How To Appeal SEC Whistleblower Award Determinations

Rules On How To Appeal SEC Whistleblower Award Determinations

Under the SEC whistleblower program, there are specific rules and procedures for how to appeal SEC whistleblower award determinations.  Because the SEC has discretion in determining SEC whistleblower awards, and due to all of the rules and procedures, appealing an adverse SEC whistleblower award determination can be a tricky, complicated, and lengthy process.

For these reasons, whistleblowers who wish to appeal SEC whistleblower award determinations should consider consulting with an experienced SEC whistleblower lawyer who has successfully navigated the SEC whistleblower appeals process.  Even a potential whistleblower who is first thinking about providing information to the SEC might want to consider hiring an SEC whistleblower attorney with successful appeals experience at the outset, just in case something unexpected happens down the line.

The SEC appealsappeal SEC whistleblower award process can generally be broken down into two separate parts:  (1) the administrative appeal part, and (2) the court appeal part.

The U.S. Congress felt that this process to appeal SEC whistleblower award decisions would “significantly contribute to make the program reliable for persons who are contemplating whether or not to blow the whistle on fraud.  It will add to the notion of an enforceable payout.”  Congress also “determined that enforceability and relatively predictable level of payout will go a long way to motivate potential whistleblowers to come forward and help the Government identify and prosecute fraudsters.”  (Report of the U.S. Senate Committee on Banking, Housing, and Urban Affairs entitled “The Restoring American Financial Stability Act of 2010” (April 30, 2010).)

Appealing A Preliminary SEC Whistleblower Award Determination

After the 90-day period to file award claims in a particular case has expired, the SEC’s Claims Review Staff (“CRS”) evaluates all timely award claims submitted on Forms WB-APP in that case.  Following that evaluation, the SEC’s Office of the Whistleblower sends the Claims Review Staff’s Preliminary Determination to each award claimant.  The Preliminary Determination sets forth a “preliminary assessment” of whether or not a claim should be granted.  If an award is recommended, the Preliminary Determination also sets forth the proposed percentage amount of the award.  (Rule 21F-11(d).)

A claimant has the right to challenge a Preliminary Determination through an administrative appeal process.  This is done by submitting a written response to the SEC’s Office of the Whistleblower.  (See Rules 21F-11(e)-(i).)  Sometimes this is referred to as “contesting” the Preliminary Determination.

The SEC whistleblower rules set forth procedures for requesting to review the materials that formed the basis for the Preliminary Determination, and for requesting a meeting with the Office of the Whistleblower.

The SEC whistleblower rules set forth different 60-day deadlines for when a written response to the Preliminary Determination must be submitted, depending on whether the claimant wishes to review the SEC’s materials or not, and when those materials are provided.

If an award claimant files a written response with the Office of the Whistleblower within the applicable deadline, the Claims Review Staff will consider it, and will issue a “Proposed Final Determination”.  The Claims Review Staff will then notify the Commission (which means the five SEC Commissioners in Washington, D.C.) of its Proposed Final Determination.

The Commission will then issue its Final Order stating whether an SEC whistleblower award will be granted, and in what percentage amount.

Appealing A Final SEC Whistleblower Award Order

A claimant who is unsatisfied with the Commission’s Final Order has the right to appeal it to either the U.S. Court of Appeals for the D.C. Circuit, or to the U.S. Court of Appeals for the Circuit where the claimant resides or has his or her principal place of business.  (Rule 21F-13; 15 U.S.C. §78u-6(f).)

The appeal must be made within thirty (30) days after the Commission issues its Final Order or final decision.  (15 U.S.C. §78u-6(f); SEC Rule 21F-13.)

According to the SEC whistleblower statute and the SEC’s Rules, not all aspects of SEC whistleblower awards can be appealed.  Some of the things that an award claimant can appeal are:

  • The SEC’s decision whether to issue an SEC whistleblower award,
  • The SEC’s decision as to whom to grant an award,
  • An award that to all recipients in the aggregate totals less than 10% of the amount collected by the SEC in the action or related actions, or
  • An award that to all recipients in the aggregate totals more than 30% of the amount collected by the SEC in the action or related actions.

(See 15 U.S.C. §78u-6(f); SEC Rule 21F-13.)

Additional Information

For more information about appealing SEC whistleblower awards, click on the link below:

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