21-2537 Doe v. SEC
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 15th day of November, two thousand twenty-two.
PRESENT: Jon O. Newman, Guido Calabresi, Steven J. Menashi, Circuit Judges. ____________________________________________
JOHN DOE,
Petitioner,
v. No. 21-2537
SECURITIES AND EXCHANGE COMMISSION,
Respondent. ____________________________________________ For Petitioner: EZRA SPILKE, Law Offices of Ezra Spilke, Brooklyn, NY.
For Respondent: EZEKIEL L. HILL, Attorney (Dan M. Berkovitz, General Counsel, Michael A. Conley, Solicitor, Stephen G. Yoder and Emily T. Parise, Senior Litigation Counsel, on the brief), Securities and Exchange Commission, Washington, DC.
On Petition for Review of an Order of the Securities and Exchange
Commission.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the petition is DENIED.
John Doe petitions for review of an order of the Securities and Exchange
Commission (“SEC”) denying him a whistleblower award. We assume the parties’
familiarity with the underlying facts and procedural history.
In general, federal law directs the SEC to pay a monetary award to a
whistleblower when that whistleblower “voluntarily provided original
information to the Commission that led to the successful enforcement” of “any
judicial or administrative action brought by the Commission under the securities
2 laws that results in monetary sanctions exceeding $1,000,000.” 15 U.S.C.
§ 78u-6(a)(1), (b)(1). But the SEC may not make an award “to any whistleblower
who is convicted of a criminal violation related to the judicial or administrative
action for which the whistleblower otherwise could receive an award.” 15 U.S.C.
§ 78u-6(c)(2)(B).
John Doe is a whistleblower. He provided information to the SEC that
assisted in a successful agency enforcement action with respect to an international
bribery scheme (the “Covered Action”). After the SEC posted a notice on its
website about the Covered Action, Doe timely filed an application for a
whistleblower award pursuant to 15 U.S.C. § 78u-6(b)(1) in connection with both
the Covered Action and a related action (the “Related Action”). By that point,
however, Doe himself had pleaded guilty to bribery charges. A court had accepted
Doe’s guilty plea but had not yet sentenced him. Because of the accepted guilty
plea, the SEC determined that Doe had been “convicted of a criminal violation
related to” the bribery scheme that was at issue in the Covered Action and the
Related Action. 15 U.S.C. § 78u-6(c)(2)(B). The SEC issued a preliminary
determination recommending the denial of Doe’s award application. Doe
contested the preliminary determination, and a few months later the SEC issued
3 its final order denying a whistleblower award to Doe.
The “determination … whether … to make [a whistleblower] award[]” is at
“the discretion of the Commission.” 15 U.S.C. § 78u-6(f). We review the
determination of the SEC as to whether to make a whistleblower award for abuse
of discretion and—to the extent the agency makes findings of fact—for substantial
evidence. See id. (noting that a court “shall review the determination” of the SEC
“in accordance” with 5 U.S.C. § 706); see also Kilgour v. SEC, 942 F.3d 113, 120 (2d
Cir. 2019) (“We review the Commission’s whistleblower award determinations in
accordance with section 706 of the Administrative Procedure Act.”) (internal
quotation marks and alteration omitted).
Doe challenges the SEC’s interpretation of two key terms in 15 U.S.C.
§ 78u-6(2)(B): “convicted” and “related to.” He argues that he was not “convicted”
and that his criminal conduct was not “related to” the bribery scheme at issue in
the Covered and Related Actions. He additionally argues that the SEC did not
adequately explain its reasoning in denying the whistleblower award. We
disagree. Doe forfeited his challenge to the SEC’s interpretation of “convicted,”
which in any event lacks merit, and the SEC properly interpreted and applied the
“related to” provision of the statute. The agency adequately explained its
4 reasoning and supported its findings with substantial evidence. We deny Doe’s
petition for review.
I
Doe argues that he was not “convicted” under 15 U.S.C. § 78u-6(c)(2)(B). In
Doe’s telling, the fact that he has not yet been sentenced—even though a court has
accepted his guilty plea—means that he has not been “convicted.” But Doe did not
raise this issue before the agency and therefore we need not address Doe’s
argument about the meaning of “convicted.” But even if we were to excuse the
forfeiture, Doe’s argument would fail.
