Award Winning Attorneys
SEC Whistleblower Program
News & Insights
In a landmark whistleblower action, the Securities and Exchange Commission awarded the highest possible financial bounty to a [Jordan Thomas][prior firm][‘s] client, a hedge fund employee who reported securities violations to the Commission. Following the SEC’s investigation, Paradigm Capital Management paid $2.2 million to settle allegations that it had engaged in prohibited principal transactions designed to reduce investors’ tax liability. The monetary sanctions also settled allegations that the firm retaliated against the whistleblower. With respect to the retaliation claim, according to the SEC, after reporting the misconduct to the SEC, the whistleblower was demoted from his position as head trader and was so marginalized that he finally resigned.
Critically, this marks the first time the SEC exercised its new anti-retaliation authority established under Dodd-Frank. The law is clear: Employers may not, directly or indirectly, discharge, demote, suspend, threaten, harass, or in any way discriminate against whistleblowers who: provide information to the SEC; initiate, testify in, or assist in an SEC investigation or related enforcement action; or make any disclosures required or protected by law.