This Obscure Government Agency Has a Plan to Put Wall Street CEOs in Prison; U.S. SEC Warns Firms on ‘Whistleblower’ Compliance Failures

The Washington Post, Thomson Reuters
October 26, 2016

Jordan A. Thomas weighs in on cracking down CEOs at large Wall Street firms and discusses the SEC’s concerns on whistleblower agreement failures

                                                                                                                                                                                                                       
Recently, the federal agency has been successful in sending bankers committing fraud and other prohibited arrangements to prison. While the number of bankers charged has increased significantly, the Office of the Special Inspector General for the Troubled Asset Relief Program has failed to charge CEOs of large Wall Street firms. Those executives, according to the agency, are protected by a Wall Street culture that keeps its leaders in the dark about potential fraud. Special inspector general Christy Goldsmith Romero who investigated crime at companies that received taxpayer bailout funds has requested Congress to pass a legislation to prevent that from happening in the future. 

Partner Jordan A. Thomas spoke with The Washington Post to discuss why CEOs should be held more accountable for their actions, and face repercussions for any wrongdoing. Thomas explained the positives surrounding the idea of law enforcement forcing CEOs to become more diligent. “It is hard for a company to argue this is going to be something they shouldn’t be doing anyway,” he said. The question, Thomas said, is whether lawmakers could craft a strong certification requirement that both eliminated potential loopholes for irresponsible CEOs that was also considered legally reasonable. “She is moving the ball in the right direction,” said Thomas.

Thomas also spoke with Thomson Reuters to discuss the recent alert released by the U.S. Securities and Exchange Commission. The SEC sent a cautionary warning to securities firms regarding limitations in provisions to defend potential whistleblowers. The agency mentioned cases of contractual agreements that have reserved employees from coming forward to the SEC with evidence of misconduct, and advised compliance staff to review existing policies for violations.

Thomas said, "what this alert does is remove any possibility that an organization could claim that they were unaware of what the commission's expectations were regarding secrecy agreements and other practices that discouraged (employees) to report wrongdoing.”

“There is no doubt there will be more cases”, Thomas added.