Once an SEC Regulator, Now Thriving as a Lawyer for Whistleblowers

When Jordan A. Thomas left the Securities and Exchange Commission in 2011, he could have landed a job at a top law firm, likely earning $500,000 or more a year to defend corporations and Wall Street firms in government investigations.

But Thomas had another plan: He wanted to build a law practice representing whistleblowers seeking to expose corporate wrongdoing.

“People thought I was crazy not to go into a big corporate defense practice where I could make a lot of money,” Thomas said.

Seven years later, his bet is paying off. He has built one of the top legal practices in the country representing corporate whistleblowers. And because of a program Thomas helped create at the SEC, in which whistleblowers can receive a cut of penalties the agency imposes as a result of information they provide, the money is starting to pour in to Thomas’ firm.

On Monday, the SEC announced two awards totaling $83 million, with the money coming from a fund established by Congress that is financed by the fines paid by violators. Thomas said three clients of his firm, Labaton Sucharow, will collect the awards for alerting the agency to wrongdoing at Bank of America’s Merrill Lynch unit, which led to Merrill’s paying $415 million to settle the case in June 2016.

Thomas’ firm could pocket more than $25 million, with him personally reaping a significant slice of that.

The awards disclosed Monday were the largest ever paid under the SEC whistleblower program. The previous record was a $30 million payout in 2014 to a client of Thomas’ biggest rival, the law firm of Phillips & Cohen.

Michael J. Osnato Jr., who was a senior SEC enforcement attorney until last year, said Thomas has been successful at finding whistleblowers with valuable information and then “packaging that for consumption by teams at the SEC, making it much easier to investigate.”

Equally important, Osnato said, is Thomas’ ability to make his clients comfortable with the whistleblowing process.

It was only last year, after seeing several cases pay out, that Thomas recouped the costs of getting his practice up and running. After a client received an $8.8 million award in a New York state tax-fraud case last April, Thomas recruited three additional partners to join him, two of them alumni of the SEC.

Aside from expanding his practice, Thomas has made one concession to his improved fortunes: He traded in his 16-year old Toyota Avalon for a Tesla Model S — sticker price $68,000. Thomas, 47, doesn’t have the traditional pedigree of a Wall Street lawyer.

He describes his childhood as traumatic. His parents divorced when he was young, and he grew up with his mother, a teacher, and stepfather in mobile home parks in California and Yakima, Washington. He and his stepfather battled, and at 15, Thomas became an emancipated minor.

Later, while studying at UCLA, he was inspired by a performance by the Alvin Ailey American Dance Theater and transferred to Bennington College in Vermont, known for its contemporary dance program. Seeking to create some distance from his past, hechanged his name to Jordan Thomas. (He declined to give his parents’ names or the name on his own birth certificate.)

“He said he felt basically broken. He had a lot of wounds in his life,” said Susan Sgorbati, who mentored Thomas in dance improvisation at Bennington. “I remember a lot of anger, uncertainty and restlessness in him but also real ambition.” His classmates included the future Hollywood star Peter Dinklage.

Thomas went to law school and then entered the U.S. Navy Judge Advocate General’s Corps. In 1999, he joined the Justice Department. There, he described himself as “a poor boy trying to fit in with all the Ivy League guys.”

Thomas eventually migrated to the SEC, working in the enforcement division before helping to develop the whistleblower program, which was created in response to criticism the agency failed to heed warnings about Bernard Madoff’s Ponzi scheme.

Thomas left the commission just before its whistleblower office opened in 2011. He decorated his new office in downtown Manhattan with posters of movies about the legal system, including “All the President’s Men,” “Twelve Angry Men” and “Anatomy of a Murder.”

So far, his clients have filed 57 whistleblower submissions to the agency. Three of those submissions have generated rewards. Another 10 cases either have awards pending or are in the application process after the SEC took action based on their tips. The agency is still investigating another 27 submissions of Thomas’ clients.

Including the Merrill awards, the agency has paid a total of more than $262 million to whistleblowers. Awards range from 10 percent to 30 percent of the penalty paid by wrongdoers.

Many whistleblowers seek to remain anonymous, to avoid being blacklisted in their fields. Thomas arranged for one of his clients in the Merrill case to speak with SEC investigators while using an electronic device to disguise his voice. The Merrill whistleblowers helped the SEC build a case that accused the Wall Street firm of improperly risking customer assets to generate trading profits from 2009 through 2012.

In a telephone interview with Thomas on the line, one of the anonymous Merrill whistleblowers said the experience had been “lonely” and “pretty stressful.”

“The one person I could talk to was Jordan,” he said.