Jordan A. Thomas discusses the pursuit to represent whistleblowers
Sean McKessy, the former head of the Securities and Exchange Commission’s whistleblower program, is joining a law firm that represents those same tipsters—an unusual turn of the revolving door that highlights the potential profitability of legal work that didn’t even exist a few years ago.
Whistleblowers who alert the SEC to securities fraud or other violations can receive millions of dollars if their tips result in settlements or fines. While the payouts can take years to materialize, if they ever do, the steady growth of the SEC’s program has made whistleblowing an increasingly lucrative field. The SEC has made 33 awards since starting the program five years ago. The SEC whistleblower program was formed as part of the 2010 Dodd-Frank financial-overhaul law. It allows the SEC to pay tipsters between 10 percent and 30 percent of any resulting penalties larger than $1 million.
Last week, the agency said it has now paid out more than $100 million since the program was created, including $37 million for fiscal year 2015 and $31.6 million for fiscal 2014.
Jordan A. Thomas, a former SEC enforcement official, in 2011 launched a practice representing SEC whistleblowers at plaintiffs firm Labaton Sucharow. He is now expanding, interviewing candidates with plans to hire one or two former colleagues. Thomas has represented whistleblowers in at least three SEC cases, leading to a total of $837 million in settlements.
In one of the cases, a whistleblower tipped off the SEC to alleged misuse of customer cash through complicated trades by Bank of America Corp.’s Merrill Lynch unit, leading the bank to reach a $415 million settlement in June. The case involved a practice the SEC didn’t know about before the tip came in; the agency said it was conducting a sweep to find similar practices at other firms. The case could lead to a bounty of more than $100 million and could also include any other resulting settlements from the sweep.
”I was discouraged from pursuing this path and was told that I would come to regret it because I would never be able to work in corporate America....More than five years later, current and former SEC attorneys now regularly ask me how they can do what I do,” Thomas said.