Whistleblower Debate Emerges in Court Cases

On the other hand, tips that could have remained internal might now also be lodged with the SEC. Internal whistleblower programs are often meant to be the first place employees air concerns—and they can be used to catch wrongdoing early and deal with it discreetly, though companies might choose to eventually self-disclose some of that information to the government.

The ruling makes it less likely that a savvy whistleblower, especially one with a knowledgeable lawyer, would report a potential securities-law violation internally without also reporting to the SEC, said Jordan Thomas, partner and chair of the whistleblower representation practice at [prior firm].

“Internal compliance systems play an important role as the first line of defense,” Mr. Thomas said. “This ruling will make people less likely to use these avenues.”