A
SEC regulations provide that when a claimant contests the agency’s
preliminary determination about a whistleblower award, the claimant must “set[]
forth the grounds for [his] objection to either the denial of an award or the
proposed amount of an award.” 17 C.F.R. § 240.21F-10(e). When Doe contested the
SEC’s preliminary determination in this case, he did not argue that he was not
“convicted” under the applicable statute. Doe’s failure to comply with the
administrative process for raising the argument before the agency prevents him
5 from raising it for the first time on appeal. Xiao Ji Chen v. USDOJ, 471 F.3d 315, 320
n.1 (2d Cir. 2006).
Doe resists this conclusion. He notes that in a footnote in its final order, the
SEC described its interpretation of the term “convicted” despite Doe’s failure to
challenge that interpretation when he contested the preliminary determination.
Doe points to Ye v. Department of Homeland Security, in which we excused an alien’s
failure to raise a claim before the Board of Immigration Appeals (“BIA”) because
the BIA addressed the merits of the claim. 446 F.3d 289, 296-97 (2d Cir. 2006). Yet
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21-2537 Doe v. SEC
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 15th day of November, two thousand twenty-two.
PRESENT: Jon O. Newman, Guido Calabresi, Steven J. Menashi, Circuit Judges. ____________________________________________
JOHN DOE,
Petitioner,
v. No. 21-2537
SECURITIES AND EXCHANGE COMMISSION,
Respondent. ____________________________________________ For Petitioner: EZRA SPILKE, Law Offices of Ezra Spilke, Brooklyn, NY.
For Respondent: EZEKIEL L. HILL, Attorney (Dan M. Berkovitz, General Counsel, Michael A. Conley, Solicitor, Stephen G. Yoder and Emily T. Parise, Senior Litigation Counsel, on the brief), Securities and Exchange Commission, Washington, DC.
On Petition for Review of an Order of the Securities and Exchange
Commission.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the petition is DENIED.
John Doe petitions for review of an order of the Securities and Exchange
Commission (“SEC”) denying him a whistleblower award. We assume the parties’
familiarity with the underlying facts and procedural history.
In general, federal law directs the SEC to pay a monetary award to a
whistleblower when that whistleblower “voluntarily provided original
information to the Commission that led to the successful enforcement” of “any
judicial or administrative action brought by the Commission under the securities
2 laws that results in monetary sanctions exceeding $1,000,000.” 15 U.S.C.
§ 78u-6(a)(1), (b)(1). But the SEC may not make an award “to any whistleblower
who is convicted of a criminal violation related to the judicial or administrative
action for which the whistleblower otherwise could receive an award.” 15 U.S.C.
§ 78u-6(c)(2)(B).
John Doe is a whistleblower. He provided information to the SEC that
assisted in a successful agency enforcement action with respect to an international
bribery scheme (the “Covered Action”). After the SEC posted a notice on its
website about the Covered Action, Doe timely filed an application for a
whistleblower award pursuant to 15 U.S.C. § 78u-6(b)(1) in connection with both
the Covered Action and a related action (the “Related Action”). By that point,
however, Doe himself had pleaded guilty to bribery charges. A court had accepted
Doe’s guilty plea but had not yet sentenced him. Because of the accepted guilty
plea, the SEC determined that Doe had been “convicted of a criminal violation
related to” the bribery scheme that was at issue in the Covered Action and the
Related Action. 15 U.S.C. § 78u-6(c)(2)(B). The SEC issued a preliminary
determination recommending the denial of Doe’s award application. Doe
contested the preliminary determination, and a few months later the SEC issued
3 its final order denying a whistleblower award to Doe.
