CFTC to Pay $30M to Whistleblower in $367M Asset Management Case Against JPMorgan
The Commodity Futures Trading Commission will pay $30M to one whistleblower who provided information that brought about the $367M asset management settlement in a case against JPMorgan Chase & Co. (JPM). Federal regulators alleged that the bank didn’t tell wealth management clients about conflicts of interests that may have affected how the financial institution managed their money between 2008 and 2013. The two JPMorgan units involved were its nationally chartered bank and its securities subsidy.
JPMorgan, which is the biggest bank in the US according to assets, neglected to tell customers that it made money when it placed their money in hedge funds and mutual funds that earned the firm fees. Both high net worth customers and retail mutual fund customers were purportedly affected.
The bank was also accused of not telling investors that it’s wealth business preferenced its own proprietary products over others’ products when deciding where to invest clients ‘funds. JPMorgan was accused of violating its fiduciary duty when it failed to notify customers that more costly share classes of proprietary mutual funds were chosen for them. Although JPMorgan acknowledged its failure to properly disclose the information, the bank maintained that such omissions were not done on purpose, and it has since remedied the matter.
In 2015, the bank settled the regulators’ allegations against it for $367M. That’s $267M to the US Securities and Exchange Commission and $100M to the CFTC. $30M of the CFTC’s share is what will go to the whistleblower. Although four other applicants had sought whistleblower status in the CFTC’s case, the regulator turned them down. The CFTC found that either they weren’t the ones that provided the help that proved crucial to its case or they submitted their application too late.
The CFTC and the SEC have two separate whistleblower programs that allow qualified whistleblowers to receive 10-30% of amount recovered when successful monetary sanctions exceed $1M. This is the CFTC’s biggest whistleblower award in the five years since it began issuing them. Its largest whistleblower award before now was $10M. Meantime, The SEC issued $48M to one whistleblower in its probe against JPMorgan. It granted $13M to another whistleblower.
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SEC, CFTC Record Whistleblower Award Is A Big Win For Consumers, Investors, Forbes, February 20, 2018
The CFTC Order in the Case Against JPMorgan (PDF)
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