[00:00:00] Speaker 02:
Pace number 23-1044, John Doe Petitioner versus Securities and Exchange Commission.

[00:00:07] Speaker 02:
Mr. Cummings for the petitioner, Mr. Shaury for the respondent.

[00:00:12] Speaker 01:
All right, Mr. Cummings.

[00:00:14] Speaker 01:
Good morning.

[00:00:15] Speaker 04:
Good morning, Your Honor.

[00:00:17] Speaker 04:
May it please the court, Tom Cummings on behalf of Claimant.

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This is an appeal of the Security and Exchange Commission's denial of Claimant's whistleblower award application.

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The case comes down to a simple set of facts and turns on a single question.

[00:00:32] Speaker 01:
First, the fact.

[00:00:34] Speaker 01:
Can you get closer to the microphone?

[00:00:36] Speaker 01:
I have a hard time hearing, and I'm trying to do everything.

[00:00:39] Speaker 04:
Yes, you are.

[00:00:40] Speaker 04:
Is this better?

[00:00:41] Speaker 01:
Well, if you just get closer to the... Okay, is that it?

[00:00:44] Speaker 04:
Thank you.

[00:00:45] Speaker 04:
Of course.

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So, as I was saying, this case comes down to a simple set of facts and a single question.

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The facts.

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Two co-venturers are working on a business project.

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One is the claimant's client.

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The other is stealing from the project.

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The claimant reports the thief.

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Pausing here, it's undisputed that Klayman's tip led directly to the commission's investigation, which stopped a massive fraud and recovered tens of millions of dollars for the federal government.

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In short, it's undisputed that Klayman did the right thing substantively.

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So the only question is, did Klayman reasonably believe that reporting this thief could serve his client's interest?

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He did, and the commission abused its discretion, including otherwise.

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So it seems that there's this case turns on sort of factual determinations by the commission.

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And it seems that there is evidence in the record that your client believed that his clients be a perpetrator and not a victim of this fraud, which would preclude the idea that him blowing the whistle on his client was in his client's interest.

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Respectfully, your honor, there's no contemporaneous evidence that he believed that his client was involved.

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In fact, all of the contemporaneous evidence directly contradicts that.

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So can I can I point you to a few parts of the record and ask you to address them?

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So didn't he say, well, I did not yet have smoking gun proof of the misconduct by my client.

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At the time I made the whistleblower submission, I had suspicions that the interests of investors were not being adequately protected.

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He also said, I considered that the tip would lead to an SEC investigation of the entire money trail.

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I would uncover any wrongdoing by my client.

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And the purpose of my tip was to alert the SEC to investigate the entire offering, including all affiliated persons and entities, including not only the third party, but also my client.

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So if he believed that his client was a perpetrator, it could not have been in his client's best interests to blow the whistle.

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A couple things there, Your Honor.

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First, he made that statement in 2022, which was eight years after he had made this initial tip.

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But it's supported by that substantial evidence in the record that supports the Commission's finding.

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So it's contradicted by the actual four corners of his tip.

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It's contradict which state that he's seeking to have the project successfully completed.

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If he wanted the project to be successfully completed and he knew that one co-venture was stealing from the project and he suspected that another, it would make no sense to report it to the project.

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That's arguable.

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But if it's supported by evidence in the record, we affirm, correct?

[00:03:40] Speaker 04:
Yes, Your Honor, but it's also contradicted by the declaration of the commission's own attorney who said that they thoroughly investigated the claimant and concluded that he neither knew nor should have known of the wrongdoing by his client because he didn't have access to that information.

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And even if he, so that's the first part.

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And then the second part is if he actually believed that his client was involved, then it would have been permissible under rule 4.1

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I'm sorry.

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I'm sorry.

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reasonably believed that his client was involved when he made the tip in 2014.

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Rather, he reasonably believed, as his own whistleblower submission states, that he was serving his client's interests, that he wanted the project to be successful.

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Now, in 2015, he did learn that his client was involved, and he resigned.

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And then he sat for multiple interviews with the commission, as well as other law enforcement agencies, and his cooperation

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enabled the Commission's successful prosecution.

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I understand that, but I think the question in this appeal is whether it was in his client's interest to blow the whistle.

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Right.

