Whistleblower Who Revealed Currency Abuses at BNY Mellon Gets $50 Million -- Update
June 05 2020 - 11:12AM
Dow Jones News
By Dave Michaels
A former trader at Bank of New York Mellon Corp. -- who alerted
authorities to the bank's pattern of overcharging big clients on
currency trades -- was awarded a $50 million whistleblower
payment.
The award, the largest of its type made by the Securities and
Exchange Commission, comes more than a decade after the trader,
Grant Wilson, began assisting authorities with the currency-trading
investigations, according to a person familiar with the matter. The
bank paid $714 million in fines and other compensation in 2015 to
resolve allegations it defrauded pension funds and other clients
related to currency transactions.
The investigations were among the broadest enforcement efforts
ever against banks that trade in global currencies -- one of the
world's biggest financial marketplaces. Large pension funds that
invested in global assets on behalf of teachers, police and other
retirees learned they were given close to the least-favorable
exchange rates of the day, with the bank profiting from the
difference.
The SEC didn't name Mr. Wilson or the bank in its press release
or an order documenting the award, but Mr. Wilson is the
whistleblower whose information was crucial for moving the case
forward, the person said. Mr. Wilson assisted the government for
two years while working as a currency trader at BNY Mellon, The
Wall Street Journal reported in a 2011 article. He left the bank
that year, the Journal reported.
Mr. Wilson couldn't be reached for comment.
A spokesman for the SEC, which doesn't reveal information about
whistleblowers' identities, declined to comment.
Mr. Wilson provided extensive documentation, including his
descriptions of how the bank processed trades that resulted in
client overcharges. BNY Mellon told customers its service was "free
of charge" and designed to help clients "minimize risks and
costs."
A bank spokeswoman said Thursday that BNY Mellon remains
"focused on delivering excellent service to our clients, today and
always."
The settlement with the SEC required BNY Mellon to report on
compliance improvements that it planned to implement over a period
of three years. It also had made changes to its pricing disclosures
in 2012.
The whistleblower's assistance to U.S. officials involved
"firsthand observations of misconduct" and details that "provided a
road map for the investigation," the SEC said in an order
announcing the award.
"Whistleblowers have proven to be a critical tool in the
enforcement arsenal to combat fraud and protect investors," Jane
Norberg, the chief of the SEC's whistleblower office, said in a
news release.
The SEC's whistleblower program, which has grown in prominence
over recent years, allows people who provide original leads about
illegal conduct, or give information that significantly advances an
open investigation, to keep between 10% and 30% of the total fines
collected in a case. The SEC's settlement with BNY Mellon, detailed
in 2016, ordered the bank to pay about $163 million in fines. The
agency has awarded over $500 million to whistleblowers over the
nine-year life of the program, officials said Thursday.
Federal prosecutors in Manhattan and state authorities also
investigated BNY Mellon over the foreign-exchange misconduct. The
$714 million included fines paid to the U.S. Department of Justice
and New York state, and payments to customers who filed a
class-action lawsuit.
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
June 05, 2020 10:57 ET (14:57 GMT)
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