Court Opinion

ID: 4454385
Source: CourtListenerOpinion
Date Created: 2019-11-08 16:00:19.740634+00
Date Added: 2024-06-11T14:25:25.264868
License: Public Domain

18‐1124(L)
     Kilgour v. United States Securities and Exchange Commission

     18‐1124(L)
     Kilgour v. United States Securities and Exchange Commission

 1                            UNITED STATES COURT OF APPEALS
 2                                FOR THE SECOND CIRCUIT
 3                                          August Term, 2018
 4                (Argued: January 22, 2019                Decided: November 8, 2019)
 5                                   Docket Nos. 18‐1124, 18‐1127

 6
 7
 8                         COLIN KILGOUR, DANIEL WILLIAMS, JOHN DOE
 9                                        Petitioners,

10                                                    v.

11                   UNITED STATES SECURITIES AND EXCHANGE COMMISSION,
12                                       Respondent.
13
14
15   Before:        KEARSE, SACK, LIVINGSTON, Circuit Judges.

16          These two petitions—one by John Doe, the other by Colin Kilgour and

17   Daniel Williams—are from the denial by the United States Securities and

18   Exchange Commission of ʺwhistleblowerʺ awards. The petitioners sought the

19   awards following a $50 million settlement the SEC reached with Deutsche Bank

20   AG that resolved an enforcement action against the bank. The petitioners assert

21   that the SEC erred in basing the denials of their claims on its determination that

22   the petitioners did not provide ʺoriginal information that led to a successful
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                                                   Kilgour v. United States Securities and Exchange SEC

 1   enforcement action,ʺ a prerequisite for obtaining a whistleblower award under

 2   the Securities Exchange Act and the SEC’s regulations implementing the Act; and

 3   that the SEC erred procedurally during its decision‐making process. We

 4   disagree. The petitions are therefore DENIED.

 5                                          COLIN KILGOUR, Toronto, Ontario, Canada,
 6                                          Pro se Petitioner.
 7                                          Daniel Williams, Toronto, Ontario, Canada,
 8                                          Pro se Petitioner.
 9                                          DAVID E. KOVEL, Kirby McInerney LLP,
10                                          New York, NY, for John Doe, Petitioner.
11                                          WILLIAM K SHIREY (Robert B. Stebbins,
12                                          Stephen Yoder, Michael A. Conley, on the
13                                          brief), for the United States Securities and
14                                          Exchange Commission, Washington, D.C.,
15                                          Respondent.
16

17   SACK, Circuit Judge:
18
19         In 2015, the United States Securities and Exchange Commission (the ʺSECʺ)

20   reached a settlement agreement with Deutsche Bank AG (ʺDBʺ) after the SEC

21   discovered misstatements in DBʹs financial statements. Previously, between 2010

22   and 2014, while the SEC was investigating DB, petitioners ʺJohn Doe,ʺ1 Colin

23   Kilgour, and Daniel Williams disclosed information to the SEC that they thought

      1 We have adopted the partiesʹ practice of keeping John Doe and two other claimantsʹ
     identities confidential.
                                               2
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                                                  Kilgour v. United States Securities and Exchange SEC

 1   would be helpful to that investigation. After the settlement, the petitioners filed

 2   applications with the SEC for ʺwhistleblowerʺ awards. Their applications were

 3   denied.

 4         The petitioners ask that we set aside the SEC's denial of their award

 5   applications and instruct the SEC to issue whistleblower awards to them based

 6   on the value of the information provided to the SEC. For the reasons that

 7   follow, we deny the petitions.

 8                                    BACKGROUND

 9         I.     The Deutsche Bank Case and Settlement

10         During 2005 and 2006, DB purchased $98 billion of leveraged super senior

11   tranches in more than thirty collateralized debt obligations (the ʺLSSʺ) as credit

12   protection. The LSS were leveraged eleven times, i.e., the sellers of the protection

13   posted only 9% of the total value of the LSS as collateral. In late 2008 and early

14   2009, DB began overvaluing the LSS by misstating in their financial records the

15   associated ʺgap riskʺ—the risk that the market value of its credit protection could

16   exceed the available collateral posted by the sellers. This overvaluation was

17   reflected in misstatements in DBʹs financial statements. On May 26, 2015, the

18   SEC both instituted agency cease‐and‐desist proceedings against DB with respect

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                                                     Kilgour v. United States Securities and Exchange SEC

 1   to these statements and accepted a settlement offer from DB in which DB agreed

 2   to pay a penalty of $55 million.

