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 serious matter, Bank of America’s Merrill Lynch division agreed to pay a total of $415 million in monetary sanctions in the case 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 JPMorgan paid more than $267 million to resolve charges of steering clients into bank-owned mutual funds and other investment products. Mr. 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 Mr. 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.
Correction: A previous version of this release noted a parallel case in which the SEC charged Bank of America for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index. Labaton Sucharow clients were not involved in that case.
About Labaton Sucharow LLP
For more than 50 years, Labaton Sucharow has been one of the country’s premier law firms comprehensively representing businesses, institutional investors and consumers in complex securities and business litigation. It was the first law firm in the country to establish a practice exclusively focused on protecting and advocating for whistleblowers who report possible securities violations to the SEC. Building on the Firm’s market-leading securities litigation platform, the Whistleblower Representation Practice leverages a world-class in-house team of investigators, financial analysts and forensic accountants with federal and state law enforcement experience to provide unparalleled representation for whistleblowers. Labaton Sucharow is consistently among the top plaintiff litigation firms based upon its rankings in Chambers & Partners, The Legal 500, The National Law Journal’s Plaintiffs’ Hot List and Benchmark Litigation. More information about the Firm and its Whistleblower Representation Practice is available at www.labaton.com.