A media outlet, Financial Planning, is predicting that a pair of SEC whistleblowers will share an award of approximately $70.6 million out of the $307 million in regulatory fines against JPMorgan in 2015. Another outlet, Advisor Hub, put the number at $61 million instead. Either award amount would be the largest in the history of the SEC whistleblower program to date.
The SEC whistleblower program is authorized by the Dodd-Frank Act to pay awards of between 10 and 30 percent of the amount the United States recovers as a result of a tip. The top award previously was announced in September 2014 and totaled approximately $30 million.
It looks like the discrepancy between the two numbers reported by the media outlets results from the calculation of the overall amount of fines against JPMorgan. Financial Planning is counting both the SEC fine of $267 million as well as the CFTC fine of $40 million. Advisor Hub is counting only the SEC settlement. It seems probable that the larger number is correct and that the CFTC waward
Any award announcement is still probably months away. The calculations are based on a leaked preliminary award determination. The number of whistleblowers, percentages and their allocation can still change as the parties are permitted time to dispute the preliminary determination.
The settlement with JPMorgan was announced in December 2015. Two JPMorgan wealth management subsidiaries agreed to admit wrongdoing and pay $267 million to the SEC and $40 million to the CFTC for the failure to disclose conflicts of interest to clients. The subsidiaries had a preference for clients to invest in the firm’s own proprietary products which it did not disclose to them. The SEC said that the preference deprived clients of information that they needed to make fully informed investment decisions with respect to asset allocation and the selection of fund managers.