A whistleblower who has not been named,says that JPMorgan’s misdeeds concerning pension funds violated IRS rules and that the company did not comply with its fiduciary responsibility by favoring its own funds.
The whistleblower, is a former JPMorgan employee who is working with the U.S. Securities and Exchange Commission early in its investigation, has filed a previously unreported claim to the IRS over the bank’s handling of retirement funds. The whistleblower’s lawyer, says may be on the hook for hundreds of millions of dollars in tax penalties.under IRS rules the underlying conflicts should subject the bank to substantial tax penalties because they involved pension funds. As with tax-exempt charities, the IRS imposes guidelines on how tax-advantaged pensions are handled and can impose significant penalties on managers who fail to comply. 5 percent to 10 percent of the $1.8 trillion managed by JPMorgan Asset Management, a subject of the regulatory settlement, involves tax-advantaged retirement plans, according to records filed with the Labor Department in 2015. Those include IRAs and private pensions governed by the Employee Retirement Security Income Act, known as ERISA. An unknown portion of that total was steered into JPMorgan funds.
There’s a high bar to make such a claim against outside managers, however. The IRS code states that for an asset manager to be subjected to IRS sanctions, imust have resulted in federal or state criminal penalties, the loss of professional licenses or the privilege to engage in a trade.
Under the IRS whistleblower program upto 30% of the proceeds, collected by the government may be awarded to the whistleblower. The highest whistleblower award to date was $104 million.
Jeffrey Newman represents whistleblowers and has several pending claims filed under the IRS whistleblower program.
