What It’s Really Like to Be a Wall Street Whistleblower

Eugene Ross (Photographs by Christopher Leaman)

Eugene Ross

(Photographs by Christopher Leaman)

SEC’s Office of the Whistleblower has splashed out nearly a billion dollars in its cash-for-tips program. But it’s not for the faint of heart.

There was the matter of the missing $175,000.

Eugene Ross did not feel at all confident about confronting a billion-dollar hedge fund with what he hoped was just a clerical error. At 45 years old, he was at the apex of his career. He started out on Wall Street in the late 1980s working in “the cage,” an airtight vault in the bond department at Salomon Brothers, while going to night school. He set aside his aspirations of becoming a musician and entered into a broker-training program, eventually landing a job at Morgan Stanley, where he built a multimillion-dollar investment portfolio. He married, bought the wedding-cake house, and, with his wife, began rearing three young sons. When poached in 2002 by Bear Stearns, which let him write his own ticket, he could scarcely believe it. “They had a very good payout,” Ross says. He joined up with his partner, bringing with them an asset base of $500 million. Bear wanted brokers who could produce, with big assets and clean compliance records. “At Bear, it was the Wild West,” he says. But he avoided the hijinks and enjoyed complete autonomy.

Ross boasted a high-end clientele. It included Hollywood actress and Fast Times at Ridgemont High star Phoebe Cates and her husband, actor Kevin Kline, as well as Phoebe’s Fabergé-egg-collecting mother, Lily Cates. Ross made no claims to financial wizardry, but he did well. He told his clients, “The best way to make money is to have fewer eggs, but watch them.” In the summer of 2004, Lily Cates came to see him, concerned about some missing monthly statements from a bold-name San Francisco hedge fund in which she was invested, Amerindo Investment Advisors. At her request, Ross began to investigate and, to his dismay, discovered what appeared to be a trail of unauthorized transactions, including one that had posted just days earlier, pulling $175,000 from her account for mysterious reasons.

Unable to get answers from Amerindo, Ross and Cates hatched a plan. One sunny day in late September 2004, they met outside the hedge fund’s gleaming Park Avenue office to confront its New York-based founder, Alberto Vilar, to find out where the money had gone. Vilar, a personal friend of Cates for more than a decade, had agreed to let her bring him lunch. So far, Vilar, who made his name investing in emerging technology stocks, had been successful in dodging Ross’s inquiries about Cates’s missing statements. He did not realize Ross would be accompanying her. Riding the elevator to the 22nd floor of the steel-and-glass tower, Cates held a paper bag with an egg salad sandwich. Ross clutched a sheaf of paper, evidence of the latest irregularities in her account. Normally phlegmatic, he was not looking forward to the ambush. “I don’t know if you’ve ever accused a billionaire of stealing money, but it’s not your best day,” he tells Institutional Investor. “Even then, I didn’t think a billionaire would have any reason to steal $175K. I knew Alberto Vilar was full of s---. But I didn’t know he was broke. Nobody did.”

The life of a Wall Street whistleblower is no witness protection program. The government doesn’t finance the relocation of a whistleblower, or subsidize new housing or furnishings, or provide a salary. A Wall Street whistleblower faces the consequences, as well as the backlash, alone. For Ross, there was no notice his life was about to change permanently. He cannot recall a moment in the sequence of events that followed where he could have chosen to do the right thing and not also risk losing his job, home, and career prospects. That day in September, for him, was the last day of his former life.


“I never thought I could lose my job over this,” he says. “I never thought that Bear Stearns would retaliate against me. I couldn’t have imagined I would file for bankruptcy, or that the legal bills would force me to sell my house.” Ross, whose sons are now grown, says they did not know what he went through until recently, although the family had watched the American Greed episode on the multimillion-dollar fraud he uncovered. “My kids were small at the time,” he says. “My wife and I didn’t want to tell them what was going on. You don’t advertise that you declared bankruptcy.”

