Whistleblower Tries to Shed Light on Private-Equity Transaction Fees

Crains New York Business
December 1, 2013

Jordan A. Thomas comments on the debate of subjecting private equity firms to stricter regulation


Now a senior private-equity insider is trying to shine light on these little-known payments, which can constitute a sizable slug of revenue at the firms. The insider filed a whistle-blower complaint earlier this year with the Securities and Exchange Commission in which he contends that private-equity firms are violating federal securities law because they are acting as unlicensed brokers when they collect transaction fees.

"This is one of the most black-and-white examples of a securities violation that I can recall," said the insider's attorney, Jordan Thomas, who helped establish the SEC's whistle-blower program and is now a partner at Labaton Sucharow. "The widespread, systematic and flagrant nature of these violations is likely to be deeply troubling to the new, more aggressive SEC under Chairman Mary Jo White's leadership."