In Ross v. SEC, the D.C. Circuit Court of Appeals affirmed the SEC's denial of a whistleblower award, finding the claimant provided information to the SEC before the Whistleblower Program's cutoff date. Ross v. SEC,No. 21-1165 (D.C. Cir. May 27, 2022). The Whistleblower Program was created on July 21, 2010 as part of the Dodd-Frank Act. Per the Act, to be eligible for awards, whistleblowers must provide their "original information" (as defined in the Act) after the date of the Act's enactment. 15 U.S.C. § 78u-7(b).
In Ross, the whistleblower, Ross, was a stockbroker who provided information to a client regarding potentially fraudulent trading activity in her account. The client reported the suspicious activity to the DOJ and the SEC. Later, an assistant United States attorney requested to meet with Ross. Subsequently, Ross met with DOJ and SEC attorneys on several occasions, from 2005 to 2008. Ross submitted his formal whistleblower disclosures to the SEC in 2011, "incorporat[ing] by reference all the 'original information' voluntarily provided . . . since his discovery of the fraud." The SEC's subsequent enforcement action resulted in a $100 million judgment against the defendants in May 2014. The SEC rejected Ross' whistleblower claim on two grounds: (1) He did not meet the requirement that the information be provided "voluntarily," as required by the statute; and (2) Ross did not supply the original information after July 21, 2010. Ross challenged the SEC's interpretation of "original information" in its rule requiring that such information be provided to the SEC after July 21, 2010.
The D.C. Circuit Court of Appeals affirmed with little difficulty. The court found the SEC rule was consistent with the language of the Dodd-Frank Act requiring that "original information" had to be provided after July 21, 2010.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