The “determination … whether … to make [a whistleblower] award[]” is at
“the discretion of the Commission.” 15 U.S.C. § 78u-6(f). We review the
determination of the SEC as to whether to make a whistleblower award for abuse
of discretion and—to the extent the agency makes findings of fact—for substantial
evidence. See id. (noting that a court “shall review the determination” of the SEC
“in accordance” with 5 U.S.C. § 706); see also Kilgour v. SEC, 942 F.3d 113, 120 (2d
Cir. 2019) (“We review the Commission’s whistleblower award determinations in
accordance with section 706 of the Administrative Procedure Act.”) (internal
quotation marks and alteration omitted).
Doe challenges the SEC’s interpretation of two key terms in 15 U.S.C.
§ 78u-6(2)(B): “convicted” and “related to.” He argues that he was not “convicted”
and that his criminal conduct was not “related to” the bribery scheme at issue in
the Covered and Related Actions. He additionally argues that the SEC did not
adequately explain its reasoning in denying the whistleblower award. We
disagree. Doe forfeited his challenge to the SEC’s interpretation of “convicted,”
which in any event lacks merit, and the SEC properly interpreted and applied the
“related to” provision of the statute. The agency adequately explained its
4 reasoning and supported its findings with substantial evidence. We deny Doe’s
petition for review.
I
Doe argues that he was not “convicted” under 15 U.S.C. § 78u-6(c)(2)(B). In
Doe’s telling, the fact that he has not yet been sentenced—even though a court has
accepted his guilty plea—means that he has not been “convicted.” But Doe did not
raise this issue before the agency and therefore we need not address Doe’s
argument about the meaning of “convicted.” But even if we were to excuse the
forfeiture, Doe’s argument would fail.
A
SEC regulations provide that when a claimant contests the agency’s
preliminary determination about a whistleblower award, the claimant must “set[]
forth the grounds for [his] objection to either the denial of an award or the
proposed amount of an award.” 17 C.F.R. § 240.21F-10(e). When Doe contested the
SEC’s preliminary determination in this case, he did not argue that he was not
“convicted” under the applicable statute. Doe’s failure to comply with the
administrative process for raising the argument before the agency prevents him
5 from raising it for the first time on appeal. Xiao Ji Chen v. USDOJ, 471 F.3d 315, 320
n.1 (2d Cir. 2006).
Doe resists this conclusion. He notes that in a footnote in its final order, the
SEC described its interpretation of the term “convicted” despite Doe’s failure to
challenge that interpretation when he contested the preliminary determination.
Doe points to Ye v. Department of Homeland Security, in which we excused an alien’s
failure to raise a claim before the Board of Immigration Appeals (“BIA”) because
the BIA addressed the merits of the claim. 446 F.3d 289, 296-97 (2d Cir. 2006). Yet
here, unlike in Ye, the agency did not address an argument the petitioner failed to
raise. Instead, the SEC simply noted its longstanding interpretation of the term
“convicted” as it addressed Doe’s argument that his conviction was not “related
to” the Covered and Related Actions. J. App’x 393 n.15 (quoting In the Matter of
Gregory Bartko, Release No. 71666, 2014 WL 896758, at *8 (Mar. 7, 2014), aff’d in part,
rev’d in part on other grounds, Bartko v. SEC, 845 F.3d 1217 (D.C. Cir. 2017)). Doe was
on notice from the preliminary determination that the agency believed his
accepted guilty plea disqualified him from the whistleblower award. Having
failed to contest before the agency its determination that one is “convicted” when
he has pleaded guilty, Doe is not entitled to raise the issue for the first time on a
6 petition for review. Xiao Ji Chen, 471 at 320 n.1.
B
Even if Doe had not forfeited his argument about the term “convicted,” the
argument would fail. The agency did not err in adhering to its view that “there is
no reason for ascribing a different meaning to the word ‘convicted’ in the
Exchange Act to the meaning given to that term in the Advisers Act.” Gregory
Bartko, 2014 WL 896758, at *8 (alteration omitted). Doe contends that a person may
be considered “convicted” only after a sentence is imposed, but that is not correct.
