As reported by the The Wall Street Journal and other news sources last week, documents released by the Florida Attorney General's Office provide an insider's glimpse into the Florida state qui tam action against Bank of New York Mellon Corporation (Mellon Bank). That suit, State of Florida ex rel FX Analytics v. Bank of New York Mellon Corporation, was initially filed by a foreign currency trader and whistleblower at the bank, Mr. Grant Wilson, in 2009 and the Florida Attorney General intervened in 2011. In this qui tam case, the Florida Attorney General alleged that Mellon Bank conducted foreign currency trades on behalf of the Florida Retirement System Trust Fund, and in so doing, fraudulently "added hidden spreads . . . to these foreign exchange trades rather than pricing the trades at the exchange rates at which it actually executed the transactions, causing the [Trust Fund] to pay far more than it should have for buys and receive much less than it should have for sells."
The Florida Attorney General released "hundreds of pages of confidential documents" that Mr. Wilson had obtained while working at Mellon Bank. According to the Wall Street Journal, the documents reportedly show "how the bank allegedly scrambled to contain the fallout from a fast-growing government investigation," and included "company materials, emails and observations." As described in a Huffington Post article, the documents reflected the important role played by the relator's counsel. For example, Wilson's lawyers provided "a question-and-answer tutorial so the Florida Attorney General's office knows the right questions to ask BNY Mellon employees;" and in another memo, the lawyers discredit Mellon's claims that "difficulty in production" delayed its document productions because, according to Wilson, documents are "centrally stored" and can be "easily obtained." In another released memo, Wilson's "legal team provided detailed biographies of fellow traders and employees at BNY Mellon to help determine whether they might be helpful in the whistleblower legal effort."
Beyond the insight into the qui tam against Mellon Bank, these articles prompt several observations: First, the Florida Attorney General's release of these documents show that there is far less confidentiality surrounding relators and the documents they provide in state qui tams than in federal qui tams. This difference is especially stark when dealing with states like Florida, which have public records laws that permit the public broad access to government records. The case is ongoing, with the State having intervened only months ago, and yet hundreds of pages of internal confidential documents, both from Mellon and the relator's lawyers have been released. It is not clear that Wilson, his lawyers, or Mellon wanted these documents released.
Second, the experience of Mr. Wilson as a whistleblower shows just how lucrative the role of a relator can be. The Wall Street Journal reports that Wilson, a foreign trader with Mellon for more than a decade, "walked away from deferred bonuses totaling roughly $5 million." Clearly, he anticipates making much more than that from the qui tam.
Third, from these articles, you can see the important role that whistleblower counsel can play in ensuring a successful qui tam suit and in pressing for a vigorous prosecution against the defendant. In Wilson's case, counsel apparently went so far as to "provide intimate snapshots of [Wilson's] colleagues, including details about their families, personal problems and financial standing."
Finally, where was the bank's compliance officer? Wilson reportedly worked for two years as an informant, allegedly detailing the bank's scheme to overcharge its clients for whom it made foreign exchange trades. He was, documents appear to show, not the only one who knew about these suspect practices. If that is true, how could such conduct be kept from the bank's compliance officers?