Background
John Doe suspected that his former employer was facilitating a scheme to bribe foreign officials. He gave information and supporting materials to a journalist, who passed the information to the Department of Justice and published articles about the alleged scheme. After the DOJ alerted the SEC and the articles appeared, the SEC opened an investigation. Although a DOJ attorney advised through the journalist that Doe should submit a whistleblower tip to the SEC, Doe waited more than a year to do so.
By the time Doe filed his Tip, Complaint, or Referral form, the SEC had been investigating for eight months and had already obtained the relevant information from the news reports, the DOJ, and its own investigative work. The SEC ultimately secured a settlement exceeding $1 million and invited whistleblower-award claims, but denied Doe’s application because neither his filing nor his later interviews materially assisted the investigation. Doe petitioned the D.C. Circuit for review, arguing that his status as the original source of the information entitled him to an award.
The Court’s Holding
A divided D.C. Circuit denied Doe’s petition. The majority held that 15 U.S.C. § 78u-6(b)(1) requires a whistleblower both to provide original information to the SEC and to show that the information provided to the SEC led to a successful enforcement action. It was not enough that Doe originated information that reached the SEC indirectly through a journalist and the DOJ. Because his later submission merely duplicated information the SEC already possessed and did not advance the investigation, it did not satisfy the statute’s causation requirement.
The court also held that the SEC properly applied its regulations. Doe’s submission neither caused the agency to open an investigation under 17 C.F.R. § 240.21F-4(c)(1) nor significantly contributed to an existing investigation under § 240.21F-4(c)(2). He also could not invoke the 120-day lookback provision because he did not submit the same information to the SEC within 120 days of reporting it to another government authority. Judge Henderson dissented, reasoning that the statute and § 240.21F-4(c)(1) require only that the claimant’s original information—not the claimant’s later submission—lead to the successful action.
Key Takeaways
- Originating information that eventually reaches the SEC does not alone establish eligibility for a Dodd-Frank whistleblower award.
- The information submitted to the SEC must cause the agency to open or expand an inquiry, or significantly contribute to an investigation already underway.
- A person who first reports to another government authority must submit the same information to the SEC within 120 days to receive the benefit of the earlier reporting date.
Why It Matters
The decision emphasizes that prompt, direct reporting to the SEC is essential for whistleblowers seeking monetary awards. A claimant risks losing eligibility when the SEC learns and acts on the information through the press, another agency, or another source before receiving the claimant’s own submission.
The divided panel also exposes a disagreement over whether the statutory causation requirement attaches to the original information itself or to the whistleblower’s act of providing that information to the SEC. The majority adopted the latter interpretation and upheld the SEC’s retreat from contrary reasoning it had used in a 2022 award order.