As a long term securities attorney who was one of the initial attorneys to publish an article about the new Dodd-Frank Whistle-blower statute on Forbes.com on July 27, 2010, I hereby submit the following comments to the Commission. As an attorney who has represented countless defrauded investors and senior securities employees in whistle-blower and other claims involving major wall street wire houses, as well as having been a former securities regulator for many years, totaling over two decades of practice, I applaud the new Dodd-Frank Whistle-blower provisions as historic. The new provisions very well may prevent not only the future Madoff scandals from growing out of control, but also may prevent the much broader Wall Street scandals, such as the scandal related to Auction Rate Securities, from growing to the multi-billion dollar problem it became.
However, the provisions will be nothing more than glorified gov’t PR without proper follow-up by the SEC and proper written guidance provided to such potential whistle-blowers and their counsel. One critical issue, that the SEC must flesh out, for example, are the privacy issues and the details of how anonymous whistle-blowers will be protected. Although some issues are addressed by the statute, many are not. Issues that come to mind range from dealing with future Freedom of Information Act Requests served on the SEC that may, years down the road, possibly expose whistle-blower submissions and/or their interactions (even if anonymous through counsel), to concerns related to what if any action the SEC could take against a whistle-blower, whose internal knowledge may be substantial, directly as a result of their proximity to some wrongdoing. As a former prosecutor of 11 years, including as a securities prosecutor with the Investor Protection and Financial Crimes units of the NY Attorney General’s Office, and before that as an Assistant District Attorney in the Trial Division with the Manhattan District Attorney’s Office handling organized crime and other matters, it is well known that often times one may have to make arrangements with a somewhat smaller fish, so as to be able to catch the larger fish or firm. Such potential actions against an SEC whistle-blower may result in discouraging the very whistle-blowing the SEC and Congress intended to encourage, as potential whistle-blowers may be concerned that the SEC may “giveth (sic) with one hand and taketh (sic) with the other”.
Other issues that raise concern of whistle-blowers are the known “revolving door” at the SEC (which obviously is not unique to the SEC), whereby former SEC employees leave the commission to work for the investment houses which may have been the subject of a whistle-blower’s complaint and the concern of “informal” disclosure. It would appear that the Commission may seriously want to consider publishing guidelines regarding who in the Commission may work on whistle-blower issues and guidance for its own employees with respect to future employment in related firms, so as to put potential whistle-blowers at ease.
Our law firm alone has already, just in the last ten days filed several whistle-blower complaints with the SEC, pursuant to the new statute, involving major Wall Street firms, which filings appear to implicate hundreds of millions of dollars, if not more, of investor related fraud issues, including on behalf of former senior employee(s) of entities. In addition, we are reviewing and screening several more potential submissions ranging from potential broker-dealer violations, accounting fraud, violations of the Foreign Corrupt Practices Act and improper or inadequate corporate disclosures by public companies. However, as a former securities regulator, I do not wish to waste either my firm’s or the SEC’s valuable resources, and thus unlike some other law firms, we are attempting to screen such cases carefully. The expedited detailing of more guidance by the SEC would assist in that process for all interested in the future success of this new statute.
As per the Commission’s invitation, I would welcome an in-person meeting with the Commission and Chairperson Shapiro to discuss the above issues and make further suggestions to the staff in its rule making process.
Very Truly Yours,
Stuart D. Meissner Esq.
Law Offices of Meissner Associates
450 Seventh Ave. Suite 2205
New York, N.Y. 10123