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Justices’ Securities Docket Could Reflect Class Action Focus

In a recent Bloomberg BNA article discussing cases on the U.S. Supreme Court’s upcoming docket, Firm partner Jordan A. Thomas offers his perspective on how the cases might proceed.

Chair of the Firm’s Whistleblower Representation Practice, Thomas remarked on Digital Realty Trust, Inc. v. Somers, a decision requiring reporting to the Securities and Exchange Commission (SEC) that could “hurt all key stakeholders—whistleblowers, companies, and the SEC.” The U.S. Courts of Appeal for the Ninth and Second Circuits have said so-called reporting out isn’t required, but the Fifth Circuit has held otherwise.

First, he said, “[i]t would force sophisticated whistleblowers to report to the SEC first and bypass internal reporting. This hurts responsible organizations because they’ll be deprived of the ability to address problems internally”; second, it would leave the commission “between a rock and a hard place,” because historically, the first line of defense has been robust compliance programs; and third, the SEC Whistleblower Program was designed to encourage internal reporting and provides an incentive to do so, Thomas said. “If there’s no remedy for retaliation, it will send whistleblowers into harm’s way.”

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