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Dec 18, 2018

Q&A: Jordan Thomas

The go-to lawyer for Wall Street whistleblowers on what makes people come forward, how they’re protected today and what’s likely to come out after the next market crash.

Jordan Thomas isn’t your traditional white-shoe lawyer. Raised in trailer parks in California and Washington, his hardscrabble background somehow led him across the country to Vermont to study dance at Bennington College.

Thomas says he had been inspired by an Alvin Ailey performance while studying at UCLA. But while he loved to dance, Thomas had a practical side as well. In Vermont he started a nonprofit encouraging kids to dream and helping them set goals and realized, “I wanted to devote my life to things where I could have a greater impact.” He became a trial lawyer. “It’s a kind of performance,” he told Worth in an interview about his latest legal endeavor: representing whistleblowers.

Jordan Thomas

After law school, Thomas joined the Navy Jude Advocate General’s Corp., then moved to the Justice Department and eventually landed at the Securities and Exchange Commission. During his time at the SEC, he helped develop a new whistle-blower program, a direct result of the Bernie Madoff Ponzi scheme and the SEC’s failure to listen to warnings about it.

Thomas left the SEC in 2011 and started a practice counseling whistleblowers at Labaton Sucharow. Earlier this year, the New York law firm helped three whistleblowers uncover wrongdoing at Bank of America’s Merrill Lynch. The resulting settlement of $415 million and $83 million in whistleblower awards is the largest in the SEC’s history. 

Q: Why did you decide to become a whistleblower lawyer?

A: I’ve always identified with outsiders and underdogs. Working with whistleblowers, I’m able to help level the playing field for the little guys.

How has the new whistleblower program changed things? 

First of all, the SEC whistleblower program and the Commodity Futures Trading Commission whistleblower program, both programs that came about following the financial crisis and the Madoff scandal, have three major pillars: the ability to report anonymously, which is the best protection against retaliation and blacklisting; robust employment protections; and the ability to collect monetary awards, which can be quite significant. The awards are 10 to 30 percent of the monetary sanctions collected and in recent years, the SEC has collected more than $4 billion in monetary sanctions.

You mentioned one of the protections is against retaliation. If you’re anonymous, can you still suffer retaliation?  

There are cases where people are retaliated against because the company suspects, though sometimes it is wrong. That’s one scenario in which the SEC could take action.

But somebody could fire you and not tell you why. Isn’t it hard to prove that you were retaliated against?

It’s easier than you think because companies tend to justify their action in a way that’s not supported by the record or is inconsistent with prior treatment. So, for instance, a company could say we’re firing you because of unauthorized use of your laptop. Let’s say they brought it home when they shouldn’t have or they were looking at porn on the computer and technically, that may kind of be a basis for firing someone. The problem is if 10 other people have done this and they weren’t fired, then it looks like that’s just a pretext. That’s the kind of kind thing that sometimes get companies in trouble.

Have you worked on some of those cases?

Yes, we represented the first whistleblower whose company was charged with retaliating against them in 2014. That’s when the SEC whistleblower program came into effect.

Since the Enron case, in which executives went to jail, we have not seen any criminal cases filed against corporations. No one went to jail for acts that led to the financial crisis, so there’s a sense that the judicial system has become more relaxed against corporate wrongdoing. Would you argue that that’s not the case?

Law enforcement authorities, historically, have not done as good a job in bringing cases against culpable individuals within organizations and so I believe there is some truth to the criticism. What I can tell you is that recent leadership at the SEC and DOJ have sought to turn that around and one of the ways in which they have been successful in doing that is with the help of whistleblowers.

Can you talk about that?

When I started at the SEC, ambitious enforcement attorneys would wake up early in the morning and look at major newspapers for exposes on corporate wrongdoing and then open an investigation and try to build a case. Now, because there are whistleblowers who are coming forward with recordings and key documents, and some of them point fingers at bad actors, law enforcement authorities are in a much better place to actually charge senior people. The best stories, the most reliable stories are the ones in which you have an insider, a source who can provide you with documents. Some who are willing to go on the record.  

How do you get them comfortable if there’s still an element of fear in coming forward?