Well into the 21st century, people like Ross were left completely exposed when they attempted to blow the whistle. That changed in 2010, when the Securities and Exchange Commission set up a new division bearing the Orwellian title of Office of the Whistleblower. Since the SEC granted its first whistleblower award in 2012, the program, set up under the Dodd-Frank Wall Street Reform and Consumer Protection Act, has meted out more than $937 million in awards to 178 individuals. Last year, the SEC presented the highest-ever whistleblower award of $114 million to a single whistleblower (who, like many, chose to remain anonymous). Whistleblowers can receive anywhere from 10 percent to 30 percent of the total collected by the SEC in an enforcement action, granted at its discretion, when they voluntarily turn over information leading to sanctions in excess of $1 million.

Jane Norberg, who commandeered the whistleblower program from its embryonic stages, spoke with II shortly before leaving her post as chief of the SEC’s Office of the Whistleblower in April, noting that the program was just beginning the second half of its fiscal year, but was “already breaking last year’s records,” with awards of “over a quarter of a billion dollars.” In fiscal 2020, the SEC paid approximately $175 million in awards to 39 individuals.

The best tips, Norberg says, “are specific, timely, and credible — tips that point to specific people, specific transactions, and specific dates; things that are tangible that the staff can dig into.” Of the whistleblowers who have received awards under the program, 71 percent provided original information allowing the SEC to open an investigation or examination into securities violations, while 29 percent provided original information that “significantly contributed to an already existing investigation or examination,” according to the Office of the Whistleblower’s latest annual report.

About 68 percent of those who end up receiving SEC whistleblower awards are company employees or insiders, such as corporate officers or directors, internal auditors and accountants, or members of the compliance department. That said, award recipients don’t have to be insiders. Sometimes they are simply investors who have been victims of a fraud; professionals working in the same field or in a related industry; or “individuals who had a personal relationship with the wrongdoer, or individuals who have a special expertise in the market,” the report said.

Stephen Kohn, whose Washington law firm, Kohn, Kohn & Colapinto, has represented whistleblowers like Ross since the 1980s, says the Dodd-Frank whistleblower program’s masterstroke is that it finally puts the whistleblower first. The incentives, he says, are threefold: whistleblowers can file tips confidentially and anonymously; whistleblowers are protected by exceedingly strict anti-retaliation laws; and any tip filed with the SEC resulting in an enforcement action can be used by other agencies, such as the Department of Justice or the Internal Revenue Service, allowing whistleblowers to stack their awards. As a result, the average whistleblower award extends into the millions. None of these benefits or safeguards existed before Dodd-Frank, Kohn says. “The beauty of the SEC program is that it can open the whistleblower to eligibility of mandatory awards of 10 percent to 30 percent for every civil, administrative, or criminal action pursued by not just the SEC, but the United States,” he explains. “Anything that relies on the same information brought forth by the whistleblower, such as a criminal antitrust violation — for which there is typically no whistleblower award — can create a multiplier effect.”

That means, over time, whistleblowers can reap compounding returns as their information is deployed throughout the system by various government agencies undertaking related actions. When the $114 million whistleblower award was granted last October, approximately $52 million of it came from the SEC, while $62 million emanated from related actions by another agency, which the SEC did not name to ensure it did not give away the whistleblower’s identity. “The SEC is super, super careful to keep all whistleblower identities secret,” Kohn says. “I don’t think it has ever messed up.”

In the end, the record whistleblower award totaled more than double the SEC’s prior top payout of $50 million in June 2020. “No other program is like this,” Kohn says. One of his biggest clients — also anonymous — received an award of $177 million resulting from actions by the SEC, the IRS, and the DOJ. “The larger the sanction and sum collected, the larger the award,” he says.


It is unclear whether Vilar ever got to eat his egg salad sandwich. But the meeting with Ross did not go well.

