Former UBS banker left without Whistleblower Bonus
2022.11.21 10:30
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Former UBS banker left without Whistleblower Bonus
Budrigannews.com – The former Royal Bank of Scotland (NYSE:) was not heard by the Supreme Court on Monday.The attempt made by managing director Victor Hong to receive a whistleblower award from the United States government worth at least $490 million for revealing alleged misconduct pertaining to the institution’s sales of mortgage-backed securities.
Hong’s appeal of a lower court’s decision that Hong was not eligible for a cut under the U.S. Securities and Exchange Commission whistleblower program because the SEC did not take enforcement action itself was denied by the justices. Hong’s tips helped federal agencies win large settlements against the bank.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the SEC’s whistleblower program as a response to the 2008 financial crisis.Whistleblowers who meet the requirements stipulate that they are entitled to a cash award equal to 10% to 30% of any monetary sanctions collected in excess of $1 million.
The question of whether Hong’s tips fell under the definition of “covered judicial or administrative action brought by the commission under the securities laws” was at the heart of the disagreement.
In 2007, Hong resigned after only six weeks at RBS (LON:) -prompted by what he believed to be illegal practices related to its portfolio of residential mortgage backed securities, now known as Natwest Group PLC, according to court documents.
He provided information to the Securities and Exchange Commission (SEC) in 2014. The SEC did not take any action against the bank but did share the information with federal prosecutors and the Federal Housing Finance Agency (FHFA) for use in RBS-related investigations that they had already begun.
FHFA and the U.S. Justice Department were able to secure settlements with RBS worth $5.5 billion and $4.9 billion, respectively, thanks to Hong’s additional documentary evidence.The bank denied involvement.
Hong applied for an award through the SEC’s whistleblower program, but the commission disqualified him because it did not take any action against RBS.
In July, the 2nd U.S. Circuit Court of Appeals, which is based in Manhattan, agreed with the SEC but noted:We are aware that this decision may appear to some to be incompatible with the program’s primary statutory objective.”
Hong’s lawyers filed an appeal with the Supreme Court, arguing that the SEC is “coordinating enforcement efforts with other agencies and then refusing to pay an award,” which contradicts Congress’s intent to reward and reward whistleblowers.