 3          II.    The Investigation

 4          Between 2010 and 2014, i.e., before the SEC cease‐and‐desist proceedings

 5   were instituted, the SEC obtained information from several persons (the

 6   ʺClaimantsʺ) regarding the potential wrongdoing by DB. Three of the

 7   Claimants—John Doe, Colin Kilgour, and Daniel Williams – are the petitioners in

 8   this case.2

 9                 a. John Doe

10          On or about June 7, 2010, the Enforcement Division of the SEC received

11   information from DB’s counsel, after Claimant 1, a DB employee, filed an internal

12   complaint, to the effect that DB was overstating the value of certain assets ʺto

13   improve the appearance of [DBʹs] financial performanceʺ to its shareholders, the

14   market and the investing public. Declaration of Amy Friedman, Assistant

15   Director of the SEC Enforcement Division, July 27, 2016 (ʺFriedman

16   Declarationʺ), at 3‐4; Joint Appendix (ʺJAʺ) 3086‐87. Following this disclosure,

17   the SEC opened an investigation of DB, and arranged for an in‐person interview

     2In this opinion, we refer to Claimants 1, 2, and 3. In doing so, we refer to persons
     other than John Doe, Colin Kilgour, and Daniel Williams.
                                                 4
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                                                   Kilgour v. United States Securities and Exchange SEC

 1   with Claimant 1. According to the SEC, it was Claimant 1ʹs ʺearly identification

 2   of the Gap Risk issue that led the enforcement staff to focus on [that] issue in its

 3   investigation, and it was [that] issue that formed the cornerstone of the charges

 4   ultimately brought by the [SEC] against [DB] in the enforcement action.ʺ Id. at 3;

 5   JA 3087.

 6         On September 30, 2010, petitioner John Doe met with enforcement staff

 7   from the SECʹs Complex Financial Instruments Unit (ʺCFIUʺ), a group that was

 8   part of the SECʹs Enforcement Division but whose membership did not overlap

 9   with the team working on the DB matter (ʺDB teamʺ). The SEC and Doe offer

10   different characterizations of this meeting. According to a declaration provided

11   by the Deputy Chief of the CFIU, Reed Muoio: ʺ[Doe] appeared to be very

12   disjointed and had difficulty articulating credible and coherent information

13   concerning any potential violation of the federal securities laws . . . . [He]

14   brought with [him] to the meeting a wet brown bag containing what [he] claimed

15   to be evidence.ʺ Declaration of Reid Muoio, Deputy Chief of CFIU, July 11, 2017

16   (ʺMuoio Declarationʺ), at 1; JA 4059.

17         Doe, for his part, contends that he provided credible, helpful information.

18   For example, he asserts that during his meeting with the CFIU he gave a

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                                                 Kilgour v. United States Securities and Exchange SEC

 1   presentation that explained how certain restructuring efforts by DB would

 2   reshape the gap risk of the LSS. Doe sent several follow‐up emails to the CFIU

 3   staff in October 2010, but Deputy Chief Muoio and his staff had concluded that

 4   Doe was ʺnot a credible source of information.ʺ Id. Having so concluded, Muoio

 5   and his staff declined to forward emails they received from Doe to other staff in

 6   the Division of Enforcement. Id. Meanwhile, the SEC assigned two TCR3

 7   numbers (numbers used to track whistleblower tips in its database) to Doe.

 8         In March 2011, Claimant 2 began providing the DB team with information

 9   concerning DBʹs gap risk calculations and made multiple submissions to the

10   team in June and July 2011. The DB team found Claimant 2 to be a highly

11   credible source of information, and the information that Claimant 2 provided

12   proved, according to SEC enforcement officials, to be invaluable to their

13   investigation of DB.

14         On July 29, 2011, Doe sent another email to the CFIU staff, which they

15   forwarded to the DB team on August 3, 2011. This was the first time the DB team

16   had seen any information provided by Doe. However, Doeʹs email contained ʺno

     3ʺTCRʺ stands for ʺTip, Complaint or Referral.ʺ See United States Securities and
     Exchange Commission, Form TCR (Aug. 2011), https://www.sec.gov/files/formtcr.pdf.
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                                                  Kilgour v. United States Securities and Exchange SEC

 1   new information and did not help advance the [DB] [i]nvestigation.ʺ Friedman

 2   Declaration, at 8; JA 3092.

 3         In November 2011 and December 2012, Claimant 2 made two additional

 4   submissions which were both considered by SEC enforcement personnel to be

 5   helpful to the DB team. The submissions provided information about how the

 6   gap risk calculation affected DBʹs results on their late 2008 and early 2009

 7   financial statements, and how something called the ʺMontreal Accordʺ affected

 8   the gap risk calculation. At that point, the DB team had received no such

 9   information from Doe.

10         On March 11, 2013, Doe made additional submissions to the DB team,

11   including the email message that he had sent to the CFIU staff back in October

12   2010. But the DB team considered those submissions, like Doeʹs prior

13   submissions, to be unhelpful. At that point, ʺthe investigation had already been

14   ongoing for over two and a half years,ʺ and the information contained in Doeʹs

15   submission was ʺlargely duplicative of other information that [the DB team] had

16   already received or had learned.ʺ Friedman Declaration at 8; JA 3092. Doeʹs re‐

17   sent October 2010 email, while referencing the Montreal Accord, ʺprovided very

18   little detailʺ and attached only ʺpublicly‐available documents.ʺ Additional

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                                                 Kilgour v. United States Securities and Exchange SEC

 1   Declaration of Amy Friedman, July 11, 2017 (ʺAddʹl Friedman Declarationʺ), at 7;

 2   JA 3827.

 3          On April 26, 2013, Doeʹs counsel contacted the DB team to inform them

 4   that Doe ʺhad [additional] information that might aidʺ the investigation. Addʹl

 5   Friedman Declaration, at 13; JA 3833. The DB team met with Doe but found the

 6   information to be redundant. The DB team, like the CFIU in September 2010,

 7   thought Doeʹs presentation was ʺvery difficult to follow, as [he] jumped from

 8   topic to topic.ʺ Id. at 7.

