## Facts

- John Doe was a Florida lawyer who served as in-house counsel for a company owned by “Individual One.”
- With assistance from Doe’s company, Individual One conducted a securities offering for another corporate entity, represented as raising funds to finance a project.
- In the course of Doe’s legal work, he learned that “Individual Two,” who was not formally tied to Doe’s company, had misappropriated money raised through the offering.
- Doe believed the misappropriation could make it impossible to complete the promised project and suspected that the company and/or Individual One might be engaged in fraud or other wrongdoing connected to the offering.
- Doe submitted a whistleblower tip to the Securities and Exchange Commission (SEC) reporting the misappropriation.
- After investigating, the SEC obtained enforcement results that included sanctions totaling tens of millions of dollars against Individual One, Individual Two, Doe’s company, and others.
- Doe applied to the SEC for a whistleblower award under Dodd-Frank based on the SEC’s enforcement outcomes.
- Because Doe obtained the information through his work as an attorney, SEC rules allowed an award only if the disclosure of client information was permitted by applicable state attorney-conduct rules (here, Florida’s confidentiality rule).
- Doe argued the disclosure was permitted under Florida Rule of Professional Conduct 4-1.6(c), which allows disclosure of confidential information to the extent reasonably believed necessary to serve the client’s interest, because reporting the misappropriation was the only way to save the project or its funds.
- Doe also relied on Florida Rule 4-1.6(b), which requires disclosure in certain circumstances to prevent a client from committing a crime, but the SEC concluded it did not apply on the record presented.
- The SEC denied Doe’s award application. Doe petitioned the U.S. Court of Appeals for the D.C. Circuit for review.

## Issues

1. Whether Doe’s disclosure was “reasonably necessary to serve the client’s interest” under Florida Rule 4-1.6(c) and therefore permitted for purposes of SEC Rule 21F-4(b)(4)(ii), making Doe eligible for a whistleblower award.
2. Whether Doe could obtain review based on Florida Rule 4-1.6(b)’s crime-prevention provision, or whether that theory was forfeited due to inadequate presentation on appeal.

## Decision

- The D.C. Circuit affirmed the SEC’s denial of Doe’s whistleblower award application.
- The court held the SEC reasonably determined that Doe’s disclosure was not permitted by Florida Rule 4-1.6(c) because the record showed Doe suspected his client of wrongdoing and intended his tip to subject the client to possible SEC investigation and enforcement, which was not “reasonably necessary” to serve the client’s interests.
- The court did not reach Doe’s alternative theory based on Florida Rule 4-1.6(b), concluding Doe had not properly raised that argument on appeal.
- Applying deferential review of the SEC’s decisionmaking, the court found the Commission’s reasoning and outcome adequately supported by the record and consistent with the governing regulations.

## Legal Principles

- Under the SEC’s Dodd-Frank whistleblower regulations, an attorney generally cannot receive an award for information obtained through representing a client unless the disclosure is permitted by applicable state bar rules or SEC attorney-conduct rules. 17 C.F.R. § 240.21F-4(b)(4)(ii).
- Florida Rule of Professional Conduct 4-1.6(c) allows disclosure of confidential client information only to the extent the lawyer reasonably believes it necessary to serve the client’s interest; a disclosure intended to trigger regulatory scrutiny of the lawyer’s own client is not reasonably characterized as serving that client’s interests.
- A petitioner must clearly and timely present legal theories in the proper manner during appellate review; an inadequately raised argument may be treated as forfeited.
- A court reviewing an SEC whistleblower-award denial will uphold the agency’s decision where the SEC offers a reasonable explanation grounded in the record and consistent with its regulations.

## Conclusion

The D.C. Circuit upheld the SEC’s denial of a whistleblower award to a Florida in-house attorney because the SEC reasonably concluded that reporting information learned through the attorney-client relationship—when the attorney suspected the client’s wrongdoing and aimed to expose the client to an SEC investigation—was not a disclosure “reasonably necessary to serve the client’s interest” under Florida Rule 4-1.6(c), and the court did not consider the attorney’s alternative crime-prevention argument under Rule 4-1.6(b) because it was not properly raised on appeal.


Doe v. Securities and Exchange Commission, 114 F.4th 687 (2024)