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In an article published by Law360, Whistleblower Practice Chair Jordan A. Thomas warns that the recent whistleblower rule amendments “will suppress tips from Wall Street bigwigs who provide some of the bigwigs who provide some of the most valuable checks on major financial institutions.”
The article notes the origins of the SEC Whistleblower Program, the controversy over the proposed rules, and how Commissioner Lee’s courageous dissent inspired him to challenge the new rules. He also said that he had a “legal and moral obligation” to take action, particularly because the final rules applied retroactively to his clients’ pending cases. “That was the straw that broke the camel’s back. The ethics rules required me to act.”
When discussing the stakes involved with his lawsuit, he said “the new rules leave a gaping hole in protections against Wall Street, because they discourage some of the most senior and highest-paid executives from speaking out against their employers.” This matters because these are the cases that reap the biggest sanctions and awards. He estimated that “at least” half of the whistleblower awards have been tied to sanctions against Wall Street firms. In fact, he noted that “only three of the five largest award have ever been disclosed, and those went against Wall Street giants JPMorgan, BNY Mellon and Bank of America Merrill Lynch, resulting in $850 million in total sanctions along,” more than one-third of all the sanctions collected by the entire program.
Jordan opines, “I don’t think that Chairman Clayton or the others involved is this are [James] Bond villans, but I think they didn’t fully appreciate the implications of the rulemaking and were not properly advised on the legal problems.”