As discussed in a Law360 article by Ed Beeson, the Second Circuit Court of Appeals will decide in Stryker v. SEC, No. 13-cv-4404, whether the SEC needs to pay Dodd-Frank whistleblower bounties to tipsters who provided information to the SEC prior to July 21, 2010, the date the law was enacted.
In this case, plaintiff-appellant, Larry Stryker, allegedly provided numerous tips to the SEC that ultimately led to an enforcement action resulting in around $24 million. Under Dodd-Frank whistleblower bounty provision, Stryker claims that he would ordinarily be entitled to an award of between 10 and 30 percent of that figure. However, as set forth in the SEC’s denial, because Stryker provided information to the SEC before Dodd-Frank was enacted, he did not receive any bounty award. While Stryker claims that the date on which a whistleblower submits information to the SEC has no bearing on his eligibility to receive an award, the SEC has responded that the statute and legislative history demonstrate that Congress intended that the bounty program would not apply to those who provided tips before the law was passed. The SEC also argues that even if the statue is ambiguous, the Court should give Chevron deference to its interpretation.
As noted in Mr. Beeson’s Employment Law 360 article, Steven J. Pearlman, co-head of Proskauer’s Whistleblowing & Retaliation Practice Group, has explained that the Stryker case is significant because it presents the possibility that the Second Circuit could “open the floodgates” by inviting payouts to pre-Dodd-Frank tipsters that led to substantial enforcement actions. This, in turn, could “drain” the account that the SEC has established to pay out whistleblower awards.
We will continue to monitor this case and will report back to our loyal readers when a decision is issued. Stay tuned …