The starting point is straight talk. I often tell potential whistleblowers that being a whistleblower isn’t always easy, glamorous or lucrative. In our initial conversations with whistleblowers, we allow them to speak generally, use code names for the entities—ABC Corp., my boss, Mr. Smith or Mrs. Jones is doing X, Y, and Z, generalize numbers, things like that. We also meet with people outside of our offices at locations that make them feel more comfortable. We’ve met with people in churches. We’ve met with them out of town. We’ve traveled overseas to meet with people who we thought were important enough.

How else do you make them feel protected?

We are able to protect these whistleblowers in a more sophisticated way. Many of our clients are senior and have a lot to lose, so they choose to report anonymously and we have used investigative reporter type techniques, voice change technology and other things to allow them to report wrongdoing with less fear about being identified. The idea is to give people a safe place to determine whether there’s a violation, whether it’s significant and then to weigh the pros and cons of reporting. Once they choose to go forward, then we kind of marshal our team.

What does that involve?

We have former FBI agents, forensic accountants, analysts and others who will help them to build the best case and then since our team are all former prosecutors or people who worked in federal law enforcement, we also work with them to try to minimize the risk, whether it’s of identification or of retaliation or physical harm. There have been times where we’ve contacted law enforcement authorities and advised them of our concerns about harm, and they worked with our clients to give them comfort that they would be protected if they came forward.

What if you get into a situation where there might be some really bad actors, doing drug dealing or money laundering, for example?

Those are the people that will try to stop the world from finding out about their illegal activity. That is what tends to scare people.

Even though there may be protection and there may be some financial benefit, do people worry about being known as a troublemaker and not being able to get another job in their industry?

That is probably the biggest concern for our clients. The more senior you are, the more you’re worried about the ability to work in the industry.  People often think that clients are motivated by money. I think their decision to report or not to report is influenced most by fear. The greater the fear, the less likely they are to report. If they feel like the risk is high, they’re far less likely to report.

Are they also worried that they might get tainted with the illegal activity? 

Some are boy scouts. Others are mercenaries. The majority are people who care about the organization, who are concerned that somehow they will be implicated in wrongdoing or that their organization that they love will be mortally wounded if the practice isn’t stopped.  Sometimes you have people who are upset because people are advancing within the organization because of illegal activities when they were playing by the rules and had not been successful and that bothers them. There are people who have reported on their ex-husbands who engaged in wrongdoing.

So a little bit of revenge sometimes.

Sure. It’s always wise to be a good husband because god forbid you’re involved in illegal activity, things could get pretty bleak for you.

What would be the most common types of crimes that people come to you about?

We see a lot of accounting violations, or financial fraud type violations. Another area is trading violations, everything from insider trading to market manipulations and things relating to trading. The third area, which is smaller but can be quite significant, is foreign bribery cases.

From your vantage point, has Wall Street become more ethical since the financial crisis? Has anything changed?

I’d like to believe that Wall Street and corporate America are better than they were at the time of the financial crisis. Organizations that once might have asked, “How likely is it that the SEC is going to find out?” are reporting because they view the risk as too high that the law enforcement and regulatory authorities will become aware of the wrongdoing.

How important is it for whistleblowers to come forward with a lot of evidence?

There’s no question that the information and evidence that our clients bring to law enforcement allow them to be more effective and efficient. Our firm has in-house forensic accountants, financial analysts, former FBI agents and we also hire external experts, whether it’s on international accounting standards or other things so that we can prepare the best case, so the government doesn’t have to spend those resources and time building out these cases. In many ways, the SEC and other law enforcement authorities have an auxiliary law enforcement function, kind of like the auxiliary fire department in local communities.

Short sellers always say that rising markets cover up a lot of fraud. Do you expect that when this market cracks, which it will at some point, a lot more things will come out?

I think it’s inevitable that when the market is weaker that we will see the outliers, the players that weren’t operating with integrity. It’ll be easier to see them.

Is there any evidence of that?

Unfortunately, there’s more than enough fraud to keep myself and many others busy.

See all of Michelle Celarier’s monthly columns here.

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