If You See Something, Say Something? A whistleblowing choose-your-own adventure.

Chief Investment Officer
September 15, 2015


Jordan A. Thomas examines different scenarios that whistleblowers may undertake when he or she witnessed illegal or unethical activity at work

“People come to me with crazy big violations—huge cases—but blowing the whistle isn’t consistent with their goals. Or, say, three people on the planet truly know about it, and you’re the only one who doesn’t work there anymore. I know about securities frauds that are going on right now undetected, because the people I advised chose not to come forward,” said Jordan A. Thomas, Chair of the Firm’s Whistleblower Representation Practice.

“I see people looking for retribution—ex-spouses trying to jam the other one over, for example—or the Boy Scout types, taking a stand for justice,” Thomas says. “Or people loyal to a company, saying, ‘I won’t see the place I love be turned into this’; and the mercenaries, who see a reward as their ticket to a private island.” He’s judgment-free about those who seek his counsel. Most come through his office doors, though some prefer cloak-and-dagger encounters in empty churches and other public places.

“Whistleblowers are the test of an institution’s capacity for deferred gratification. They’re like the bitter pill than can keep a company out of the hospital. ”Regulators take on a tiny number of new cases each year. The attorney’s job is figuring out who has the best shot. In turn, he or she demands a fully open kimono from aspiring clients—the most invasive probing happens before regulators even know you exist. 

“The first thing we do is a background check,” Thomas explains, noting that Labaton Sucharow’s staff includes former FBI agents. Next, the misconduct has to be a violation, one significant enough to interest the SEC, and likely to result in monetary sanctions in excess of $1 million—the hurdle rate for whistleblowers to earn a cut. After that comes a deep dive into the informant’s motivation, goals, and fears. “By far, the number one concern is retaliation and industry blacklisting.” Is that reasonable? “Yes.” But Thomas stresses that anonymous reporting—another Dodd-Frank feature—has created whistleblowers from people he would have otherwise advised to drop out. With anonymous reports, an attorney acts as a liaison/avatar for the client, whose identity (in theory) remains totally secret. Only now do the lawyers and in-house investigators build their case and fill in evidence gaps.

“People have a tendency to minimize their involvement,” Thomas says. “So you press. I was a Navy Judge Advocate General and learned that at a certain point, you get one-on-one with your client and say, ‘You need to tell me everything.’ This is the most significant decision people will ever make in their professional career. They are paying me to ensure they don’t have regrets.” 

Even for those who approach Thomas, options may appear more numerous than they really are. He estimates taking on one full client for every 85 initial meetings with potentials. So where does that leave the other 84? “They can report directly, and I’ll make introductions if I think the SEC or DoJ might be interested. Also, other firms do this work, and I’ll refer cases elsewhere that aren’t right for us.”

He pauses. “For those whose goal is that the truth comes out, there’s another excellent option.”