Whistleblowers seeking financial rewards from the U.S. Securities and Exchange Commission (SEC) under the Dodd-Frank Act are running into a steep wall of procedural hurdles, and federal appeals courts aren’t inclined to offer lifelines.
Whistleblower award denials can be appealed before the Federal Courts of Appeals. However, time and again, courts have rejected these appeals, primarily on procedural grounds. Errors made by whistleblowers in the application or appeal process were the reason for denial, and not the merits of their claims.
A review of recent appeal court decisions suggests that the appeals process is not necessarily hostile to whistleblowers. Instead, success hinges on adherence to procedural requirements, both in the initial filing of the whistleblower submission and in navigating the complex appeals process.
Under Dodd-Frank, whistleblowers may be entitled to a portion of the penalties collected by the SEC in enforcement actions triggered by their tips. But to qualify, they must play by exacting rules.
First, the initial submission must be filed directly with the SEC, not any other government agency. In addition, the information must be timely, useful, and clearly contribute to an enforcement action. Duplicative, incomprehensible, or unclear information often results in denials of awards and subsequent appeals.
Whistleblowers must also follow strict time limits. Once a Notice of Covered Action (NOCA) is issued, notifying potential claimants of a successful enforcement action, whistleblowers have 90 days to file an award application. Similarly, appeals of SEC decisions must be filed within 30 days.
“Missing the SEC’s deadlines can be fatal to even the most compelling SEC whistleblower case,” said Stephen Kohn, a Washington, DC based whistleblower attorney familiar with the SEC whistleblower program.
Even whistleblowers who believe they fulfilled all procedural requirements can be denied if they fail to conform to procedural guidelines during the appeal process itself. One common pitfall is attempting to raise an argument for the first time on appeal. Several courts have held that arguments on which an appeal will be based must have been previously raised to the SEC or in a plaintiff’s opening brief.
An unresolved issue centers on whether whistleblowers preserve an argument simply by raising it in their initial award application, even if they fail to mention it again when objecting to the SEC’s preliminary decision. The D.C. Circuit has offered conflicting views, though it recently advised that claimants explicitly state in their objections that they are incorporating earlier arguments.
There are arguments that courts have held are not legally reviewable. In a 2022 decision, the D.C. Circuit held it lacked jurisdiction to decide disputes between joint whistleblowers regarding the division of a whistleblower award. In another 2025 case, the same court declined to overturn a denial based on unsupported allegations of bias.
There are a few precedents in appeals cases that could benefit future appellants. In 2025, the D.C. Circuit found that the 30-day appeal deadline may be subject to equitable tolling. This legal doctrine allows for extension in exceptional circumstances. In 2024, the Fifth Circuit held that a new issue can be raised on appeal in a matter where the whistleblower did not have a previous opportunity to challenge the holding before the SEC. While neither appeal was successful, the rulings demonstrate some sensitivity on the part of appeals courts to the circumstances of SEC whistleblowers.
Overall, the courts’ decisions do not necessarily signal hostility towards whistleblowers seeking awards. Instead, they reflect a rigid adherence to procedural requirements and the SEC’s broad discretion in determining the eligibility of a whistleblower for an award. However, complying strictly with all procedural guidelines increases the likelihood that courts will at least investigate the merits of appellants’ claims.
A clear message to whistleblowers can be found in recent denial decisions. Their success hinges not just on reporting securities fraud, but also on successfully navigating the SEC’s procedural requirements. Failure to do so could result in appeals courts not considering your claim.
