A whistleblower provided information to the SEC concerning the Credit Suisse dark pool, according to a Marketwatch article today. The SEC and New York are expected to fine Credit Suisse a total of $80-85 million for their misconduct.
The individual is a founder of a registered investment adviser providing portfolio management to investment funds. The firm manages three mutual funds according to its website. The whistleblower reportedly undertook tests to determine whether individuals were front running the firm’s trades and discovered it happening at Credit Suisse’s dark pool, called Crossfinder.
Media reports indicate the investment bank will pay approximately $50 million in fines and disgorgement to the Securities & Exchange Commission and $30 million to New York State because of the Attorney General’s investigation. Last fall, the media reported that an agreement was expected shortly yet none has been announced to date. The investigations reportedly center around the disclosures made about the rules of the dark pool. At the estimated amount, it would be a record fine for the operation of a dark pool. The largest fine to date was $20.3 million paid by ITG pursuant to an August 2015 settlement.
The disclosure by the whistleblower at this point is interesting. The SEC whistleblower program offers anonymity so it wasn’t necessary to go public. If an award determination is ultimately made in his favor, he stands to gain between 10 and 30 percent of the amount that the SEC recovers and possibly an additional 10 to 30 percent of the New York Attorney General’s settlement as an alternate remedy.
Also interesting, there was no mention in the article of an attorney representing the whistleblower. According to last year’s annual report from the Whistleblower Office, less than 50% of the successful tips are initially submitted with the assistance of an attorney however many hire legal counsel prior to submitting their claim for a reward. More than 50% were represented by a whistleblower attorney for the SEC’s award determination.