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Merrill Lynch FAs Receive $3M Whistleblower Award Over Structured Notes Sales

June 13, 2019

Two former Merrill Lynch brokers who secretly recorded internal phone calls in 2011 about the wirehouse’s sales of structured notes are the recipients of the SEC’s $3 million whistleblower award announced earlier this month, according to news reports.

The regulator announced the award June 3 without identifying its recipients or the company involved, as is the SEC’s policy concerning whistleblower awards, the Wall Street Journal writes.

But Rebecca Katz, a senior counsel at law firm Motley Rice LLC who represents both whistleblowers, tells the paper that the company involved is Merrill Lynch. The wirehouse declined comment to the Journal.

In 2012, Glen Ringwall and Mark Manion left the wirehouse for UBS and filed a whistleblower complaint over the sales of the notes several months later, which could have resulted in rewards if the SEC were to fine Merrill Lynch more than $1 million, the Journal wrote in 2016. The pair had secretly taped calls with Merrill Lynch executives discussing marketing and sales of structured notes that ended up losing 95% of their value.

Three years ago, the wirehouse paid $10 million to settle SEC allegations that it had failed to properly disclose certain costs in the notes, the paper writes. Merrill Lynch allegedly had sold around $150 million worth of the notes to 4,000 retail investor accounts from 2010 to 2011, the SEC said at the time, according to the Journal.

The paper couldn’t reach Ringwall and Manion for comment this week, but UBS provided the Journal with a comment from them.

“The SEC press release acknowledges and applauds our efforts,” the statement said, according to the paper. “We feel vindicated and have no further comment.”

The SEC said in an award review letter seen by the Journal that the whistleblowers in the case received the full 30% maximum of the monetary penalty as their reward, splitting the total evenly.

By Alex Padalka
  • To read the The Wall Street Journal article cited in this story, click here.