Feted as a billionaire genius and philanthropist, Cuban-born Vilar had the hedge fund and the art-drenched New York duplex. He even stunned onlookers by showing up for a performance at the Metropolitan Opera with the Renée Fleming on his arm. Says one fellow hedge funder, Vilar may not have been courting the renowned opera singer, “but they certainly left everyone with that impression.” Vilar pledged an estimated $250 million in charitable donations to the Met and opera houses and art institutions around the world, claiming his gifts gave him the right to take a bow on stage — which he did.

But when Ross showed Vilar the paperwork revealing unauthorized transfers of Lily Cates’s money, the big man grew quiet. “We’re going to have to look into this,” he said. Ross pointed to the signature from Amerindo approving the transaction, alongside Cates’s own signature. Cates said she had never seen or signed the document. Vilar’s partner, Gary Tanaka, also at the meeting, visibly blanched. He admitted that Amerindo’s authorization on the document looked like a stamp of his own signature. “Well, you don’t have a stamp of my signature, do you?” Cates asked.

“That’s when things got really uncomfortable,” Ross recalls. Neither Vilar nor Tanaka denied her signature was forged. “They didn’t say it was a mistake. They didn’t say, ‘We’ll give the money back,’” Ross notes. “That’s when I knew they were lying.”

Ross quickly left the hedge fund’s office, but not before Vilar met him on the way to the elevator — and this time, Vilar threatened him. “I told him that I was going to have to tell Bear Stearns,” Ross says. “It wasn’t a small thing. He was a big client of ours and he was taking advantage of an elderly lady.” Ross says Vilar informed him that when this was over, one of them wasn’t going to have a job, and it wasn’t going to be Vilar. “I asked Vilar, ‘Did you do anything wrong?’ He said no, so I said, ‘Then you have nothing to worry about,’” Ross recalls.

Within eight months, both Vilar and Tanaka were arrested and charged with stealing tens of millions of dollars from their investors, approximately $5 million of which belonged to Cates. In November 2008, they were convicted on 12 counts of money laundering, wire fraud, securities fraud, and other financial crimes linked to Amerindo. Vilar spent a decade in prison and was released in 2018, saying he was punished for a crime in which no one lost anything — because investors were eventually repaid, with interest — and lamenting, “Look at the bull markets I missed; look at the operas I missed.”

Ross was vindicated for his suspicions, but Vilar’s prediction also came true: Ross lost his job at Bear Stearns in September 2005, exactly one year after discovering the fraud. The situation came to a head when Ross, still employed by Bear, began to voluntarily cooperate with the U.S. attorney’s office for the Southern District of New York, the DOJ, and the SEC in criminal and civil actions against Vilar and Tanaka. He provided evidence, documents, and testimony at the criminal trial. Meanwhile, Bear cut his pay and took away his sales team. Ross was subjected to ongoing harassment and retaliation. As the Dodd-Frank rules had not yet come to pass, he worked with prosecutors as a key witness from 2005 to 2008 without the benefit of whistleblower anonymity or anti-retaliation protections. With his legal bills mounting, Ross sent a note to the U.S. attorney’s office in August 2008, stating, “Please contact me directly with regard to the Vilar and Tanaka trial. I can no longer afford the expense of counsel. I will make myself available to you, as I have in the past.”

In the criminal proceeding United States v. Vilar et al., Ross’s detailed testimony of uncovering the fraud and forgery scheme against Cates helped win the case, with government prosecutors focusing on Ross’s story of confronting Vilar and Tanaka over the theft in their opening statement. The case led to the collection of tens of millions of dollars by the SEC in its civil action against Amerindo, allowing it to make sure all the investors who lost money in the fraud were made whole. (Cates did not respond to calls for comment.)

