Jordan A. Thomas addresses what a Trump administration may mean for the SEC Whistleblower Program
Regardless of the Trump administration’s desire to dismantle the Dodd-Frank Act, the U.S. Securities and Exchange Commission’s Whistleblower Program is likely to continue its track record of success. Partner Jordan A. Thomas recently spoke to Law360 to discuss the future of the program and dissect what changes might be implemented due to the recent election results under a Trump presidency.
"I think that the size and quantity of cases that have been announced this year will become the new normal," Thomas said. He added that while the program would indeed be gutted if the entire Dodd-Frank Act were repealed, it’s unlikely Republicans will opt for such a significant change. "I believe it is more likely they will seek to repeal certain provisions of Dodd-Frank, and the SEC Whistleblower Program is one of the rare provisions of Dodd-Frank that have had early success and has been widely acclaimed by senior law enforcement officials."
Thomas said that Trump had appeared to show respect to law enforcement officials and pledged to end Wall Street corruption while campaigning, promises that could help support a program that is popular with agency officials. "So in light of that, I expect that a Trump administration will embrace the SEC Whistleblower Program as an effective tool for policing the financial markets," Thomas said. Thomas agreed that whistleblower attorneys have assisted the SEC in "building great cases," noting that Labaton Sucharow employs a number of resources like forensic accountants and outside experts to help develop whistleblowing cases. "As a result, we save the commission time and resources in their enforcement efforts, and they often lead to more significant results than cases in which sophisticated counsel are not involved."
Thomas also noted that 2016 is essentially the first full year where "mature" cases are coming through the whistleblower pipeline. "In prior years, they hadn’t matured enough, so I don’t think they’re reflective of the potential of the program.” Comparing the sanctions the agency has collected to this year’s whistleblower bounties, Thomas said, shows the awards represent a meaningful amount of money—and that the SEC is "just warming up."
Thomas also spoke with The Wall Street Journal to explain that he would be surprised if the Trump administration tried to kill the program, citing its bipartisan support and the Republican Party’s oft-mentioned desire for government agencies to be more efficient. “The program essentially deputizes the public to report and assist law enforcement authorities. Whistleblowers are only paid when the SEC is successful,” said Thomas.
The $20 million award announced earlier this week is “a good example of the power of the program” because the SEC’s press release noted that investors in that case were able to recover nearly all of their investment due to the promptness of the tip, said Thomas. “This early detection intervention is unusual because too often investors receive small returns” in cases of wrongdoing.
Thomas also discussed the future of the program with Thomson Reuters and expanded on Trump’s decision to tap former Republican SEC Commissioner Paul Atkins to help manage the Trump team's transition efforts at the SEC. Atkins "cares deeply about the commission and its enforcement program. I find it very hard to believe that he would support undermining such a successful program," Thomas said.