In a significant win for the good guys, today, the SEC announced settlements with Merrill Lynch totaling $415 million for its misuse of customer funds to generate profits for the financial services firm. Merrill Lynch also failed to safeguard customer securities from the claims of its creditors. The action against Merrill Lynch was precipitated by whistleblowers represented by Labaton Sucharow.
This announcement comes on the heels of record-setting whistleblower payouts, including the recent $17 million award—the second largest in the SEC program’s history—to another Labaton
Sucharow client. In an incredible show of the program’s strength—and the potency of its anonymity provision, financial incentives, and employment
protections—we see more and more often that behind major enforcement actions stand courageous whistleblowers.
Importantly, the value of whistleblower intelligence is not limited to a one-time slap on the wrist for a single bad actor, rather it arms regulators and
law enforcement to take on misconduct on a much bigger scale. In addition to the massive financial penalty levied against Merrill Lynch, in conjunction with this case, the Commission announced "a coordinated effort across divisions to find potential violations by other firms through a targeted sweep and by encouraging firms to self-report any potential violations of the Customer Protection Rule.”