“The Life of a Wall Street Whistleblower is no Witness Protection Program”

Eugene “Gene” Ross was featured in Institutional Investor yesterday as part of a deep-dive into what life is like as a Wall Street whistleblower.

While working at global investment firm Bear Stearns, Ross witnessed massive fraud at a hedge fund in which he invested a client’s money. After doing some investigating into several dubious transactions from Amerindo Investment Advisors, Ross uncovered a multimillion dollar fraud scheme that involved millions being stolen from his clients.

As a result of his reporting, Amerindo founders Alberto Vilar and Gary Tanaka were arrested eight months later and were convicted on 12 counts of money laundering, wire fraud, securities fraud, and other financial crimes in 2008. Ross testified at their trial and the prosecutor credited Ross with uncovering the fraud.

However, Ross was not fully vindicated for his whistleblowing. A year after discovering the fraud, Ross lost his job with Bear Stearns.

“I never thought I could lose my job over this,” Ross says. Ross was forced to file for bankruptcy and forced to sell his house after facing severe retaliation from his employer.

Ross, who is represented by whistleblower law firm Kohn, Kohn & Colapinto, filed for a whistleblower award with the Securities and Exchange Commission (SEC) in 2014, after the SEC relied on the information provided by Ross to obtain a monetary sanction of more than $50 million against Vilar and Tanaka. In 2018, the SEC recommended denying Ross’ claim for a whistleblower award because he supposedly did not voluntarily provide information that led to successful enforcement actions.

Ross’s lawyers filed an appeal, stating it was “uncontested” that Ross was the sole voluntary source of the information that led to the convictions of Vilar and Tanaka and even the prosecutor at the criminal trial told the jury that Ross uncovered the fraud. Two years later, Ross is still waiting for a response from the SEC.

The SEC has collected an estimated $54 million from successful enforcement actions based on Ross’s whistleblowing.

In 2019, Ross spoke at the annual celebration of National Whistleblower Appreciation Day in Washington, D.C. “Every fraud victim’s best hope is a whistleblower,” Ross said. “If we really want to stop the securities industry from ripping people off, we need whistleblowers, we need independent regulators, and we need to enforce strog whistleblower laws.”

Whistleblower attorney Stephen M. Kohn told Institutional Investor it is crucial to protect whistleblowers who communicate with the victims first, which is what Ross did. “That should not be held against him. He blew the whistle to the victim first. He protected her from further fraud. That’s exactly what you’re supposed to do. The SEC has discretionary powers to grant whistleblower awards. They can still do the right thing by Gene.”

The Institutional Investor article provides rare insight into the SEC’s whistleblower process. While the SEC has paid approximately $1 billion in whistleblower awards in the last decade, little has been revealed about the SEC whistleblowers who have filed claims for awards.

Read the article: What It’s Really Like to Be a Wall Street Whistleblower