 9          On June 7, 2013, Doe made his final submission, attaching various internal

10   DB documents. Again, these documents were considered by the DB team to be

11   largely duplicative of documents the DB team had received from Claimant 2 or

12   from DB itself when it responded to SEC document requests, and therefore

13   unhelpful.

14                 b. Colin Kilgour and Daniel Williams

15          On June 21, 2013, Claimant 2 submitted an expert report to the DB team,

16   which had been prepared by the Kilgour Williams Group (ʺKWGʺ), a consulting

17   firm owned by petitioners Colin Kilgour and Daniel Williams. According to the

18   DB team, this expert report was ʺdetailed and comprehensive,ʺ ʺabsolutely

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                                                   Kilgour v. United States Securities and Exchange SEC

 1   critical to [the] investigation,ʺ and used ʺin connection with [the] proffer session

 2   with [DB] and ensuing settlement negotiations with the company.ʺ Id. at 9‐10.

 3   After submitting the report, and until July 2014, KWG continued to provide

 4   information to the SEC and to respond to questions from the DB team that

 5   ʺallowed the [team] to strengthen the SECʹs position vis‐à‐vis [DB].ʺ Id.

 6         In May 2014, Claimant 2 and his wife divorced. The state court overseeing

 7   the divorce proceedings awarded half the proceeds of any whistleblower payout

 8   Claimant 2 might receive to his wife. The court also ordered that Claimant 2 pay

 9   ʺall costs and expenses he had incurred or will incur with . . . [KWG].ʺ State

10   Court Divorce Judgment August 10, 2015, at 10; JA 411.

11         On August 11, 2014, Claimant 2 authorized Kilgour and Williams to make

12   an independent whistleblower submission so that they too could claim an award

13   from the SEC. The next day, they jointly submitted an SEC Form TCR in an

14   attempt to attain whistleblower status. This Form TCR did not provide any new

15   information; it reiterated the information that KWG had been commissioned to

16   provide on behalf of Claimant 2 between June 2013 and July 2014 and which had

17   previously been supplied to the SEC.

18

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                                                   Kilgour v. United States Securities and Exchange SEC

 1         III.   SEC Whistleblower Proceedings and the Award Order

 2         After DB agreed to pay the $55 million civil fine to the SEC, nine

 3   whistleblower claimants (including the three petitioners in the case at bar) came

 4   forward to claim awards. On July 27, 2016, the SECʹs Claims Review Staff

 5   (ʺCRSʺ) issued a Preliminary Determination (ʺPDʺ), as is required by Rule 21F‐

 6   10(d), recommending awards for Claimants 1 and 2 and rejecting all other

 7   claimantsʹ applications.

 8         Pursuant to SEC regulations, any claimant may submit ʺa written response

 9   to the Office of the Whistleblower setting forth the grounds for [an] objection to

10   either the denial of an award or the proposed amount of an award.ʺ Rule 21F‐

11   10(e). To facilitate such objections, the SEC also permits claimants to request to

12   review the materials ʺthat formed the basis of the . . . [PD].ʺ Rule 21F‐10(e)(1)(i).

13         After the issuance of the PD, Doe requested that the CRS produce all

14   materials upon which it based its PD. The CRS produced a record consisting of

15   Doeʹs own submissions to the SEC and the Friedman Declaration, dated July 27,

16   2016. The declaration set forth the timing of the CFIU intake and subsequent

17   forwarding of Doeʹs information to the DB team, asserting that by the time the

18   DB investigators received Doeʹs information, it was duplicative of information

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                                                  Kilgour v. United States Securities and Exchange SEC

 1   that was publicly available or that they had already received from other sources

 2   (primarily Claimant 2).

 3         Doe objected to the PD on several grounds, arguing that the CFIU staff

 4   should have forwarded his information to the DB investigators and that it was

 5   unfair for the SEC to penalize him for their failure to do so; that the CRS should

 6   have provided Doe with the other Claimantsʹ materials on which Friedman had

 7   relied in preparing her declaration; and that Doe had, in any event, submitted

 8   important, original information, and therefore deserved credit as a source of that

 9   information. The SEC responded with the Muoio Declaration and a second

10   declaration from Friedman.

11         On November 30, 2017, the SEC issued an ʺOrder Determining

12   Whistleblower Award Claimsʺ for the DB matter. SPA 1. Under the order,

13   Claimant 1 and Claimant 2 were each to receive an award of about $8 million.

14   Each of the other claimants — including these petitioners — would not receive

15   an award.

