Richard Levine

As the U.S. Securities and Exchange Commission's whistleblower program continues to spin out multimillion-dollar financial awards to tipsters who report wrongdoing on Wall Street, plaintiffs firm Labaton Sucharow has beefed up its whistleblower practice, hiring former high-ranking SEC official Richard Levine.

Levine, a former longtime associate general counsel for legal policy at the SEC, will focus his efforts on representing whistleblowers in front of the agency in his new role as a partner at Labaton in Washington, D.C. Levine's hire lands him among other former SEC officials already in Labaton's five-partner whistleblower practice, including the group's leader, Jordan Thomas, who started the practice in 2011 after several years as a lawyer in the SEC's enforcement division.

Discussing the new addition to Labaton's SEC whistleblower group, Thomas said Wednesday that Levine's choice to go to a plaintiffs firm marked a departure from the well-trod path of former SEC officials leaving the agency for a private defense firm. Thomas added that Levine's role at the agency involved vetting all of the SEC's enforcement actions.

“Literally everything that the SEC enforcement division does passes through Rich's old group,” Thomas said. “He has had a courtside seat at the commission for every enforcement matter for more than two decades.”

Thomas also noted Levine's specific experience with the SEC's whistleblower program, which began in 2011 following the passage of the Dodd-Frank Wall Street Reform Act. In addition to reviewing and vetting SEC enforcement actions generally, Thomas said, Levine's former role at the agency's general counsel's office involved reviewing the financial awards that are ultimately provided to people who brought tips to the SEC under its whistleblower program.

Jordan Thomas

“That provides a unique kind of perspective for a whistleblower on, 'Is this a case, and how do you make out your case?'” Thomas said. “He can make recommendations on the things to emphasize and, early on, tell people if there are red flags.”

The SEC program offers financial incentives to tipsters who voluntarily present original information to the SEC. If a successful SEC enforcement action follows the tip-off and results in more than $1 million in monetary sanctions, the whistleblower can receive between 10 percent and 30 percent of the SEC's recovery. Labaton's practice, in turn, aims to guide people through the program.

For his part, Levine said in a statement that he viewed the move to Labaton as a extension of the work he previously did on behalf of investors as an SEC official, but in a private practice setting. (Levine was not immediately available for comment Wednesday due to the Yom Kippur holiday.)

“Labaton made me an offer that I couldn't refuse—the opportunity to continue to work on behalf of investors by representing whistleblowers who courageously report wrongdoing to the SEC,” Levine said in prepared remarks. “Having been deeply involved both in counseling SEC enforcement staff and in developing the SEC whistleblower program, I know firsthand the enormous value that whistleblowers add to securities law enforcement.”

Labaton's SEC whistleblower group has expanded in recent years after its launch in 2011. In May 2017, it added three new partners—all former SEC or U.S. Department of Justice officials—and Levine's hire marks the latest expansion.

The group has also been busy, racking up the largest whistleblower award in a single case, $83 million. In that case, Labaton represented a group of tipsters who helped an SEC investigation into Bank of America Corp.'s Merrill Lynch brokerage unit that resulted in a $415 million settlement in 2016 and an admission that the company misused consumers' cash.

While Labaton has had its share of successful representations, the firm is not alone in focusing on the SEC whistleblower space. Also on the plaintiffs side, Phillips & Cohen has touted its expertise in SEC whistleblower actions, including notching some of the largest awards the agency has handed out so far. Phillips & Cohen's group is led by Erika Kelton, a partner in the firm's Washington, D.C., office.

As Thomas noted Wednesday, some defense firms are “making headway” in the area as well. Boston-based Choate Hall & Stewart, for instance, has an established SEC whistleblower group headed by partner Gregory Keating, who rejoined the firm three years ago this month. So does Orrick, Herrington & Sutcliffe with New York partner Mike Delikat and Proskauer Rose also boasts a whistleblower defense practice that includes a focus on SEC cases.

The emphasis on whistleblower practices at private firms comes as the SEC's program has hit its stride. This month alone, the agency announced financial awards to whistleblowers totaling more than $55 million. Overall, the SEC has awarded some $322 million to 58 people since the first whistleblower payout in 2012.

Thomas said Wednesday that he expects the steady drumbeat of awards to continue. As the program has moved out of its infancy, he noted, more financial professionals have become aware of the possibility and incentives of reporting wrongdoing to the SEC.

“You're starting to now see the output of the program,” Thomas said. “Awareness is growing, the number of tips are growing [and] the quality of tips are growing.”

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