A qui tam lawsuit filed against Wells Fargo by two whistleblowers has been unsealed. The suit claims that Wachovia, which was bought by Wells Fargo in 2008, defrauded the federal government by accepting billions from federal programs while engaging in and concealing fraudulent banking practices, including falsifying certifications of the bank's financial statements. Wells Fargo is accused of not being upfront about the fraud inherited from Wachovia.
Under the Dodd-Frank Act, whistleblowers can receive sizable awards for notifying the Securities and Exchange Commission (S.E.C.) of securities fraud. The first payout -- close to $50,000 -- was made in 2012, and the whistleblower program continues to be effective. The S.E.C. is authorized to award between 10 and 30 percent of a sum collected by the government as a result of information provided by a whistleblower.
He was a tax lawyer for the biggest mutual fund group in the U.S., though he says the company's tax strategy was illegal. In a whistleblower lawsuit filed in New York, Vanguard Group Inc. is accused of a number of wrongful practices, including fraudulently failing to report a "Contingency Reserve" of $1.5 billion and sending salespeople and marketers throughout the country without keeping proper records for taxes. According to the suit, state and federal governments have lost in excess of $1 billion as a result of Vanguard's illegal tax practices.
Four years ago, when the Dodd-Frank Act was signed into law, a program was started to protect whistleblowers from retaliation if they report securities violations. Whistleblowers can also receive monetary awards for providing information to the Securities and Exchange Commission. However, a recent ruling by a federal appeals court draws into question whether tipsters from overseas are afforded the same protections afforded to whistleblowers in the U.S.