16         With respect to Doeʹs application, the SEC determined that ʺthe

17   information provided by [Doe] was not of a higher quality than the information

18   provided by Claimant #2 (or Claimant #1)ʺ and that ʺthe [DB team] received

                                             11
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                                                       Kilgour v. United States Securities and Exchange SEC

 1   information from Claimant 2 (as well as Claimant 1) before receiving any

 2   information from [Doe].ʺ SEC Order, November 30, 2017, SPA 16. The SEC

 3   therefore concluded that ʺthe record firmly demonstrates that [Doe] did not

 4   provide information that led to the success of the [DB action].ʺ Id.

 5            Regarding Kilgourʹs and Williamsʹs claim, the SEC found, inter alia, that

 6   the information the two had included in their August 2014 Form TCR was not

 7   ʺoriginal informationʺ because the SEC already had obtained it from Claimant 2

 8   in his submissions. The SEC further decided that neither petitioner qualified as

 9   the ʺoriginal sourceʺ of that information because they had both previously

10   interacted with the SEC in their capacity as Claimant 2ʹs experts. The SEC also

11   determined that Kilgourʹs and Williamsʹs Form TCR submission did not lead to

12   the success of the enforcement action.

13                                          DISCUSSION

14            The petitioners Doe, Kilgour, and Williams now ask us to overturn the

15   SECʹs denials of their ʺwhistleblowerʺ4 award applications. We must address

     4   The Securities Exchange Act provides, in relevant part:
              The term ʺwhistleblowerʺ means any individual, or 2 or more individuals
              acting jointly, who provides information relating to a violation of this Act

                                                  12
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                                                    Kilgour v. United States Securities and Exchange SEC

 1   four issues in order to resolve the petitions: First, whether the SEC can, should,

 2   or must be equitably estopped from denying Doe his requested whistleblower

 3   award. Second, whether the SEC violated Doeʹs Due Process rights by failing to

 4   provide him with materials to which he asserts he was entitled in order to

 5   contest the CRSʹs PD. Third, whether the SEC acted arbitrarily and capriciously

 6   in granting an award to Claimant 2, but not Doe. And fourth, whether Kilgour

 7   and Williams were entitled to a whistleblower award for the information that

 8   they submitted.

 9      I.      Standard of Review

10           We review the Commissionʹs whistleblower award determinations ʺin

11   accordance with section 706 of [the Administrative Procedure Act].ʺ 15 U.S.C.

12   § 78u‐6(f). Accordingly, this Court may set aside an agency action if it is

13   ʺarbitrary, capricious, an abuse of discretion, or otherwise not in accordance with

14   the law,ʺ or if it is ʺunsupported by substantial evidence.ʺ 5 U.S.C. § 706(2)(A) &

15   (E). Section 702(2)(A) provides for ʺa deferential standard of reviewʺ where ʺwe

16   cannot substitute our judgment for that of the agency.ʺ Nat. Res. Def. Council, Inc.

             to the Commission, in a manner established by rule or regulation by the
             Commission.

     15 U.S.C. § 78u‐6(a)(6).

                                               13
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                                                     Kilgour v. United States Securities and Exchange SEC

 1   v. FAA, 564 F.3d 549, 555 (2d Cir. 2009). In reviewing the SECʹs findings of fact

 2   for ʺsubstantial evidenceʺ we require that they be supported by ʺmore than a

 3   scintilla of evidence,ʺ which may be ʺless than a preponderance.ʺ Cellular Tel. Co.

 4   v. Town of Oyster Bay, 166 F.3d 490, 494 (2d Cir. 1999).

 5      II.      Legal Framework

 6            In 2010, as part of the Dodd‐Frank Act, Congress amended the Securities

 7   Exchange Act of 1934 to establish a whistleblower award program. See 15 U.S.C.

 8   § 78u‐6. Under this program, the SEC ʺshall pay an award or awards to 1 or

 9   more whistleblowers who voluntarily provided original information to the

10   Commission that led to the successful enforcement of [a] covered judicial or

11   administrative action.ʺ Id. § 78u‐6(b)(1). To be eligible for an award, a

12   whistleblower must submit information in accordance with the SECʹs rules and

13   regulations. Id. § 78u‐6(a)(6), (c)(2)(D); see also id. § 78u‐6(j) (authorizing the SEC

14   to issue rules and regulations to implement the program).

15            In 2011, the SEC adopted rules establishing the procedures and criteria for

16   whistleblower awards. See Securities Whistleblower Incentives and Protections,

17   76 Fed. Reg. 34,300 (June 13, 2011) (codified at 17 C.F.R. Parts 240 and 249).

18   These rules limit awards to whistleblowers who ʺvoluntarily provide the

                                                14
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                                                    Kilgour v. United States Securities and Exchange SEC

 1   Commission with original information that leads to the successful enforcement

 2   by the Commission of a Federal court or administrative action.ʺ 17 C.F.R. §

 3   240.21F‐3(a).