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And the Commission found it was not, and there's substantial evidence supporting it.

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So even if you have arguments to the contrary, we're not sitting de novo and weighing these arguments.

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We're just making sure that the Commission, that their findings were supported, it seems to be.

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Yes, Your Honor.

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Again, the only evidence is eight years afterwards and is contradicted by the contemporaneous evidence.

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But that evidence is in the record.

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And to the extent that it indicates that he reasonably believed that his client was committing a crime, it would be permitted under Rule 4.1-6, subsection B, which permits a lawyer to make a disclosure of confidential information

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to prevent a client from committing a crime.

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But that's not, you didn't make that argument in your brief.

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That's right, Your Honor, because we believe that the record read as a whole unequivocally demonstrates that when he made the submission in 2014, he thought he was acting in his client's interest.

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But his client

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didn't have an interest in the ultimate project as far as a financial interest.

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It wasn't a shareholder, right?

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That's right.

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And his client wasn't like a partner in the partnership that owned the project, right?

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His client was the corporation.

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But that corporation was not

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a partner in the partnership that was constructing the items at issue, right?

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That's correct.

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So how is it in his client's interests to disclose this just because his client could get

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more work in the future or something, but I don't understand the argument.

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So both benefits and detriments.

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The benefits would be it would receive revenue and profits from the successful completion of the project.

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And then the detriments, by fulfilling its contractual obligations, it would avoid liabilities to contract counterparties and investors.

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And then, of course, the knock-on effects.

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The successful completion of this project would allow us business to win future business.

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And you don't dispute that what he disclosed were client confidences within the meaning of work product attorney-client privilege.

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I would dispute that it's neither attorney-client privilege nor work product.

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He was very careful not to disclose any attorney-client material.

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In fact, the only material that he disclosed was information that he obtained within the course of his representation about the person that he believed was stealing.

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I spoke too loosely there.

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You don't dispute that it's confidential information that he disclosed.

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that was learned and gained in the course of his representation of his client?

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We agree that within the broadest reading of confidential information, it was technically confidential information, although it's important to point out that it was not his client's confidential information.

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Further reinforcing that his disclosure both fulfilled the spirit and the letter of the relevant attorney conduct

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What difference does it make for the purpose of the rule, whether it's his client's confidential information or not?

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I didn't think that the rule made any such distinction.

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Your Honor, I think that these are rules of reason be applied with

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thought to the broader context, so you can't disclose attorney-client information without your client's express consent.

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You can disclose confidential information even without your client's express consent to the extent that you reasonably believe that it would serve your client's interest.

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And here, this is potentially one step further.

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This is not confidential information of the client, but merely confidential information that you learned in the course of your representation of the client.

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So for that reason, that it was confidential information learned in the course of representing his client.

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One of the commission's alternative arguments falls flat.

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Commission argues that the disclosure was not authorized because it was not within the scope of his representation.

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Scope of his representation was the providing legal advice on the project in question.

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working with the investors on the project in question, but all of those were directed towards a single aim, the ultimate success of the project.

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And as his TCR, his whistleblower submission expressly states, he's making the submission that the project can be successfully completed.

[00:10:26] Speaker 01:
And if you're- There are no questions, but I would like you, do you have your blue brief?

[00:10:34] Speaker 01:
Yes, Your Honor.

[00:10:36] Speaker 01:
Could you turn to page 18?

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And while Mr. Shirey is arguing on that page, the quoted language, that paragraph on the fourth line, you have added something.

[00:11:04] Speaker 01:
that describes the regional centers, that is entities such as claimants, client.

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And what I'd like you to do before you reply is tell me how this regional economic development authority fits within the definition of regional centers under the statute, or maybe you can do it standing there, but I think that's an unfair

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characterization of it.

[00:11:36] Speaker 04:
Your Honor, I'd be happy to supply supplemental briefing on that point in a week of this argument.

[00:11:43] Speaker 04:
I would be happy to provide you a supplemental brief on that argument.

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I wouldn't want to speak off the cuff and would misrepresent it.

[00:11:52] Speaker 01:
All right, but you know the entity that your client worked for.

[00:11:56] Speaker 04:
Yes, Your Honor.

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I'd like to know how it fits within the definition of regional centers.

