McKessy, the former chief of the SEC’s Office of the Whistleblower who now represents whistleblowers at Phillips & Cohen, said Digital Realty has driven more people to bypass internal reporting structures entirely and go straight to the SEC and even his own firm to ensure they are afforded federal protections.
The decision will likely be a boon for SEC enforcement, McKessy said, while internal systems, which were once the primary mode by which people first reported securities violations, will be “forever tarnished.”
“Companies that want employees to use internal compliance systems can only cross their fingers and hope that their employees are unaware of the Digital Realty decision,” McKessy said. “Trying to convince whistleblowers to trust that their employers, rather than the law, will protect them will be a hard sell.”
Read the article, “The Biggest Securities Decisions of 2018,” in full on Law 360’s website (subscription required).