 4         ʺOriginal informationʺ is defined as information ʺ[n]ot already known to

 5   the Commission from any other source, unless [the applicant is] the original

 6   source of the information.ʺ 17 C.F.R. § 240.21F‐4(b)(1)(ii). The SEC considers an

 7   applicant to be an ʺoriginal sourceʺ of information that the SEC has obtained

 8   from another source if ʺthe other source obtained the information from [the

 9   applicant or her] representative.ʺ Id. § 240.21F‐4(b)(5). The rules further define

10   information ʺlead[ing] to successful enforcementʺ as information that (1) ʺwas

11   sufficiently specific, credible, and timely to causeʺ the SEC to open, reopen, or

12   expand an examination or investigation, leading to a ʺsuccessful judicial or

13   administrative action based in whole or in part on conduct that was the subject of

14   [the applicantʹs] original information,ʺ or (2) concerned ʺconduct that was

15   already under examination or investigationʺ and its ʺsubmission significantly

16   contributed to the success of the action.ʺ Id. § 240.21F‐4(c)(1)‐(2). ʺA

17   whistleblower must be an individual. A company or another entity is not

18   eligible to be a whistleblower.ʺ Id. § 240.21F‐2(a)(1).

                                               15
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                                                   Kilgour v. United States Securities and Exchange SEC

 1         Rule 21F‐9 governs the procedures for submitting information as the basis

 2   of a claim for a whistleblower award. 17 C.F.R. § 240.21F‐9; see also id. § 240.21F‐

 3   2(a)(2) (eligibility for awards conditioned on compliance with these procedures,

 4   among others). It provides that to be considered a whistleblower for these

 5   purposes, an individual must submit her or his information to the SEC through

 6   the SECʹs website or in a ʺForm TCR (Tip, Complaint or Referral)ʺ mailed or

 7   faxed to the SEC. Id. § 240.21F‐9(a). This submission must be accompanied by a

 8   declaration ʺunder penalty of perjury . . . that [the] information [provided] is true

 9   and correct to the best of [the claimantʹs] knowledge and belief.ʺ Id. § 240.21F‐

10   9(b). ʺ[T]he Commission may, in its sole discretion, waive any of these

11   procedures based upon a showing of extraordinary circumstances.ʺ Id.

12   § 240.21F4‐8(a).

13      III.   Can the SEC Be Equitably Estopped from Denying Doeʹs
14             Whistleblower Award?
15
16         Doe does not contest the SECʹs factual determination that when the DB

17   team received his submissions, the information was duplicative of information

18   the team had already obtained from other sources. Doe argues, though, that ʺthe

19   Commission should be equitably estopped from claiming it did not rely on Doeʹs

20   September/October 2010 submissions and be directed to issue an award based on

                                              16
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                                                    Kilgour v. United States Securities and Exchange SEC

 1   the contribution that information made to their investigation (when provided by

 2   other sources).ʺ Petʹr Doe Br. 33. In other words: Doe argues that

 3   notwithstanding the fact that his submissions did not contribute to the success of

 4   the enforcement action against DB, he should be entitled to a whistleblower

 5   award because the information in those submissions did. We disagree.

 6         In Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), the

 7   Supreme Court concluded that ʺa claimant may not assert a monetary claim of

 8   estoppel against the government when the funds used to pay this claim will

 9   come from the Federal Treasury, but are not authorized by statute.ʺ Dun &

10   Bradstreet Corp. Found. v. U.S. Postal Serv., 946 F.2d 189, 195 (2d Cir. 1991) (citing

11   Office of Personnel Management v. Richmond, 496 U.S. at 423‐25.). ʺAccordingly, an

12   estoppel claim that will require the payment of government funds in

13   contravention of a statute will fail.ʺ Id. This is such a claim.

14         First, the funds for the award that Doe requests would come from the

15   Securities and Exchange Commission Investor Protection Fund in the Federal

16   Treasury, as do all SEC whistleblower awards. See 15 U.S.C. § 78u‐6(g)(1) (ʺThere

17   is established in the Treasury of the United States a fund to be known as the

18   ʹSecurities and Exchange Commission Investor Protection Fundʹʺ).

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                                                     Kilgour v. United States Securities and Exchange SEC

 1         Second, if we were to grant Doe’s petition on the grounds of equitable

 2   estoppel, we would be compelling the SEC, in effect, to issue Doe an award that

 3   is not authorized by statute. In his reply brief, Doe argues that awarding him

 4   whistleblower funds would not contravene the Securities Exchange Act because

 5   the relief sought—granting Doeʹs award application—is authorized by statute.

 6   He contends that ʺ[i]n crediting the provider of the original information the

 7   statute . . . requires that the SEC ʹshall payʹ for ʹoriginal informationʹ that led to a

 8   successful conclusion.ʺ Pet’r Doe Reply 11. Doe argues that therefore, ʺso long

 9   as a claimant provided original information, and that information aided a

10   successful enforcement action, payment is authorized and non‐discretionary.ʺ Id.

11   Not so.

12         We do not decide whether that the SEC erred in its determination that Doe

13   was not credible. As the SEC notes, the ʺCFIU staff and the DB team reached

14   generally similar conclusions that Doe did not have helpful information

15   regarding Deutsche Bank.ʺ SEC Br. at 30. But even if we assume that some of the

16   information Doe provided was also provided by Claimant 2 and ultimately led to

17   the success of an enforcement action, the statute does not authorize the SEC to

18   give Doe an award under the circumstances.