[00:12:01] Speaker 01:
You have added to that by saying

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entities such as the claimant's client.

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My understanding is that my client was a regional center under the relevant federal program that authorized investors to qualify for immigration status if they made sufficient investments.

[00:12:28] Speaker 01:
And you can't look at your file and find that

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side.

[00:12:35] Speaker 04:
Not as I stand here.

[00:12:37] Speaker 01:
All right.

[00:12:38] Speaker 04:
Okay.

[00:12:38] Speaker 01:
Thank you.

[00:12:40] Speaker 01:
Um, Mr Shire.

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Is that as far as it goes?

[00:13:01] Speaker 01:
We've been having a heck of a

[00:13:04] Speaker 05:
Thank you.

[00:13:05] Speaker 05:
There we go.

[00:13:08] Speaker 05:
I think we're at the end.

[00:13:10] Speaker 05:
Good morning, Your Honors.

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The commission, when it's designed its whistleblower program, was very careful to not greenlight attorneys taking their clients' information and using that information for their own benefit, the benefit of the attorney.

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So the commission created a regime that's based on preserving and promoting the duty of confidentiality.

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And as part of that regime, the commission's rules

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place the onus on attorneys who want to use their client's information to explain how the disclosure fits within the limited exceptions that exist throughout this country to breach or to use information that would otherwise potentially violate the duty of confidentiality.

[00:14:02] Speaker 01:
Can I ask you something?

[00:14:04] Speaker 01:
We couldn't find another case in which an attorney based on

[00:14:11] Speaker 01:
what his client did or didn't do was awarded a whistleblower award.

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Do you know of any?

[00:14:19] Speaker 05:
I am not aware of one, Your Honor.

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It is for the understandable reason, because an attorney taking their client's information and using it is so discouraged and subject to, as we discuss in footnote 21 of our orders, so subject to very limited exceptions.

[00:14:40] Speaker 05:
Returning to the point I was just sort of.

[00:14:42] Speaker 03:
But isn't it the case that even if it's not under the whistleblower awards, attorneys make disclosures to the SEC Justice Department on behalf of corporate clients all the time if there's a.

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Form Corrupt Practices Act violation, et cetera, that, you know, at some point, the attorneys decide that it's in their client's interest to disclose that, even though it will subject their company to scrutiny, investigation, maybe even prosecution, because it's, and the government encourages those disclosures, and the company then, you know,

[00:15:23] Speaker 03:
throws the guilty employees under the bus and tries to have some sort of remedial measures, et cetera, and better prophylactic measures.

[00:15:36] Speaker 03:
So it's not unprecedented for lawyers to disclose kind of inculpatory confidential information to the government, right?

[00:15:47] Speaker 05:
That's absolutely correct, Your Honor, but in those contexts, the attorneys are coming forward is in their sort of fiduciary capacity and the representative capacity speaking for their client.

[00:15:58] Speaker 01:
And they're not making money from it.

[00:16:01] Speaker 05:
We have not had a situation like that.

[00:16:06] Speaker 05:
And they're also in the run of cases doing it with the express authorization with their client where they've engaged with their client.

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They've informed the client about the potential risks, the upside and the downsides of coming forward and admitting that there's been a violation of the securities laws and working to remediate that.

[00:16:25] Speaker 03:
My point isn't that the cases are similar.

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My point is that sometimes disclosure of client confidences to

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enforcement authorities does serve the client's interests, right, which is the whole point.

[00:16:42] Speaker 03:
of this Florida Bar Rule 4-1.6C1, right?

[00:16:48] Speaker 05:
Typically, in the cases that you're describing, Your Honor, it would be actually with express authorization to come here.

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There had been no dialogue with the client that has ever been alleged, and the attorney took it upon himself

[00:17:06] Speaker 05:
essentially going rogue to decide it's in my client's interest.

[00:17:12] Speaker 05:
And on that point, unlike what you're describing, Your Honor, which is a situation where the attorney comes forward to ultimately protect the interest of the client, the overall interests of the client,

[00:17:26] Speaker 05:
You actually go back and you look at pages 76, I believe the pages 76 and 77 of the Joint Appendix.

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That's the declaration that was submitted, the sworn declaration that was submitted by Doe.

