predecessor to McEldrew Young Purtell Merritt) client of Eric Young in 2012. The client was awarded $4.5 million by the IRS.

Second SEC Whistleblower Denied Award in Latest $3 Million Payout

0
CFTC Whistleblower attorneys Philadelphia

The Securities and Exchange Commission today announced its third highest award under the Dodd-Frank whistleblower program, as $3 million reward to a corporate insider who helped the agency crack a complex fraudulent scheme.

The announcement is a fitting way to celebrate the 5th Anniversary of the creation of the SEC program on Tuesday. Over the past five years, it has helped the U.S. Government collect more than $100 million in enforcement actions against companies and individuals engaged in misconduct that violates the federal securities laws. The program has paid out more than $50 million in financial incentives since the Whistleblower Office was opened in 2011.

Although we may never know more about this case due to the confidentiality provisions involved, the award determination does include a footnote that a second claimant was denied an award for not providing original information as it is defined by the SEC Rules and the Dodd-Frank Act. I’ll have to go back and check, but this may be the first instance of a securities whistleblower denied an award while another received one.

Footnote 2 indicated that the second claimant did not provide information that led to successful enforcement. Based on the laws cited, I suspect that the tip (a) happened during the investigation and didn’t significantly contribute to its success and (b) didn’t lead the investigation to inquire about different conduct than it was already investigating.

Of course, there are a few other options but this is probably the most likely one. Since the award determination release notes the delay before the individual reported the fraud to the U.S. Government, it is also possible that the tip came first but wasn’t sufficiently specific or credible enough to move the SEC to action. Additionally, it could be that the tip involved a second area not covered by the investigation and the government simply decided not to pursue an action against the company for it.

Nevertheless, this award denial re-emphasizes the importance of being the first one to provide a tip to the SEC or CFTC.

If you have questions about the importance of being the first to file, contact one of our whistleblower attorneys. An attorney can be reached by our contact form or calling 1-800-590-4116.

Photo Credit.

Whistleblower Awards at SEC Backlogged

0
Personal Injury Lawyers Philadelphia PA

The SEC whistleblower program is having trouble keeping up with the number of people applying for awards, according to a Wall Street Journal article yesterday. More than 80% of the whistleblowers filing claims for awards since 2011 have not yet received a decision.

According to the numbers obtained for the article, there have been 297 individuals applying for awards. 247 have yet to get a decision from the Commission. Andrew Ceresney, the Director of the Enforcement Division at the SEC, explained to the WSJ that the awards raise complex issues which are being addressed for the first time.

Hopefully, they will be able to work out these issues soon. Because it will be very concerning if the problem grows with the program. The number of tips provided in the first quarter of this year was up more than 20% over last year. If this growth continues, the logjam at the award stage may grow to become a much bigger issue.

The latest whistleblower award can at least provide some insight into the length of the process for awards at the SEC. The settlement of the enforcement action against Paradigm Capital Management was made in mid-June last year. The award for $600,000 was just handed down at the end of April. That’s ten months from start to finish in an application that probably had little controversy, including the three or four months for the deadline of the Notice of Covered Action to pass.

However, some of the awards have been pending for nearly two years now. There have been less than 200 claims made in Fiscal Years 2014 and 2015, so at least some of the tipsters made their claims in FY 2013, which ended September 2013.

At least the percentage of awards out of the claims that have been decided is encouraging. Of the 50 award claims, there have been 17 awards so far. At least several of the denied claims, if memory serves, dealt with tips made prior to the passage of the Dodd-Frank Act. The percentage of awards to denials is also much better than the CFTC. The CFTC has denied 30 claims and paid out on one tip.

According to the Award Determinations posted on their website, the CFTC only made six decisions in all of 2014. Of course, the commodities regulator receives a smaller amount of tips than the SEC every year, about 10% of the number. However, it is the CFTC program right now where a whistleblower could have a decent shot at an award over $100 million. The due date for four of the five Notices of Covered Action in the November Forex fines has just passed. Award claims related to the Citibank action are due next week. Across the three regulators in the United States participating in the settlement and the UK FCA, the banks paid more than $4 billion. This opens up the possibility for a new record Dodd-Frank award. The largest award currently is $30 million.

The Dodd-Frank programs, to this point, have generally been considered a success. They still have a long way to go before they achieve the success of the False Claims Act, which paid out more than $400 million to whistleblowers last year.

Hopefully, the SEC program won’t follow the path of the Internal Revenue Service. Their program has been routinely criticized in the media over the past three years for the absence of awards given the large number of individuals that provide tips to the agency. They have also been criticized by Senator Chuck Grassley, and others, about their lack of communication with the people that are providing them tips.

Have questions? Our SEC whistleblower attorneys can assist you. For a free consultation, please contact us or call 1-800-590-4116 to speak to a lawyer at McEldrew Young Purtell Merritt.

Photo Credit.

Three SEC Whistleblowers Split Nearly $2 Million

0
Mceldrew Young Philadelphia personal injury lawyers

Multiple whistleblowers appear the norm these days in securities lawsuits, if the two most recent award determinations are any indication of the success of the Dodd-Frank whistleblower program. Yesterday, the Securities & Exchange Commission released a reward determination authorizing payment of $1.8 million to one individual and $130,000 to be split between two other whistleblowers.

CFTC Issues Fourth Whistleblower Bounty of $50,000

0
futures trading

The U.S. Commodity Futures Trading Commission has issued its third award in the last year and fourth overall to CFTC whistleblowers pursuant to the terms of the Dodd-Frank Act. The decision was approved last week and the press release issued by the commodities regulator today.

SEC Whistleblower Office Awards $17 Million

0

The SEC whistleblower program seems to be hitting its stride recently, with five whistleblowers awarded more than $26 million over the past month. The latest reward was $17 million, the second largest to date, for a detailed tip by a former company employee that substantially advanced a government investigation.

SEC Whistleblower Gets $3.5 Million for Tip During Ongoing Case

0
Mceldrew Young Philadelphia personal injury lawyers

The Securities and Exchange Commission on Friday announced an award of $3.5 million to a whistleblower that bolstered an existing investigation. The government has now paid $62 million to 28 whistleblowers since the SEC whistleblower program was opened in 2011.

SEC Awards Whistleblower Top Payout After Retaliation

0
Personal Injury Lawyers Philadelphia PA

The SEC has rewarded the whistleblower in the first anti-retaliation enforcement action with a payout of thirty percent of the monetary sanction against the company. The reward by the securities regulator totaled $600,000.

The enforcement action against Paradigm Capital Management received widespread publicity last summer because it was the Commission’s first use of SEC Rule 21F-2(b)(2) which provides for enforcement of the whistleblower program’s retaliation protections by the SEC. The CFTC regulations do not similarly provide for agency enforcement action of its protections.

The securities whistleblower reported the investment adviser for failing to disclose or obtain consent concerning a conflict of interest in their management of the funds in trading accounts for clients. Paradigm was making trades between client accounts and accounts controlled or affiliated with the company or its employees.

Several months after his report, the whistleblower disclosed his tip to the company. The company suspended him from his role as a head trader, asked him to work from home on compliance duties unrelated to his position as a trader, and accused him of violating his confidentiality agreement. He eventually resigned.

The decision to reward the individual with the highest percentage of monetary sanctions received by the SEC is a welcome act. Dodd-Frank specified that the whistleblower program award incentives between ten and thirty percent of the amount collected as a result of the information provided.

For additional information, please consult with Eric Young or one of our SEC whistleblower attorneys.

Photo Credit.

Call Now ButtonCall Now