See, e.g., United States v. Adkins, 743 F.3d 176, 188 (7th Cir. 2014) (describing
defendants who are “convicted but not yet sentenced”); United States v. White, 620
F.3d 401, 414 (4th Cir. 2010) (noting that a defendant is “tried and convicted, and
then sentenced”); United States v. Montoya, No. CR-89-409, 1990 WL 252179, at *1
(E.D.N.Y. Dec. 17, 1990) (noting that a defendant “was tried before this court,
convicted, and then sentenced”).
II
Doe also argues that the bribery charges to which he pleaded guilty were
not “related to” the Covered and Related Actions. He additionally argues that the
agency did not support its finding of such a relationship with substantial evidence.
7 We disagree.
A whistleblower is ineligible under 15 U.S.C. § 78u-6(c)(2)(B) for an award
from the SEC if he was “convicted of a criminal violation related to the judicial or
administrative action for which the whistleblower otherwise could receive an
award.” Id. (emphasis added). The SEC and Doe understand the term “related to”
differently. The SEC interprets the term to mean that “the conduct underlying the
criminal conviction must be connected to or stand in some relation to the Covered
Action.” J. App’x 394. Doe suggests that the term requires the whistleblower to
have been “a part of the conduct underlying the … enforcement action” and to
have known about the conduct during its occurrence. Petitioner’s Br. 30.
We agree with the SEC. In Morales v. Trans World Airlines, Inc., the Supreme
Court said the ordinary meaning of the term “relating to” is “a broad one.” 504
U.S. 374, 383 (1992). The Court explained that this meaning is “to stand in some
relation; to have bearing or concern; to pertain; refer; to bring into association with
or connection with.” Id. (quoting Black’s Law Dictionary 1158 (5th ed. 1979)); see
also Celotex Corp. v. Edwards, 514 U.S. 300, 307-08 (1995) (explaining that the term
“related to” in a jurisdiction-conferring statute “suggests a grant of some
8 breadth”). Our court has also noted that “[t]he term ‘related to’ is typically defined
more broadly” than a term such as “arising out of.” Coregis Ins. Co. v. Am. Health
Found., 241 F.3d 123, 128 (2d Cir. 2001).
The ordinary meaning of “related to” encompasses the connection between
Doe’s bribery charges and the bribery scheme underlying the Covered and Related
Actions. Doe pleaded guilty to facilitating bribery payments that came from the
same principal briber, targeted government officials in the same country, and
sought benefits in the same industry as the scheme charged in the Covered and
Related Actions. The SEC did not abuse its discretion when it determined that
Doe’s criminal conduct was “related to” the Covered and Related Actions.
We will set aside an agency’s action if its findings are “unsupported by
substantial evidence.” 5 U.S.C. § 706. In other words, “we require that they be
supported by more than a scintilla of evidence, which may be less than a
preponderance.” Kilgour, 942 F.3d at 120 (internal quotation marks omitted). This
“threshold for … evidentiary sufficiency is not high.” Biestek v. Berryhill, 139 S. Ct.
1148, 1154 (2019).
The SEC’s findings are supported by substantial evidence. The criminal
9 information and Doe’s guilty plea establish Doe’s participation in a bribery scheme
that involved the same central figure as the scheme underlying the Covered and
Related Actions. A declaration from an SEC attorney that supported the SEC’s
denial of the award was based on information provided by a government attorney
who had been involved in the Justice Department’s investigation that resulted in
the Related Action.
III
Finally, Doe insists that the SEC failed to articulate its reasoning in its final
order, thereby denying meaningful appellate review. We again disagree.
Doe’s inadequate-reasoning argument relies on his other arguments about
the definitions of “convicted” and “related to,” and he criticizes the declarations
of SEC attorneys as “conclusory and unreasoned.” Petitioner’s Br. 38-40. We think
the SEC adequately articulated its reasoning with respect to its statutory
interpretation, and the agency lawyers’ declarations—furnished to Doe on his
request—reflected a considered analysis of Doe’s conduct and its relationship to
the Covered and Related Actions. The SEC’s articulation of its reasoning did not
prevent Doe from obtaining meaningful appellate review.
10 * * *
We have considered the petitioner’s remaining arguments, which we
conclude are without merit. For the foregoing reasons, we DENY the petition for
review.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court