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                                                     Kilgour v. United States Securities and Exchange SEC

 1         ʺWhen Congress has entrusted rulemaking authority under a statute to an

 2   administrative agency, we evaluate the agencyʹs implementing regulations under

 3   Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).ʺ

 4   Encarnacion ex rel. George v. Astrue, 568 F.3d 72, 78 (2d Cir. 2009); see also Stryker v.

 5   SEC, 780 F.3d 163, 165 (2d. Cir. 2015) (applying the ʺfamiliar two‐step framework

 6   set forth in Chevronʺ to review the SECʹs denial of a whistleblower award where

 7   the ruling was based on rules promulgated by the SEC to implement the Dodd‐

 8   Frank Act). ʺChevron requires us to apply a two‐step inquiry to an agencyʹs

 9   interpretation of a statute. At the first step of the analysis, a reviewing court

10   must ask whether Congress has directly spoken to the precise question at issue.ʺ

11   Cappetta v. Commʹr of Soc. Sec. Admin., 904 F.3d 158, 166 (2d Cir. 2018) (internal

12   quotation marks omitted). ʺIf the statute is ambiguous, then at the second step

13   the question for the court is whether the agencyʹs answer is based on a

14   permissible construction of the statute . . . in other words, whether the agencyʹs

15   interpretation is reasonable.ʺ Id. (internal quotation marks omitted).

16         The Act provides that the Commission ʺshall pay an awardʺ to a

17   whistleblower ʺwho voluntarily provided original information to the

18   Commission that led to the successful enforcement of the covered judicial or

                                                19
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                                                     Kilgour v. United States Securities and Exchange SEC

 1   administrative action.ʺ 15 U.S.C. § 78u‐6(b)(1). The statute thus seems to require

 2   that the information as provided by the whistleblower must have ʺled to the

 3   successful enforcement action.ʺ And, assuming arguendo that Dodd‐Frank is

 4   ambiguous on this question, ʺwe defer to the SECʹs interpretation of Dodd‐Frank

 5   at Step 2.ʺ Stryker, 780 F.3d at 166. The SEC has enacted Rule 240.21F‐4(c), which

 6   clarifies what is meant by ʺinformation that leads to a successful enforcement.ʺ

 7   17 C.F.R. § 240.21F‐4(c). According to the Rule, a whistleblower satisfies this

 8   statutory command if he provides original information in a ʺsubmissionʺ which

 9   itself ʺsignificantly contributed to the success of the action.ʺ Id. § 240.2F‐4(c)(2).

10   The SECʹs answer, that it is a whistleblowerʹs submission that must contribute to

11   the successful action, is thus ʺbased on a permissible construction of the statute.ʺ

12   Chevron, 467 U.S. at 843.

13         Applying Chevron, we conclude that the interpretation of ʺinformation . . .

14   that led toʺ in 15 U.S.C § 78u‐6(b)(1) by the SEC is reasonable. First, Congress has

15   not ʺdirectly spoken to the precise question at issue.ʺ Chevron, 467 U.S. at 842.

16   Section 78u‐6 says nothing about whether a whistleblower can be given an award

17   if their submission was not used by the SEC to bring a successful enforcement

18   action. Second, the SECʹs answer—that it is a whistleblowerʹs submission that

                                                20
                                                                                  Nos. 18‐1124, 18‐1127
                                                   Kilgour v. United States Securities and Exchange SEC

 1   must contribute to the successful action—is ʺbased on a permissible construction

 2   of the statute.ʺ Id. at 843.

 3          Doe asks us to disregard the SECʹs interpretation of ʺinformation . . . that

 4   led to,ʺ and instead declare that a whistleblower need not worry about curating a

 5   useful submission. All a whistleblower must do to be entitled to an award, Doe

 6   contends, is give some useful information to the SEC first, in any form, no matter

 7   how impenetrable. Consider an example: Whistleblower A submits to the SEC

 8   one‐thousand pages of scrambled documents, informing the SEC only that some

 9   incriminating information lies within that might prove useful to an ongoing

10   investigation. Several weeks later, Whistleblower B submits to the SEC a single

11   incriminating document, 10 pages in length, and explains in an attached

12   memorandum why the document is incriminating and useful to an ongoing

13   investigation. The SEC uses Whistleblower Bʹs submission, and the ongoing

14   investigation ultimately concludes in a successful enforcement action. According

15   to Doeʹs interpretation, it would seem, as long as Whistleblower Aʹs submission

16   contained the information passed along by Whistleblower B, Whistleblower A is

17   entitled to an award. We disagree.

