Merrill Lynch whistleblowers get $83 million
Snitches get riches.
A $415 million settlement from Merrill Lynch over billions in misused customer funds is the source of the largest-ever whistleblower award against a Wall Street company.
Three people are sharing $83 million in award money from the Securities and Exchange Commission for bringing the 2016 case against the Bank of America-owned wirehouse to the regulator, said Jordan A. Thomas, the lawyer representing the trio.
“My clients brought this to the commission, and helped them with the case over the years,” Thomas told The Post.
The SEC doesn’t reveal details about who whistleblowers are or which settlements awards come from. Whistleblowers can get as much as 30 percent of an award that exceeds $1 million, according to the SEC.
Two of the whistleblowers will split a $50 million award, while a third gets $33 million, the SEC announced. The award is funded by the settlement money.
“This historic award is a wake-up call for Wall Street,” Thomas added in a Monday statement. “With its protections, incentives and the ability to report anonymously, the SEC’s program empowers every citizen to be its eyes and ears. Mark my word, this is only the beginning of a revolution in ethical action for Corporate America. Bad actors are on notice.”
For three years through 2012, the wirehouse diverted money from customers’ accounts through complex options trades that reduced how much had to be held in reserves, the SEC said in the 2016 settlement.
And from 2009 to 2015, the brokerage held as much as $58 billion a day in customer securities in an account that would have been at risk if the firm failed, rather than in protected accounts, the regulator said.
“Had Merrill Lynch collapsed at any point, customers would have been exposed to significant risk and uncertainty of getting back their own securities,” the SEC said at the time.
The bank admitted wrongdoing at the time.