A federal appeals court has denied the whistleblower claims of a former Royal Bank of Scotland (RBS) employee seeking compensation for a tip he said generated more than $10 billion worth of settlements.
The U.S. Court of Appeals for the Second Circuit ruled Thursday that Victor Hong was not entitled to receive compensation for information on wrongdoing he provided to the Securities and Exchange Commission (SEC) he said was used by other agencies. Hong was seeking a portion of more than $10 billion in separate settlements RBS entered with the Department of Justice (DOJ) and Federal Housing Finance Agency (FHFA) in 2018 and 2017, respectively.
Of the agencies, only the SEC has a program that offers whistleblowers an avenue to receive a percentage of a settlement if they provided substantive information. The court ruled since the SEC did not bring either action, Hong was not entitled to receive a share of those settlements. The SEC whistleblower program says the agency must bring a “covered judicial or administrative action” for a whistleblower to be eligible to receive compensation.
“We further decide that, contrary to Hong’s arguments, investigative and information-sharing activities engaged in by the SEC are not ‘covered judicial or administrative action[s] brought by the commission under the securities laws’ or ‘actions’ as to which the DOJ and FHFA settlements can be considered ‘related,’” said the unanimous three-judge ruling, written by U.S. Circuit Judge Susan Carney....
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