                                              21
                                                                                    Nos. 18‐1124, 18‐1127
                                                     Kilgour v. United States Securities and Exchange SEC

 1         The interpretation that Doe asks us to adopt misreads the statute and

 2   would lead to consequences not likely intended by Congress. The whistleblower

 3   program was enacted ʺto motivate people who know of securities law violations

 4   to tell the SEC.ʺ Digital Realty Tr., Inc. v. Somers, 138 S. Ct. 767, 777 (2018)

 5   (internal quotation marks and emphasis omitted). ʺBy enlisting whistleblowers

 6   to assist the Government [in] identify[ing] and prosecut[ing] persons who have

 7   violated securities laws, Congress undertook to improve SEC enforcement and

 8   facilitate the Commissionʹs recover[y] [of] money for victims of financial fraud.ʺ

 9   Id. (internal quotation marks omitted; brackets in original).

10         As the foregoing example suggests, Doeʹs interpretation might

11   disincentivize whistleblowers from curating their submissions. The SECʹs

12   interpretation, by contrast, strikes a sensible balance between care and

13   timeliness, one that is more consistent with the whistleblower programʹs

14   purpose: A whistleblower might still be rewarded for being the first to bring

15   incriminating information to the SECʹs attention, but only if that information is

16   contained in a credible, and ultimately useful submission.

17         In sum, it was not arbitrary or capricious for the SEC to conclude that

18   Doeʹs submissions did not provide ʺoriginal information to the Commission that

                                                22
                                                                                 Nos. 18‐1124, 18‐1127
                                                  Kilgour v. United States Securities and Exchange SEC

 1   led toʺ a successful enforcement action, 15 U.S.C. § 78u‐6(b)(1), because Doeʹs

 2   submissions were not used by the DB team. The award Doe asks us to compel by

 3   equitable estoppel in this case is therefore not authorized by statute, and because

 4   that award would come from the Federal Treasury, Office of Personnel

 5   Management forecloses Doeʹs claim.

 6      IV.   Did the SEC Violate Doeʹs Due Process Rights by Failing to Provide
 7            Doe with Certain Materials?
 8
 9         Doe next argues that the SEC violated his rights under the Due Process

10   Clause of the Fifth Amendment by failing to provide him with materials that

11   would have enabled him to contest the CRSʹs PD more effectively. Specifically,

12   Doe argues that the SEC violated Rule 21F‐12(a) by relying on materials

13   submitted by Claimants 1 and 2 in determining Doeʹs whistleblower claim, and

14   then not producing those materials to Doe. Petʹr Doe Br. 35. We disagree. We

15   think Doeʹs argument is contrary to the plain meaning of the relevant

16   regulations.

17         Rule 240.21F‐10(e)(1)(i) requires the SEC to produce material requested by

18   a claimant only if the materials ʺformed the basis of the Claims Review Staffʹs

19   Preliminary Determinationʺ on the claimantʹs application. 17 C.F.R. § 240.21F‐

20   10(e)(1)(i). Those ʺmaterialsʺ may be (1) ʺpublicly available materials from the

                                             23
                                                                                   Nos. 18‐1124, 18‐1127
                                                    Kilgour v. United States Securities and Exchange SEC

 1   covered action or related action,ʺ (2) ʺthe whistleblowerʹs Form TCR . . . and

 2   other related materials provided by the whistleblower to assist the Commission

 3   with the investigation,ʺ (3) ʺthe whistleblowerʹs . . . award application [and

 4   supporting submissions],ʺ and (4) ʺ[s]worn declarations (including attachments)

 5   from the Commission staff regarding any matters relevant to the award

 6   determination.ʺ Id. § 240.21F‐12(a). Crucially, claimants are ʺnot entitle[d] . . . to

 7   obtain from the Commission any materials . . . other than those listedʺ in Rule

 8   21F‐12(a). Id. § 21F‐12(b).

 9           Claimant 1ʹs and 2ʹs submissions are not included within the materials that

10   Doe is entitled to review under Rule 21F‐12(a). The SEC therefore did not violate

11   that rule or by extension Doeʹs Due Process rights in refusing to produce them.

12      V.      Did the SEC Act in an Arbitrary and Capricious Manner by Favoring
13              Claimant 2ʹs Submissions over Doeʹs?
14
15           Doeʹs final argument is that the SEC was ʺbiased against Doe in its

16   treatment of information that he provided versus similar information provided

17   by Claimant 2.ʺ Petʹr Doe Br. 38. He therefore challenges the SECʹs decision on

18   the basis that its treatment of his submission was arbitrary and capricious.

19           We conclude to the contrary. It was reasonable for the SEC to credit its

20   staffʹs informed determination that Doe had not provided a credible submission,

                                               24
                                                                                 Nos. 18‐1124, 18‐1127
                                                  Kilgour v. United States Securities and Exchange SEC

 1   and that Claimant 2 had provided consistent, critical information that led to the

 2   successful enforcement action against DB.

