According to the Wall Street Journal, SEC’s fine of $382 million for the company State Street Corp for applying hidden markups to FX trades in mutual funds, and overcharging other clients in FX trades, will result in record Whistleblower rewards being paid out.
But what is interesting, is the fact, that one of the recipients of this huge whistleblower award is a well-known person in the forex market – Ryan Gagne. He works now as a Head of Sales North America for the forex broker Divisa Capital, where he is responsible for otcXchange product sales over the entire Northern America.
Before, Gagne worked as a VP Institutional Sales at Alpari’s US arm from 2012-2015. But Alpari sold its Retail operation in the US to FXCM in late 2013. Nevertheless, it was his previous employment from 1995-2003 (at State Street), that brought this change
According to the WSJ, Mr. Gagne together with Peter Cera (another State Street employee), shared around $90 million of Whistleblower payments as they worked together with US authorities, what caused extreme fine for the State Street.
These three Whistleblowers likely joined together by a man named Harry Markopolos. Markopolos became famous in the late 2000’s for warning the U.S. government about Bernie Madoff’s Ponzi scheme.
The WSJ reports that Markopolos started looking at the lack of scrutiny in how trust banks were overcharging clients in the forex markets. To do something about it, he started looking for bankers who could prove it for the US authorities. And in this case, he met Gagne, Cera and Wilson. And the rest is the story, you already know.
Mr. Markopolos is an interesting kind of person. He was active in pushing US authorities to agree to put their expensive Whistleblower program into place and to motivate higher rank employees to uncover any wrongdoing at their employers. The current SEC Whistleblower program is designed to pay out between 10-30% of fines levied, depending on the type, timing and critical-ness of the information provided by the Whistleblower.
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