Articles Posted in Bank whistleblower

Wells Fargo has agreed to pay over $1 Billion in fines and penalties for fraudulently creating accounts without customers’ authorizations; forcing customers to pay fees the bank should have covered requiring borrowers to pay for insurance policies they did not need and in some cases pushing them into default. The bank paid $185  million to federal regulators in 2016.The Federal Reserve said that Wells Fargo had engaged in widespread consumer abuses and other compliance breakdowns. In addition, in March Wells Fargo reported to federal agencies that it has been asked about its wealth-management business which may have directed customers to inappropriate investments which benefitted the bank.

The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are the regulators levying the penalty. Notably, the bureau is led by Mick Mulvaney, who wants the agency to take a gentler towards banks. Some analysts wonder whether the bank has been punished enough to alter its culture.Wells Fargo can afford the $1 Billion sanction as it earned a profit of $22.2 billion last year and $5.9 billion in this year’s first quarter.

Jeffrey A. Newman represents whistleblowers

bank-3-300x225
A whistleblower who revealed that JP Morgan Chase didn’t inform wealthy investors about investment conflicts of interest will receive a record reward of $30 million. JP Morgan agreed to pay $367 million for improperly failing to disclose that it was steering asset management customers to investments that would be profitable for the bank. Of the Commodity Futures Trading Commission (CFTC) portion, $30 million will go to one of several whistleblower applicants.

Under the Dodd-Frank Act of 2010, the SEC and CFTC operate separate whistleblower programs. Each can provide claimans between 10 percent and 30 percent of recoveries based on the value of the information provided.

The Securities and Exchange Commission said that starting in 2007, JPMorgan developed basic investment portfolios, in a program known as the Chase Strategic Portfolio, that automatically invested a significant portion of any money in proprietary JPMorgan mutual funds. The company developed a similar program for wealthier clients in JPMorgan’s private bank, known as the JPMorgan Investment Portfolio, which funneled money into the bank’s own hedge funds. JPMorgan also gave a preference to outside hedge fund managers who were willing to pay placement fees — or retrocessions — to JPMorgan. In some cases, regulators said, the clients were put into products with higher fees, which earned JPMorgan more money, even when the same JPMorgan product was available for a lower fee.