The SEC abused its discretion by moving whistleblower-policy goalposts in departure from past practice.
An appeals court remanded a whistleblower’s request for exemptions back to the SEC for reconsideration. The SEC had denied an award application, judging that the tip had not been made “voluntarily” and that the claimant was not entitled to an exemption. The D.C. Circuit concluded that the agency abused its discretion by “perfunctorily restating the statutory policy goals” when faced with a credible showing that an exception was in the public interest and consistent with past Commission practice (Doe v. SEC, No. 23-1124 (D.C. Cir.: May 1, 2026)).
Background. The whistleblower, a John Doe, tipped the news media to fraud at a large public company. On the basis of that information, the SEC opened an investigation, during which Congress and Commission staff contacted Doe for interviews and more information. Only after hiring new counsel who mentioned the possibility of a whistleblower award did Doe submit initial and supplemental Forms TCR. Then, after the SEC posted a Notice of Covered Action, Doe applied for an award.
The SEC denied Doe’s application because it came only after the agency had contacted him and thus was not made “voluntarily” as required by the statute and rules. Another basis was that the submission was untimely. The SEC summarily denied Doe’s request for exemption.
According to the petitioner, the denial on voluntariness grounds relied largely on a letter...
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