Whistleblowers "Essential" to Protect Client Funds, Says Former SEC Chief

Trade Magazine
July 25, 2012

Jordan A. Thomas comments on the recent wave of corporate misconduct and the need for stronger regulatory oversight and whistleblower protection

An investigation into alleged misappropriation of customer funds at US-based futures commission merchant Peregrine Financial Group (PFG) serves to highlight the need for stronger regulatory oversight and greater whistleblower protection, according to Jordan Thomas, partner and chair of the whistleblower representation practice at law firm Labaton Sucharow.

"Regulators are only as good as the information they have available to them," said Thomas. "They conduct spot checks and they monitor for abuse, but consider how few staff they have and then compare that with the thousands of financial organisations and individuals they are expected to cover – it is a huge task. That's why whistleblowers are essential if we are to ensure the integrity of financial markets."

"Things don't happen in a vacuum," Thomas told theTRADEnews.com. "It is particularly troubling that both here, and in the case of MF Global, ethical people who must have known about these abuses remained silent.

"Virtually everyone is eligible for the whistleblower program at some point, with very few exceptions," he said. "People who know about abuse such as mixing of client funds can now report it safely and anonymously, online, without fear of retaliation. There is no question that clients will have much greater protection, thanks to this programme."