Ross outlasted Vilar, Tanaka, Amerindo — and even Bear Stearns, which collapsed in 2008 amid the global financial crisis. But he lost his job, his home, and his life as he knew it. Today he resides with his wife in Point Pleasant, New Jersey, working as a call center manager overseeing employee benefits such as health care plans. His sons are now in their 20s. His middle son is an investment adviser. “You know what’s sad?” Ross says. “You don’t know you’re a whistleblower. You only know you’re a whistleblower when they retaliate against you. I thought I was telling them what they should know. But the bank didn’t want to deal with it. This was too big.”

In September 2014, Ross filed a whistleblower award claim with the SEC, which so far has collected an estimated $54 million in the civil action resulting from Ross’s discovery of fraud at Amerindo. In 2018, the SEC denied his claim in a preliminary determination, stating that Ross did not voluntarily provide the original information leading to its successful enforcement action in Securities and Exchange Commission v. Amerindo Investment Advisors Inc. et al.

Ross’s lawyers filed an appeal, arguing that it is undisputed Ross was the sole voluntary source of the original information that led to Vilar and Tanaka’s convictions. “It is uncontested that Ross’s original disclosure to Cates and subsequent cooperation with the DOJ and SEC triggered this sequence of events and provided the basis for the successful judgment of the SEC in this matter,” they wrote. For more than two years, they have been waiting for the SEC’s response. In the meantime, Vilar has emerged from prison, excited to attend operas again.

Kohn says the denial of Ross’s whistleblower award appears to hinge on a narrow interpretation of the Dodd-Frank provisions that goes against the spirit of the law. “Ross blew the whistle to Cates before he talked to the SEC,” says Kohn. “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.”


Whistleblowers are as diverse as their stories, with an increasingly wide cross-section of people from the U.S. and around the world coming forward. “I would not say it’s a cottage industry yet,” says Edward Siedle, a former SEC lawyer with a background in asset management who has won $78 million in government whistleblower awards, including $48 million in 2017 from the SEC in a case against JPMorgan Chase & Co. “All of this is still in its infancy.”

Siedle, in addition to investigating and filing his own claims, represents a handful of other whistleblowers through his law practice in Boca Raton, Florida. When whistleblowing works out, he says, “it is very remunerative.” But with only an infinitesimal number of whistleblower tips leading to awards — less than 1 percent — scouring the landscape for the best cases can be the hardest part. “In my niche, there are few very good whistleblower cases,” Siedle says. At the moment, he represents only three clients. “I don’t advertise heavily, but even if I had a bunch of billboards up all over the world, I would still not find that many good cases. There are very few whistleblowers who have excellent information, high-level data and analysis, or something substantial. If you can show the company is specifically engaged in wrongdoing and profiting off it and knows what they’re doing is wrong, you may have a case. What the SEC wants is smoking-gun information.”

While the SEC does not divulge whistleblower identities, it does track an impressive range of characteristics about them. In the latest fiscal year ended September 30, the Office of the Whistleblower reported the largest number of tips and complaints came from California, Pennsylvania, New York, Florida, and Texas — in that order — while about 11 percent of complaints came from outside the country, with Canada, the U.K., China, Colombia, and India leading. Since the program began just over a decade ago, 19 whistleblower award recipients lived outside of the U.S. or were foreign nationals when they filed their tips. The top complaints, in order from greatest to least, are securities violations related to corporate disclosures and financials; offerings; manipulation; insider trading; and initial coin offerings or cryptocurrencies. The SEC is so keen on smoking-gun information that it will even grant whistleblower awards to those involved in the violations. According to agency data, both companies and individuals participating in infractions have self-reported under the whistleblower program, although less than 5 percent of those who received an award had it reduced due to culpability, the SEC says.

The most important factor in who qualifies for an award, says Kohn, other than having original information, is that they come forward voluntarily. “The single most frustrating thing in my office, in my life, right now are the whistleblowers who waited too long and lost out literally — literally — on hundreds of millions of dollars,” he says. “If the government asks to speak to you about a case, but you did not initiate it, they can find you not voluntary and you get nothing. If the day before the government asks to speak to you, you call up the government and say, ‘I want to be a whistleblower,’ you are fully qualified.”

