By Andrew Chung
(Reuters) -The Supreme Court on Monday declined to hear former Royal Bank of Scotland managing director Victor Hong's bid to collect a U.S. government whistleblower award of at least $490 million for reporting alleged misconduct related to the institution's sales of mortgage-backed securities.
The justices turned away Hong's appeal of a lower court's ruling that even though his tips helped federal agencies win large settlements against the bank he 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.
The SEC's whistleblower program was created as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, a law passed in response to the 2008 financial crisis. Under the law, eligible whistleblowers can receive a cash award of between 10% and 30% of any monetary sanctions collected above $1 million.
"The federal government, by its abusive actions, is putting its financial interests ahead of whistleblowers, without whom there would be little or no recoveries," Hong's attorney, Richard Corenthal, said in a statement.
The dispute centered on whether Hong's tips met the law's definition of "covered judicial or administrative action brought by the commission under the securities laws."
Hong resigned in 2007 after just six weeks on the job at RBS - now called Natwest Group PLC - prompted by what he believed to be unlawful practices related to its...
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