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Doe nowhere alleged, nor in any papers that he submitted to the Commission, that he was doing it to protect innocent client or to, in any way that there had been any discussion

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is the downside risk of coming forward that you would normally expect in that sort of fiduciary relationship of providing your client advice and working through.

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What is the best next step?

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What I'm trying to, I guess, clarify here and I think, you know, we have to distinguish is, you know, a human being hired the claimant.

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to be a lawyer, that human being was a manager of an LLC, but the LLC was the client, right?

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The company, the entity was the client.

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The person who was paying the bills and who had hired him was kind of the client because they hired him, but ultimately the company wasn't the client, not that individual.

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And if that one individual is corrupt, what conversation can the lawyer have with that corrupt individual about what the company's best interests are?

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And your honor, how is that conversation supposed to go?

[00:19:06] Speaker 05:
And your honor, that is a consequence of the duty of confidentiality attorneys.

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If there is no one to talk to, the attorney's principal responsibility is not to sort of end that fiduciary capacity.

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decide notwithstanding the fact that the only representative official at the company, the only person who can speak for the company in any kind of authority capacity can't actually authorize it.

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It's not consistent with the attorney-client relationship for the attorney then to decide nonetheless he or she is going to come forward to the commission.

[00:19:43] Speaker 03:
Suppose the entity is a charity

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And it's raised millions of dollars to hurricane victims.

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And it's controlled by one person who hires a lawyer to represent it.

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And that lawyer learns that that person who controls the charity is stealing all of the money.

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But the charity is the client of the lawyer.

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So it wouldn't be in the client's interests for that lawyer to disclose that all the money is being stolen without consulting with this corrupt individual first.

[00:20:36] Speaker 03:
That would be a violation.

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That would be inconsistent with the interests of the client.

[00:20:42] Speaker 05:
So your honor, a couple of things.

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I think that the clearest answer to that actually is that the interest of the client, and this is discussed in the comment, Florida rules, is the interest of the client turns on the question of whether the disclosure is necessary.

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And now I'm quoting from the comment, Florida rules, in carrying out the representation, carrying out the work that the attorneys hired

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So there may be instance that you're talking about, Your Honor, where a general counsel may.

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make a determination under the particular facts and services under the particular applicable rule that it is in the client's interest.

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But what we have here, your honor, is an attorney who was principally, according to his own declaration submitted in September of 2021, he was principally an immigration attorney.

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He was then hired to, or he was then asked to assist with certain preparation of offering materials.

[00:21:42] Speaker 05:
That is a far cry from someone who you're talking about, Your Honor, who might be a compliance official, who might be a general counsel, who has to make decisions based on the applicable rules under the particular facts and circumstances, whether it makes sense to do it.

[00:21:57] Speaker 05:
That is not the case we have.

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And for obvious reasons, the commission's not in the

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opinion about the application of various rules in those more complicated situations that might come closer to the heartland of what an interest of the finance.

[00:22:14] Speaker 05:
That's not what we have here.

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Attorneys are fiduciary.

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They work

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do the work that they're hired to do.

[00:22:23] Speaker 05:
The best interest of the exception, the best interest of the client exception is an implied authorization, as the rule says, to make necessary disclosures, disclosures that the attorney believes are reasonably necessary.

[00:22:40] Speaker 05:
Reasonably necessary is an objective standard under the Florida rules, whether an

[00:22:47] Speaker 05:
an attorney, a prudent attorney, is what the Florida rules say, the terminology, the definition of reasonable.

[00:22:52] Speaker 05:
Whether a reasonable attorney would believe that coming forward to report this appropriation that their own client may be engaged in and to have that client investigated and potentially subject to an enforcement action is not what particular Florida rule.

[00:23:14] Speaker 03:
But I guess that's why

[00:23:17] Speaker 03:
why this is like a little, it's a little bit like the SEC is kind of trying to have it both ways a little bit.

[00:23:25] Speaker 03:
Because the client of the claimant was not the person who was doing the misappropriation, right?

[00:23:34] Speaker 03:
The claimant did not represent the individual, right?

[00:23:40] Speaker 03:
Correct.

[00:23:42] Speaker 03:
So when the claimant blows the whistle,

[00:23:46] Speaker 03:
the claimant isn't blowing the whistle on his client, right?

[00:23:52] Speaker 03:
Because his client is the entity.

