In a strange quirk of timing, just a day after I published my thoughts on the need for traders to escalate issues, we got news of a whistleblower being awarded $50 million, purportedly for revealing details of how a bank harmed customers.
In Thursday’s column I argued that the trader who last week told a newswire of an option barrier being targeted should be escalating this internally – and following this, a few of you got in touch to discuss the issue. What was striking to me is how most correspondents thought that there was a natural reluctance on the part of staff to escalate an issue because, as one person suggested, if the escalation goes nowhere then it could look bad on their staff record.
Firstly, I sincerely hope that organisations have a better culture than for that to happen, but secondly, as proven by Friday’s news, there is another channel to go down – one that can be sufficiently rewarding to ensure that the person doesn’t need to be concerned about their next salary.
In the US, the SEC announced that it had awarded a record $50 million to a whistleblower – only the second time this amount has been awarded and the first time it has been to an individual – who “provided detailed, first-hand observations of misconduct by a company, which resulted in a successful enforcement action that returned a significant amount of money to harmed investors”.
A heavily redacted document gives nothing away, but the Wall Street Journal names the whistleblower as Grant Wilson, a spot yen trader who worked for BNY Mellon and fed the authorities details of how the bank handled the Standing Instruction trades that led to the bank being fined over $700 million in 2015. He left the bank in 2011 when the investigation started.
Obviously, Wilson was heavily involved in the process that led to the bank’s actions being sanctioned and equally obviously he has foregone plenty of bonuses and salary since, but $50 million should compensate for that (and I presume it’s tax free as it comes from a Congress-backed pool?). The $50 million is actually quite a statement for the US authorities, although there is a formula behind the scenes that works these things out.
So at face value, this highlights that if your institution won’t listen, there is another path – but it is probably not as easy as it sounds, not least because it involves continuing to work for the institution while leaking documents to the authorities and at the same time avoiding detection – as well as, presumably, refusing to take part in the alleged misconduct? This is a lonely existence that many would find challenging and I sense the bar for being accepted as a whistleblower is higher than perhaps it should be in some cases.
Without doubt, a whistleblower has to have attention to detail and be methodical – they are often involved in matters of law and enforcement and that means due process. Which brings me to another aspect of this case – the so-called “Claimant 2” as the SEC refers to them.
Claimant 2 basically argued that they were a joint party to the whistleblowing with Wilson, however their claim to a stake was knocked back by the SEC which says that the Claimant did not submit any evidence to the Commission. It also states that Claimant 2 filed their claim for whistleblower status nearly 10 months after the deadline for submissions and that Wilson’s attorney confirmed to the SEC that they only represented Claimant 1 (Wilson).
This highlights the importance of understanding the rules of the game and following that due process, but, to reiterate, one would hope that in today’s industry one would not have to go as far as this step because it will be dealt with by the institution. If it isn’t there is always the path taken by Wilson and the reward he apparently received, but anyone considering this needs to remember Claimant 2 for whom nothing went right, and walked away with nothing but, perhaps, peoples’ respect for being a tryer!