Doe v. Securities and Exchange Commission

John Doe (plaintiff) was a Florida lawyer who worked as in-house counsel for a company owned by an individual (Individual One). With the company’s help, Individual One made a securities offering for another corporate entity, supposedly to fund a project. During his work, Doe learned that an individual not formally tied to the company (Individual Two) had misappropriated money raised by the offering, potentially making it impossible to complete the promised project. Doe realized the misappropriation might also suggest that the company or Individual One was committing fraud. Doe submitted a whistleblower tip to the Securities and Exchange Commission (SEC) (defendant) regarding Individual Two’s misappropriation. Following an investigation, the SEC issued tens of millions of dollars in sanctions against Individual One, Individual Two, the company, and others. Doe applied to the SEC for a whistleblower award. Under the Dodd-Frank Act, because Doe’s tip came from his work as an attorney, Doe was entitled to an award only if Florida’s attorney-conduct rules permitted this disclosure of his client’s information. Doe argued his disclosure was allowed under Florida Rule 4-1.6(c), which permitted disclosing confidential client information if necessary to serve the client’s interest. Doe claimed the disclosure served the company’s interest because it was the only way to save the project, or at least its funds. The SEC determined that, because Doe knew his tip might reveal that the company and Individual One were committing fraud, the disclosure likely benefited the investors’ interests but not the interest of Doe’s actual client—the company. Thus, the SEC held that this rule did not permit Doe’s whistleblower disclosure. Alternatively, Doe argued that his disclosure was permitted under Florida Rule 4-1.6(b), which required an attorney’s disclosure of confidential information if necessary to prevent a client from committing a crime. The SEC found this rule was inapplicable because Doe only suspected his client of a crime and did not know with certainty that his disclosure was necessary to stop anything. Thus, the SEC denied Doe’s whistleblower-award application. Doe appealed the denial to the United States Court of Appeals for the District of Columbia Circuit. The court found that Doe had not properly raised his argument regarding the crime-prevention rule on appeal and considered only Doe’s argument that his disclosure was permitted because it was necessary to serve the company’s interest.