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But what is prompt and resource-saving for the SEC can mean the opposite for others. Jordan Thomas, a former assistant director and assistant chief litigation counsel for the SEC, admits as much. He says, “It is true, when defendants fail to accept responsibility for their misconduct, there can be negative collateral consequences, including the inefficiency and delay associated with requiring the misconduct to be continually relitigated at other levels,” including private suits and state bar proceedings.
Yet Thomas insists that it is the states’ responsibility, not the SEC’s, to discipline their lawyers. The SEC can, and does, refer attorneys believed to have engaged in wrongdoing to their state bars, he says. But he adds, the agency “rarely includes nonpublic information acquired during its investigation.” Still, Thomas says that if some attorneys who commit securities fraud are not disciplined, “this reflects more on the state bars’ oversight than any failing by the SEC.”
Thomas, now a partner with [prior firm] in New York, also defends the SEC’s no-admit policy as in the public’s best interest, calling it “practical yet imperfect.” If the process were changed, the SEC would need a significant budget increase for new investigators and trial attorneys, he added. “In a world where there is no shortage of potential misconduct and inadequate agency resources, this policy allows the SEC to investigate and prosecute more cases.”