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.