Before Dodd-Frank, whistleblowers were almost always lacerated by the process, says Jordan A. Thomas, who heads the whistleblower practice at New York law firm Labaton Sucharow. He was a principal architect of the SEC’s whistleblower program after the 2008 financial crisis while in leadership roles at the agency, including as assistant director and assistant chief litigation counsel in the division of enforcement. “The whistleblower stereotype journalists trot out — that the whistleblower reports the wrongdoing and then the company rolls a bus over them and now they live in a motel on the edge of town, eating cat food — it’s not like that anymore,” he says. “Most of them would do it again.”

Thomas has won millions for whistleblowers reporting against major Wall Street firms, including Merrill Lynch and JPMorgan, but he says most of them are not motivated by the potential of winning a jackpot. “More than 80 percent of whistleblowers report the problem internally first. They try to do something about it from the inside,” he says. “That’s proof it’s not just about money.”

Another major reason for the popularity of the program is that whistleblowers can report fraud, insider trading, misconduct, and other violations without their employer ever being the wiser. “We have many cases now where the companies don’t even know they are being whistleblown,” says Kohn. “If the company finds out there’s a whistleblower, there will always be a witch hunt. So the SEC will back-source everything; they will make it seem like a routine audit.”

David Colapinto, who also works on the Ross case, says ideally the company never finds out why or how it got caught. “When the company doesn’t even know there’s a whistleblower, I think that’s really fun because if the whistleblower is still at the company, you can keep gathering information about the problem and then the shoe is really on the other foot. Sometimes they have an idea they might have a whistleblower, but they don’t really know and, in the meantime, they have no idea who to trust, so that’s great.”

That doesn’t mean the process, for the whistleblower, is at all comfortable. Even if a whistleblower is anonymous to the rest of the world, if they want to pursue a case and get an award, they will have to identify themselves to the SEC. “Technically, they’re still anonymous on paper,” Kohn says. “But the SEC is going to meet the person, they are going to discuss emails, and it’s going to be very obvious who wrote what, who was at what meeting.”

Over time, the whistleblower and the government build a mutual confidence by working together. “Once the trust is built, everything else flows from there,” Kohn says. “The whistleblower will wear a wire. They will engage in undercover. And they will ultimately testify in court, if they have to.” (Kohn has only had this happen in one case.) “When the whistleblower feels there’s a strong likelihood of a successful outcome, then you are going to see pretty much complete cooperation,” he says. “That’s the beauty of these laws. They take someone who is extremely anxious and circumspect and distrustful at the beginning and the government becomes their best friend.”

Intriguingly, some whistleblowers never leave the companies where they work — even after blowing the whistle and receiving a large award. “It doesn’t happen very often,” Thomas says, “but there are successful whistleblowers who choose to stay at their companies as secret millionaires. They view their companies as family. I find that surprising. I don’t understand it. If you can afford to buy an island, why work?”

At any given time, Kohn’s firm is handling 100 to 120 actions in various stages of the whistleblowing process. Most, if not all, cases take years. And some cases, like Ross’s, can take a decade or more to work their way through the SEC’s byzantine system, especially when they’re being appealed. (In an II analysis of SEC cases, at least one whistleblower died while awaiting an awards decision.) According to the SEC, about a dozen whistleblower awards claims have been appealed in court after being denied, but none has ever succeeded.

Even so, this is an enormous improvement from pre-Dodd-Frank days, when Kohn managed no more than a dozen grueling cases, with many going to trial. “These cases were highly charged, often controversial, often in the newspaper, and the company had multiple interests in trying to win the case and quash the whistleblower,” he says. “The only word to describe them was brutal.” Since Dodd-Frank, very few cases go to trial because the incentive for all involved is to keep the process under wraps.

