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SEC Whistleblower Program
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At the end of the Trump administration, the U.S. Securities and Exchange Commission inserted a poison pill into its wildly successful SEC Whistleblower Program. The Commission adopted new whistleblower program rules that simultaneously violate the law, break faith with current whistleblowers, and discourage future high-level reports.
Jordan Thomas, the chair of our Whistleblower Representation Practice and a former SEC Assistant Director in the Enforcement Division, has brought an unprecedented lawsuit to force the SEC to reverse its self-destructive rulemaking. At the time of filing, he stated “I love the SEC and do not bring this lawsuit lightly. I am proud to have had a leadership role in developing the SEC Whistleblower Program and couldn’t quietly standby as the potential of the program was undermined from within.”
Our lawsuit challenged two key amendments to the new whistleblower program rules that violated the law, broke faith with current whistleblowers and undermined the program’s future. After a change in leadership and six months of litigation, the Commission announced that it would review the controversial rules and suspend enforcement of the two contested rules during the rulemaking process. In light of these positive developments, our chair announced, “With new hope, I have directed my litigation team to stand down and work with the Commission to get the two contested rules right, once and for all.”
Whistleblowers have been one of the few bright spots in a landscape of financial oversight that has suffered from the dreadful three Ds: deregulation, depenalization and desupervision. SEC whistleblowers have provided invaluable assistance to the Commission in detecting, investigating and prosecuting securities violations.
To date, the successful SEC Whistleblower Program has received more than 45,000 whistleblower submissions, launched over 1,000 investigations, returned over $1 billion to injured investors, and sanctioned wrongdoers more than $4 billion. The whistleblowers who enabled these recoveries earned almost $1 billion.
"In the middle of the proverbial football game, the SEC boldly claimed the authority to move the goal posts on literally hundreds of SEC whistleblowers. That’s when I decided to fight back.”
“This is a significant victory for courageous SEC whistleblowers and is an important first step toward ensuring that Wall Street helps to rebuild Main Street, rather than harm it.”