[00:23:56] Speaker 03:
His client is not the individual person who is doing the misappropriation, right?

[00:24:06] Speaker 05:
That is not your honor.

[00:24:10] Speaker 05:
into the declaration that's at page 76 and 77 of the joint appendix.

[00:24:15] Speaker 05:
And I can, I'm happy to need to from it being sensitive to the fact that we're.

[00:24:37] Speaker 06:
Pages 84 through 85.

[00:24:46] Speaker 05:
Doe actually says that the purpose and the disclosure in my whistleblower submission was to... What paragraph are you on?

[00:24:53] Speaker 05:
I'm on paragraph one, but paragraph crew, and there's a number of paragraphs that carry through with the same concept, which is the purpose of the disclosure in my whistleblower submission was to prevent a crime being committed, exerting out, then my client.

[00:25:09] Speaker 05:
That is not someone who's stepping forward to protect their client from someone who's having a co-venture who is stealing from the investor funds.

[00:25:31] Speaker 05:
If I may have just 20 seconds.

[00:25:35] Speaker 05:
Ultimately, the way that the commission's rules work, an attorney has to demonstrate that they fall within one of the narrow exceptions.

[00:25:44] Speaker 05:
The burden is on them.

[00:25:46] Speaker 05:
Here, the commission determined that, notwithstanding the potential circumstances that might exist in some cases, that here the client or the DOE did not explain, not grapple with how

[00:26:01] Speaker 05:
subjecting his client to an investigation, which he says was his goal, to subjecting his client to a potential enforcement action, which he said was also something that promoted him coming forward or led him to come forward.

[00:26:15] Speaker 05:
How those fit within the totality of the overall circumstances, so that it was in his client's interest.

[00:26:22] Speaker 05:
And in failing to do that, failing to carry that burden,

[00:26:24] Speaker 05:
failing to make that factual showing, the commission made a determination that this court should, factual determination that we believe this commission at this court should have.

[00:26:35] Speaker 01:
I've got a couple of questions.

[00:26:36] Speaker 01:
That took me a while to get pages 76 and 77.

[00:26:41] Speaker 01:
What are you specifically pointing to there?

[00:26:45] Speaker 05:
I'm sorry, Your Honor.

[00:26:46] Speaker 05:
I was specifically, and I had the wrong pages, pages 84 through 85 is what I was specifically referring to.

[00:26:52] Speaker 05:
That was the declaration from

[00:26:54] Speaker 05:
Um, January 2002, but actually your honor, page 76 is a great example as well.

[00:27:01] Speaker 05:
Um, and since you're there, it's 76 on the carryover sentences at the end.

[00:27:06] Speaker 05:
Um, just backing up for a second, there had been a preliminary determination here where the commission determined that this is the crime fraud, kind of exception didn't apply.

[00:27:16] Speaker 05:
The response that's on page 76 to 77 is actually

[00:27:21] Speaker 05:
that the commission had misunderstood his TCR.

[00:27:27] Speaker 05:
He states, I was actually, and I'm going to try to read it carefully.

[00:27:31] Speaker 05:
He says, the commission implies that my purpose in the disclosure was only to prevent the co-venture

[00:27:38] Speaker 05:
who was not my client from performing this misappropriation.

[00:27:42] Speaker 05:
In fact, my goal was not solely to prevent the co-venturer from committing a crime, but also to prevent my client from committing a crime.

[00:27:54] Speaker 05:
That is Doe correcting a perceived misinterpretation of the facts from the TCR, from the original tip that he made.

[00:28:05] Speaker 05:
where he believed that the commission had only understood the tip to involve reporting the wrongdoing of the Coventure.

[00:28:15] Speaker 05:
He's actually saying here, I'm outing my client based on suspicions and concerns that I have about my client's misconduct.

[00:28:23] Speaker 01:
Okay.

[00:28:23] Speaker 01:
And then can you turn to your order, which is at 89 to page 96 and

[00:28:38] Speaker 01:
You may have touched on this already, but it may be waived.

[00:28:42] Speaker 01:
But my question goes to the sentence at the bottom of 8.

[00:28:46] Speaker 01:
Page 8, are you of the order?

[00:28:50] Speaker 05:
I'm at the order, yes, Your Honor.