The rising size and number of whistleblower awards is drawing bounty hunters in search of a bonanza, from famed forensic accountant Harry Markopolos, who continues to publicly pursue whistleblower cases across Wall Street — after famously alerting the SEC to Bernie Madoff’s multibillion-dollar Ponzi scheme and being ignored — to a bumper crop of anonymous whistleblowers, such as one corporate investigator who spoke with II about the experience. “There is a double-life aspect to it,” he says, asking not to be named since he still works in finance and has won millions of dollars in whistleblower awards. “There are times when it can feel gratifying and other times when it can be hard, because I can’t talk very openly about it.” He says the SEC’s whistleblower process can be extremely frustrating to navigate as well, due to the long wait times between filing tips and hearing back. “To be honest,” he says, “each exchange with the SEC can take years.” But the payoff can be worth it. “Let’s put it this way,” the whistleblower says. “I am not lying in bed awake at night bitter about it.”

For the SEC, it is an extraordinarily good deal. Since its inception, the Office of the Whistleblower has doled out nearly a billion dollars in awards, with the whistleblowers responsible for more than $2.7 billion in total monetary sanctions. That includes $1.5 billion in disgorgement of “ill-gotten gains” and interest, $850 million of which has been, or will be, returned to harmed investors, according to the SEC’s latest annual report. A tidy turnaround, considering the Office of the Whistleblower has little more than a dozen full-time attorneys doing everything from fielding tips to processing awards to communicating with the public. Interestingly, two attorneys are devoted to sorting through the “frivolous” tips received by the SEC every year, which has caused many of its bottlenecks and led to a push at the agency to put in place greater efficiencies. It now has a system for tracking and banning repeat offenders who have, in some cases, flooded the SEC’s system with hundreds of tips. The new system gives them three warnings for sending in junk tips — then they’re out.

Since the program’s launch, the SEC has received more than 40,000 whistleblower tips — which it accepts by mail, fax, telephone, or online portal — with the latest fiscal year attracting a record 6,900 tips. This 31 percent increase from the office’s last record year in 2018 was boosted by what lawyers and regulators viewed as a “Covid bump,” fueled by employees who felt more comfortable reporting violations while working from home, away from prying eyes. Since launching its whistleblower program, the SEC has returned more than 26,900 calls from its whistleblower hotline.

Kohn says one of the biggest revelations of the program is the phalanx of senior-level executives stepping up to become whistleblowers. “My first client under Dodd-Frank was the president of a company, and I was in shock,” he says. “I’d never seen that before. What this program has made me realize is that there are many people in corporate America who are very honest, who are hard working, and who don’t like the corruption. And these people have existed for a long time. Dodd-Frank gave them an opportunity to safely report. Up until then, they did not have such an opportunity. And that was the game changer, because there are many people, when companies do bad things, who don’t like it.”’

While many whistleblowers remain anonymous, Siedle says he spoke out because he wanted people to see that being a whistleblower doesn’t ruin your life — and can have a positive impact on the lives of others. “The reason I came out is because I want people to know you can do well by doing good,” he says. One of the biggest mistakes whistleblowers make is blowing their own cover while they’re still undercover, he notes. “The SEC is not going to tell anyone about you, so don’t get chatty. When whistleblowers see themselves as the little guy against the massive machine, they panic, they feel they have to yell the loudest. Instead, you need to focus on what’s going to reward you, help you improve your case. Not scream about the injustices of the world. These days, the only way people are going to know you are blowing the whistle is if you tell.”

For Ross, now 60 years old, the ending to his story, happy or otherwise, is still unwritten. “I never expected to be paid for what I did,” he says. “The investors got their money back because a whistleblower stopped it early enough to save them.”

But the whistleblower should get some credit, he says. “The SEC pats themselves on the backs for uncovering fraud, but they’re not putting themselves at risk the way we whistleblowers do,” he says. “If you’re a tipster like Markopolos, or an SEC official, you aren’t risking your career — you’re enhancing your career. Whistleblowers are different. When we blow the whistle, the risk is on us.”