Introduction
The Dodd-Frank Wall Street Reform and Consumer Protection Act allows whistleblowers to appeal denials of SEC whistleblower awards. This appeals process ensures that the SEC properly implements the mandatory award provisions of the Dodd-Frank Act and that qualified whistleblowers receive the awards they are entitled to, via review by the federal Courts of Appeals.
However, to date, appellate courts have almost uniformly upheld SEC denials. Many denials arise from errors made by whistleblowers during the application and appeal process, rather than on the merits of the whistleblower’s claims. Issues with the quality and sourcing of whistleblower information have also led to denied appeals.
A review of the case law reveals four recurring issues that have led to unsuccessful appeals of SEC award denials.
Appellate courts have consistently held that arguments, issues, or theories on which a whistleblower bases their appeal must have been previously raised to the SEC or in a plaintiff’s opening brief. The appellate courts typically disregard arguments raised for the first time on appeal
The Fifth Circuit established an exception to this rule in Barr v. SEC, No. 23-60216, 2024 U.S. App. LEXIS 22185 (5th Cir. Aug. 30, 2024). The court held that a whistleblower could raise an issue on appeal in a matter where the whistleblower did not have a previous opportunity to challenge the holding before the SEC. Nevertheless, the appeal in Barr...
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