 3         The CFIU staff explained that it had concluded, after interviewing Doe in

 4   2010, that he ʺhad difficulty articulating credible and coherent information

 5   concerning any potential violation of the federal securities laws.ʺ Muoio

 6   Declaration at 1; JA 4059. Doe ʺbrought with him to the meeting a wet brown

 7   paper bag containing what he claimed to be evidence,ʺ and his ʺfiles were

 8   jumbled and disorganized. During the meeting he repeatedly referred to distress

 9   over [a] personal situation, and [he] appeared to be under great duress.ʺ Id. And

10   when Doe was interviewed again in 2013, this time by the DB team, they found

11   that he was ʺvery difficult to follow, as he jumped from topic to topic.ʺ Addʹl

12   Friedman Declaration, at 13; JA 3833.

13         The SEC personnel decided that Claimant 2, by contrast, provided more

14   critical or helpful information in a far more digestible manner than Doe. The DB

15   team itself characterized Claimant 2ʹs submission as ʺdetailed and

16   comprehensiveʺ and concluded that it ʺfar surpassed the quality of the

17   information provided by [Doe].ʺ Addʹl Friedman Declaration, at 9; JA 3829. Doe

18   purports to perceive some pernicious bias, asserting that Claimant 2 also

                                             25
                                                                                   Nos. 18‐1124, 18‐1127
                                                    Kilgour v. United States Securities and Exchange SEC

 1   provided ʺpublicly availableʺ information—an aspect of Doeʹs submission that

 2   the SEC faulted him for—but the DB team explained that ʺClaimant 2ʹs expert

 3   report was not based on publicly available information, but contained an inside

 4   view of . . . the Montreal Accord.ʺ Id. at 11. The SEC therefore acted in a manner

 5   that was reasonable, not arbitrary or capricious.

 6      VI.    Were Kilgour and Williams entitled to a whistleblower award for the
 7             information that they submitted in their Form TCR?
 8
 9         Kilgour and Williams argue that they are entitled to a whistleblower

10   award on the basis of information they provided to the SEC in their joint Form

11   TCR submitted in August 2014. We disagree.

12         As discussed above, Kilgour and Williams would be entitled to an award

13   in return for that submission only if (1) they provided original information

14   submitted in their Form TCR, and (2) their submission significantly contributed

15   to the success of the action. See 17 C.F.R. §§ 240.21F‐3(a), 240.21F‐4(b)(1)(ii),

16   (b)(5), (c)(2). But by the time they submitted their Form TCR, all the information

17   contained therein was already known to the DB team, having been provided by

18   Kilgour and Williams earlier to support Claimant 2ʹs submissions. Accordingly,

19   their Form TCR submission did not significantly contribute to the success of the

20   DB action; Claimant 2ʹs submissions did.

                                               26
                                                                                  Nos. 18‐1124, 18‐1127
                                                   Kilgour v. United States Securities and Exchange SEC

 1         We recognize that Rule 21F‐4, contains an ʺoriginal source exception,ʺ

 2   which provides that

 3                The Commission will consider you to be an original
 4                source of the same information that we obtain from
 5                another source if the information satisfies the definition
 6                of original information and the other source obtained the
 7                information from you or your representative.
 8
 9   17 C.F.R § 240.21F‐4(b)(5). Kilgour and Williams argue a that refusal to grant

10   them that exception renders the original source exception ʺmoot because it

11   would effectively disqualify all whistleblowers, including petitioners Kilgour

12   and Williams, from making [w]histleblower applications using original

13   information attributed to them under this rule, because, by definition, the SEC

14   was already aware of it.ʺ Petʹrs K&W Br. 28. We disagree: The SECʹs

15   interpretation of ʺinformation . . . that led toʺ in Rule 21F‐4(c)(2)—discussed

16   above—would not have the effect of nullifying the original‐source definition in

17   Rule 21F‐4(b)(5).

18         Rule 21F‐4(b)(7) advises a whistleblower that:

19                [i]f you provide information to the Congress, any other
20                authority of the Federal government, a state Attorney
21                General or securities regulatory authority, any self‐
22                regulatory organization, or the Public Company
23                Accounting Oversight Board, or to an entityʹs internal
24                whistleblower, legal, or compliance procedures for

                                              27
                                                                                   Nos. 18‐1124, 18‐1127
                                                    Kilgour v. United States Securities and Exchange SEC

 1               reporting allegations of possible violations of law, and
 2               you, within 120 days, submit the same information to the
 3               Commission pursuant to § 240.21F‐9 of this chapter, as
 4               you must do in order for you to be eligible to be
 5               considered for an award, then, for purposes of
 6               evaluating your claim to an award under §§ 240.21F‐10
 7               and 240.21F‐11 of this chapter, the Commission will
 8               consider that you provided information as of the date of
 9               your original disclosure, report or submission to one of
10               these other authorities or persons.
11
12   17 C.F.R. § 240.21F‐4(b)(7). In other words, in circumstances identified in the

13   Rule—such as when a person submits his or her tip to another federal agency—

14   the SEC will treat the information as though it had been submitted to the SEC

15   directly from that person at the same time that it was submitted to the other

16   agency. This rule thus preserves the original source exception, notwithstanding

17   the submission‐focused nature of Rule 21F‐4(c)(2), for certain specified situations.

18   This case does not present such a situation.

19                                      Conclusion

20         We have considered the petitionersʹ remaining arguments in support of

21   their petitions and conclude that they are without merit. For the foregoing

22   reasons, we DENY the petitions of Doe, Kilgour, and Williams to compel the SEC

23   to grant their applications for whistleblower awards in connection with the DB

24   matter.

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