D.C. Circuit: No Award to Whistleblower Who Made Disclosure Before Enactment of SEC’s Whistleblower Program
On May 27, 2022, the D.C. Circuit Court of Appeals affirmed an order by the Securities and Exchange Commission (“SEC”) denying a whistleblower award under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), holding that information provided to the SEC prior to Dodd-Frank’s enactment did not qualify for a whistleblower award under the statute. Ross v. SEC, No. 21-1165 (D.C. Cir. 2022).
Plaintiff-appellant Ross appealed the SEC’s denial of his application for a whistleblower award. Between 2005 and 2008, Ross provided information to the SEC about securities violations that ultimately resulted in a successful SEC enforcement action in which defendants were ordered to pay approximately $100 million.
Among other financial reforms, Dodd-Frank authorized the SEC to give monetary awards to “whistleblowers who voluntarily provided original information to the Commission” when that information led to a successful enforcement resulting in sanctions of over $1 million. The regulations implementing Dodd-Frank define “original information” in the whistleblower context as, among other requirements, information provided to the SEC “for the first time after July 21, 2010,” Dodd-Frank’s date of enactment.
The D.C. Circuit affirmed the SEC’s denial, holding that the information Ross provided did not meet the Dodd-Frank definition of “original information” because it was first provided to the SEC prior to July 21, 2010.
This ruling confirms that the requirements in Dodd-Frank’s whistleblower award provisions will be strictly construed.