WASHINGTON (CN) — A D.C. Circuit panel expressed doubt Monday that a whistleblower could receive million-dollar awards meant to incentivize tips to the Securities and Exchange Commission if they first bring the information to the news media.
A three-judge panel heard arguments from a pseudonymous whistleblower, referred to only as John Doe, who was rejected as a claimant in an SEC investigation that resulted in two other whistleblowers receiving $12 million in awards.
According to Stephen Kohn of Kohn and Colapinto, representing Doe, the Dodd-Frank Act requires the SEC to pay whistleblowers who “voluntarily provided original information to the commission and that led to” a successful enforcement action.
Under the 2010 statute, Doe provided original information of securities violations to the press, after which the SEC opened an investigation that it later credited to two separate whistleblowers whose information helped uncover violations that “otherwise would have been difficult to detect.”
Large portions of the underlying record — from the target of the whistleblower’s complaint to the SEC’s actions against it — are redacted, leaving the primary issue before the court whether the SEC correctly applied the statute’s whistleblower provisions.
Kohn argued Congress made clear that whistleblowers who voluntarily bring information to the media should receive monetary awards if that public reporting leads to an enforcement action.
He noted that under the SEC’s apparent reading...
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