Clients reported securities violations that led to $415 million SEC enforcement action
NEW YORK (June 23, 2016) – Labaton Sucharow LLP, which established the first national practice exclusively dedicated to representing Securities and Exchange Commission (SEC) whistleblowers, announced today that it represents multiple former Bank of America executives that reported and cooperated in the SEC’s landmark enforcement action against the bank. The financial powerhouse is charged with violating a key customer protection law and exposing tens of billions of dollars of clients’ assets to unnecessary risk over many years.
“After the global financial crisis, the importance of protecting customers’ assets from misuse or insolvency cannot be overstated,” said Jordan A. Thomas, Chair of Labaton Sucharow’s Whistleblower Representation Practice and the whistleblower lawyer who represented the SEC Whistleblowers. “This case will serve as a cautionary tale for other financial institutions about how quickly little mistakes, breakdowns in judgment, and old-fashioned greed can snowball into expensive front page scandals.”
To resolve this matter, Bank of America’s Merrill Lynch division agreed to pay a combined total of $425 million in monetary sanctions in two cases and admit wrongdoing to settle charges that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors. This settlement comes just a few weeks after the SEC granted a $17 million whistleblower award to a Labaton Sucharow client for exposing significant wrongdoing at another major player in the financial services industry. That award represents the second largest SEC whistleblower award to date.
The case represents another significant action taken by the SEC against a major Wall Street firm with substantial assistance from anonymous whistleblowers. In addition to the enforcement action against Bank of America, Labaton Sucharow also represented an anonymous whistleblower in a case last year in which J.P. Morgan paid more than $267 million to resolve charges of steering clients into bank-owned mutual funds and other investment products. Thomas has also represented the first officer of a public company to receive an SEC whistleblower award.
“A quiet revolution in securities enforcement is underway and it is being led by courageous whistleblowers, like my clients,” said Thomas a leading whistleblower attorney and former Assistant Director in the Enforcement Division of the SEC. “Thanks to the SEC Whistleblower Program, the probability of detection and prosecution has never been higher. Just ask the senior leadership of Bank of America.”
Due to the unique protections and incentives offered by the SEC Whistleblower Program, Labaton Sucharow’s client reported the charged securities violations at Bank of America to the SEC. This important investor protection program has broad international reach and offers eligible whistleblowers the ability to report anonymously and the opportunity to earn substantial monetary awards—regardless of nationality. To ensure that adequate funds are available to pay awards, Congress has established a replenishing Investor Protection Fund, which has a current balance in excess of $400 million. Since the inception of the SEC Whistleblower Program in 2011, the agency has awarded more than $85 million to 32 whistleblowers.