sec whistleblower attorneys
SEC Whistleblower Program
Jordan A. Thomas published an op-ed in The New York Times and was quoted in The Washington Post, Compliance Week, Morning Consult, and Law360 in connection with the recent Wells Fargo investigation involving dishonest sales practices.
The Justice Department is investigating Wells Fargo’s improper sales tactics. Federal prosecutors are in the early stages of an investigation after it has been revealed that thousands of Wells Fargo employees created accounts customers didn’t ask for to meet sales goals. Although Wells Fargo had been served with subpoenas, the prosecutors have not decided whether the case warrants criminal or civil charges.
This is the second scandal to hit the big bank. Officials penalized Wells Fargo $185 million for a scheme in which its employees created up to two million accounts, for services such as credit cards and savings accounts, that customers did not approve. Employees have been accused of taking funds from an active customer account to create a new one. This resulted to customers getting hit with a variety of fees for accounts that they didn’t know existed.
In an op-ed piece in The New York Times, which was also referenced in Compliance Week, Thomas noted that “Studies…consistently show that a significant percentage of employees are aware of wrongdoing in the workplace. In the case of Wells Fargo, several employees raised concerns about these troubling practices within the bank and suffered retaliation for doing so.” He added, “Unfortunately, these employees had little incentive and no way of safely alerting regulators without risking their careers. Unlike other financial police, banking regulators either have no whistleblower programs that provide incentives and protections for individuals to break their silence about wrongdoing they witness, or these regulators have little-known programs with comically small awards.” Thomas differentiates this scenario with the SEC whistleblower program created under the Dodd-Frank Act for issuers.
Thomas also raised the question of what senior leadership knew at the time when speaking with The Washington Post. “How probable is it that you would have a firmwide, multiyear scheme involving thousands and thousands of people that senior leaders weren’t aware of? I think the smart money is that some senior leaders were aware, and it is for that reason that prosecutors are apparently making an inquiry.”
Thomas also told Morning Consult that the Wells Fargo saga throws banking regulators’ insufficient whistleblower programs into focus. He added that all agencies should be “empowered” to establish fully fleshed out whistleblower programs. “It’s hard to argue with the fact that they didn’t catch the fraud early in the process,” he said. “I think the question is whether they had the tools to detect this kind of thing.”
When it was announced that John Stumpf, Chairman and CEO of Wells Fargo & Co. would step down for his post, Thomas told Law360 that his resignation won’t resolve the banks problems. “From a law enforcement perspective, the problems appear to run far deeper in the organization, and law enforcement authorities are going to want to make sure they understand the full scope of the problems.”