34 F.4th 1114
D.C. Cir.2022Background
- Eugene Ross, a former Bear Stearns broker, discovered suspected Amerindo fraud in 2004, informed his client and employer, and advised the client to retain counsel.
- The client reported to DOJ and the SEC; in June 2005 an AUSA requested to meet Ross and Ross thereafter met with DOJ/SEC several times (2005–2008) and testified in the criminal prosecution.
- The SEC filed a civil enforcement action in June 2005; civil proceedings resumed after criminal convictions and final judgment in favor of the SEC was entered in 2014 (≈ $100M relief).
- Ross filed formal whistleblower disclosures in 2011 that incorporated his earlier submissions (2005–2008); after the SEC published a Notice of Covered Action he applied for an award.
- The SEC Claims Review Staff denied the award, concluding Ross did not provide "original information" because his submissions to the Commission occurred before July 21, 2010, and raised voluntariness concerns; Ross appealed.
- The D.C. Circuit affirmed: holding the Dodd‑Frank implementation/transition provision, 15 U.S.C. § 78u‑7(b), unambiguously excludes submissions to the SEC made before July 21, 2010 from the statutory definition of "original information," so Ross was ineligible.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether submissions to the SEC before July 21, 2010 can qualify as "original information" under §78u‑6(a)(3) | Ross: the statute's definition of "original information" contains only three requirements and does not bar pre‑July 21, 2010 disclosures. | SEC: §78u‑7(b) (implementation/transition) expressly excludes information provided before July 21, 2010; Rule 21F‑4(b) follows that mandate. | Court: §78u‑7(b) and §78u‑6(a)(3) read together unambiguously require submissions be after July 21, 2010; affirmed SEC. |
| Whether Ross satisfied the statute's "voluntary" requirement by reporting to his client (who reported to the SEC) or later meeting with govt at AUSA's request | Ross: voluntariness satisfied via disclosure to client who relayed info or warrants waiver given extraordinary circumstances. | SEC: Ross did not provide info to the Commission before a government request; waiver unwarranted and would frustrate deterrence purpose. | Court: Did not decide substance of voluntariness challenge because Ross failed the "original information" requirement. |
| Whether Digital Realty alters the interpretation of "original information" or invalidates Rule 21F‑4(b) | Ross: Digital Realty's interpretation of "whistleblower" undermines the SEC's regulatory definitions. | SEC: Digital Realty concerned a different definitional provision; it does not affect §78u‑7(b) timing requirement. | Court: Distinguished Digital Realty; that case does not affect the separate timing provision for "original information." |
| Proper standard of review and deference to SEC rulemaking (Chevron) | Ross: SEC rule conflicts with statute (no extra timing condition). | SEC: Rule implements explicit congressional transition instruction and is within delegated authority. | Court: Applied Chevron; found Congress unambiguously spoke (Chevron Step 1) and the SEC followed the statute. |
Key Cases Cited
- Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015) (upheld exclusion of pre‑July 21, 2010 submissions from "original information")
- Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767 (2018) (held anti‑retaliation "whistleblower" definition requires reporting to the SEC)
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (framework for judicial deference to agency statutory interpretations)
- SoundExchange, Inc. v. Copyright Royalty Bd., 904 F.3d 41 (D.C. Cir. 2018) (application of Chevron step framework)
- Doe v. SEC, 28 F.4th 1306 (D.C. Cir. 2022) (context on SEC's adoption of whistleblower program rules)