In a September decision, the U.S. Court of Appeals for the D.C. Circuit held that a whistleblower whose tip to a journalist led to successful sanctions by the Securities and Exchange Commission (SEC) did not qualify for a whistleblower award under the Dodd-Frank Act, setting a harmful precedent for media-first whistleblowers.
The petitioner in John Doe v. SEC gave a tip about a foreign bribery scheme to a journalist, who published articles on the subject and passed the information to the DOJ. In a 2-1 decision, the D.C. Circuit held that Doe did not qualify for an award because he did not submit his information to the SEC for nearly a year after contacting the media, and his formal submission did not help the investigation (as the SEC already had his information from the press and DOJ).
The Dodd-Frank Act grants awards to whistleblowers “who voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action, or related action.” According to the D.C. Circuit, this language means that a whistleblower’s submission to the SEC must itself have led to successful enforcement; it is not enough for the whistleblower to make a disclosure to a third party which leads to enforcement and submit the same information to the Commission.
Judge Karen LeCraft Henderson dissented in the case, arguing that the majority had conflated two distinct statutory requirements. “[A] whistleblower satisfies the causation requirement when his ‘original information’ is what ‘led to the successful enforcement of the covered . . . action’” and he submits that information to the Commission, she argued. In her view, disqualifying whistleblowers who meet both of these criteria in separate instances is contrary to the text of the Dodd-Frank Act.
National Whistleblower Center (NWC) chairman and Kohn, Kohn, & Colapinto founding partner Stephen M. Kohn agreed with Henderson’s interpretation. He pointed to one of the majority’s first sentences – “To qualify for an award, a whistleblower must provide original information to the SEC, and that information must be instrumental in a successful enforcement action” – as evidence that Doe should have qualified for an award.
“The majority’s own description of Dodd-Frank’s award requirements favors the whistleblower denied in this case,” Kohn said. “John Doe provided original information to the SEC which was instrumental in enforcement. That’s what Dodd-Frank requires.”
“Media whistleblowers are some of the most important whistleblowers we have,” Kohn continued. “They have led to massive government recoveries and pushed investigators to focus on crucial instances of fraud. The D.C. Circuit’s decision will disincentivize whistleblowers from going to the media, which in turn will actively harm investigatory efforts.”
In March, NWC filed an amicus brief in a similar case currently awaiting oral argument in the Eleventh Circuit. NWC argued that the plain meaning and legislative history of Dodd-Frank both supported media whistleblowers being eligible for awards so long as they subsequently submitted their media tips to the SEC. It remains to be seen whether the Eleventh Circuit will agree with the D.C. Circuit or adopt Henderson’s reading of the statute.
