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LANDMARK LAWSUIT FILED AGAINST SEC TO PROTECT ALL WHISTLEBLOWERS

Former SEC employee sues to halt whistleblower program changes

Politico ran an article on January 13, 2021 by Kellie Mejdrich discussing an injunctive action brought by Jordan Thomas in the U.S. District Court, Washington D.C. against recent SEC rule changes. Jordan was quoted as describing the rule changes as illegal under the Administrative Procedure Act and “a major step backwards.” The article highlights Jordan’s positions that the changes have a retroactive effect to the disadvantage of existing whistleblowers, and will discourage future whistleblowers from coming forward, especially higher level executives who tend to have the most information.

The article describes how support and opposition to the rule changes conformed largely to partisan lines. Former Chairman Jay Clayton was a vocal supporter who asserted that perhaps the most controversial rule change – providing the SEC with discretion to reduce whistleblower awards based simply on how much money they otherwise would be – was merely recitation of existing law and not a change. If Clayton ever provided an explanation for why adopting this new rule language was necessary in that case, the article does not include it.

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