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The US Securities and Exchange Commission slashed an award to a former Wells Fargo employee who helped expose the bank’s fake accounts scandal, sparking concern about the direction of the whistleblower programme under the Trump administration.
The Wall Street watchdog will pay $53mn to the person who gave information that led to Wells Fargo paying a $3bn settlement with the government in 2020, according to an order made public earlier this week.
But the SEC had originally planned to pay significantly more, potentially $175mn, the order shows.
The whistleblower claimed the SEC found a technicality to justify decreasing the award when “the real motivation . . . was the change in federal administration and new agency leadership”, in arguments described in the agency’s order.
Cutting back the award “is a sign that [SEC leadership] and maybe people in the White House want to have more say at an earlier stage and have the opportunity to step in”, said Sean McKessy, the first head of the SEC’s whistleblower programme, now a partner at Phillips & Cohen.
Wells Fargo paid $2.5bn to the Department of Justice and $500mn to the SEC to settle fraud claims after admitting that its staff opened millions of unwanted accounts for customers to meet aggressive sales targets. The scandal cost John Stumpf his job as chief executive and wiped billions of dollars off the value of the bank.
The SEC...
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