The SEC recently held that a whistleblower who spent two years and over 100 hours assisting with an investigation into Deutsche Bank was not “voluntary” and was therefore ineligible for an award, the Wall Street Journal reported on May 4.
Desiree Fixler, a former Deutsche Bank executive, learned that the bank was misleading investors about its use of ESG (environmental, social, and governance) criteria in investment decisions. She reported these concerns to the Wall Street Journal in 2021 and filed a complaint with the SEC two days after the article was published – but not before SEC officials saw the article and called Fixler to request additional information.
After years of investigating with Fixler’s assistance, the SEC fined Deutsche $19 million. Under the Dodd-Frank Act, SEC whistleblowers whose information leads to successful enforcement can qualify for a mandatory award of between 10% and 30% of sanctions collected. But to qualify, a whistleblower must “voluntarily” provide information to the SEC – a requirement the SEC interprets to mean the whistleblower must reach out to the Commission before the Commission reaches out to them, even if the whistleblower provided their information to the media first.
Also on May 4, Fixler filed an appeal of her award denial in the U.S. Court of Appeals for the D.C. Circuit. Fixler’s attorney, Stephen Kohn (a leading whistleblower advocate and major participant in the Dodd-Frank rulemaking process), said the SEC’s interpretation of “voluntary” contradicts the plain meaning of the Dodd-Frank Act and fails to acknowledge whistleblowers’ typical behavior and motivations. SEC investigations often remain confidential for years, he noted, so whistleblowers often choose to go to the media to inform the public about wrongdoing and create public pressure against bad actors – a finding substantiated by research on whistleblower activity.
“Whistleblowers go to the press,” said Kohn in a comment. “Media disclosures get the government to act. Congress authorized whistleblowers to submit original information through the news media. The SEC must recognize these rights. We will push this issue as hard as we can, because the public has a right to be alerted to corporate fraud as quickly and effectively as possible.”
