A federal appeals court ruled Friday against a whistleblower whose information helped the Securities and Exchange Commission (SEC) win both a criminal conviction and a multi-million dollar civil verdict against an investment broker that defrauded its customers.

Eugene Ross was a broker with the now-defunct investment firm Bear Stearns. Ross uncovered a massive fraud scheme in 2004 involving Amerindo Investment Advisors, Inc., which led to a successful SEC prosecution for misappropriation of over $5 million in investor funds. During the prosecution, Ross testified for the Department of Justice at the trial, and provided an internal memo that documented the fraud.

In the months immediately following Ross’s report of the fraud, Bear Stearns cut Ross’s pay by 30-percent, withheld commissions, and took steps to prevent Ross from opening new accounts.

The timeline following Ross’s disclosure to the SEC lies at the heart of Ross’s failed whistleblower claim.

Two Amerindo executives were convicted of fraud in 2008. Thereafter, the SEC pursued a civil action against the perpetrators. The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) became law in 2010 and created an overhaul of U.S. financial regulations as well as robust protections for industry whistleblowers.

In 2011, Ross submitted formal whistleblower disclosures to the SEC, in which he specifically incorporated his pre-Dodd-Frank statements to the SEC. In 2014, the trial court entered judgment in the...

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