June 9, 2020
The US Securities and Exchange Commission (SEC) awarded nearly $50 million to a single whistleblower who provided “highly significant” information about foreign currency trading fraud.
The SEC takes whistleblower confidentiality very seriously. As a result, the SEC removes almost every detail from its award orders and press releases. In this case, however, the financial media identified the whistleblower as a former currency trader at Bank of New York Mellon (BNYM).
The SEC noted that the whistleblower gave the SEC a “roadmap” for its investigation of BNYM. That map led a recovery of more than $714 million from BNYM for years of overcharging clients on foreign currency trades.
The SEC acknowledged that it would not have known about the massive overcharging scheme without information from the whistleblower. In recognition of that fact, the SEC awarded nearly $50 million to one whistleblower.
For years, BNYM told customers they would get the “best rates” and the “best execution” on major currency trades made through the bank. But in practice BNYM gave its customers the worst rates of the trading day. BNYM and its executives kept the difference. That difference added up to hundreds of millions of dollars. BNYM used that money to pay enormous performance bonuses.
The whistleblower knew about this scheme first-hand from his work as a BNYM currency trader. According to press reports, the whistleblower was in line for a $5 million bonus. But the fraudulent nature of that money took the whistleblower in a different direction. It took him to the SEC.
The SEC, the Justice Department, and the New York Attorney General’s Office launched a joint investigation. In 2015, those offices announced that BNYM had agreed to pay $714 million over its fraudulent foreign exchange trading practices.
Almost ten years after walking away from his $5 million bonus, the former BNYM trader will be receiving a whistleblower award of nearly $50 million.
The nearly $50 million foreign currency award brings the total SEC whistleblower awards to over $500 million. And the SEC has already awarded $100 million to whistleblowers during the current fiscal year alone. In the words of Jane Norberg, Chief of the SEC’s Office of the Whistleblower, “Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”
If you are considering submitting a tip, complaint, or referral to the SEC, we urge you to contact us for a free, confidential, consultation.