[00:28:51] Speaker 05:
OK.

[00:28:52] Speaker 01:
That sentence, while the Florida rule permits limited disclosure of client confidential information, when a lawyer reasonably believes disclosure is necessary to prevent the client from committing a future,

[00:29:08] Speaker 01:
Okay, we know that.

[00:29:09] Speaker 01:
But then the return for ongoing crime.

[00:29:13] Speaker 01:
Now, why wasn't this an ongoing, or why did you conclude that this wasn't an ongoing crime?

[00:29:21] Speaker 01:
Wouldn't it be reasonable?

[00:29:23] Speaker 01:
And again, it may be waived.

[00:29:25] Speaker 01:
I'm just trying to figure out how you analyze these for another case.

[00:29:33] Speaker 01:
If someone reports a crime that's already been committed,

[00:29:39] Speaker 01:
What do you use to determine that it isn't ongoing or it is ongoing?

[00:29:46] Speaker 01:
Wouldn't it be reasonable for a whistleblower to say, my client committed this crime without saying, and he is continuing to commit this crime?

[00:29:59] Speaker 05:
So your honor, this is where I think it comes back to the Florida rules and the narrowness of the overarching duty of confidentiality that permeates the entire attorney-client relationship.

[00:30:12] Speaker 05:
It's an important part of the foundation of that relationship.

[00:30:15] Speaker 05:
And so the Florida rules put the onus on the attorney to make sure that they fit within this very narrow exception.

[00:30:23] Speaker 05:
What your honor is talking about actually would go exactly against what Florida

[00:30:29] Speaker 05:
has directed that an attorney has to have a reasonable belief that there is something ongoing.

[00:30:36] Speaker 05:
So that's the critical answer, I think.

[00:30:37] Speaker 05:
And it's talked about on page 21.

[00:30:39] Speaker 05:
I don't think that opposing counsel, excuse me, footnote 21 of that order talks about how narrow the exceptions are in that.

[00:30:47] Speaker 01:
In Florida is very harsh.

[00:30:48] Speaker 01:
I mean, that first order bar versus Knowles, the client's statement that she would lie in court did not establish a sufficient basis

[00:30:59] Speaker 05:
And if your honor, if I can just for a second, that there's a, and when the commission promulgated the rules, they were very conscious that the aggressive enforcement of the duty of confidentiality is actually consistent with the goals of whistleblower program.

[00:31:11] Speaker 05:
The ultimate goals of the whistleblower program are to promote the effective enforcement of the securities laws, compliance with the securities laws, the duty, the cornerstone of the underlying logic of the duty of confidentiality.

[00:31:24] Speaker 05:
So that clients talk to their,

[00:31:27] Speaker 05:
that talk to their counsel.

[00:31:30] Speaker 05:
They give the information that they may be engaged in inappropriate contact.

[00:31:34] Speaker 05:
They ask, what should we do?

[00:31:36] Speaker 05:
This has been discovered.

[00:31:38] Speaker 05:
This has been going on.

[00:31:39] Speaker 05:
And they get counsel from their attorneys.

[00:31:43] Speaker 03:
I guess that, but the ABA model rule 1.6 does not include this exception C1 that's in the Florida rule.

[00:31:55] Speaker 03:
The ABA model rule

[00:31:57] Speaker 03:
Um, and it goes through all of the instances where a lawyer may reveal confidential information, um, didn't include what's in one.

[00:32:11] Speaker 03:
And from my reading on that, um, the ABA, um, whatever committee recommended language akin to see one.

[00:32:24] Speaker 03:
But

[00:32:24] Speaker 03:
A lot of lawyers objected to that and said, you know, that's a pretty broad exception to allow a disclosure that a lawyer reasonably believes is consistent with the interests of their client.

[00:32:41] Speaker 03:
And so the ABA took it out of the model rule.

[00:32:46] Speaker 03:
But Florida, for whatever reason, put it in their state rule.

[00:32:51] Speaker 03:
So a lot of

[00:32:53] Speaker 03:
the opinions in court, both ethical opinions and bar opinions and court opinions to talk about rule 1.6 confidentiality are based on state rules that are modeled on the ABA model rule completely and don't have this provision C1 in it.

[00:33:17] Speaker 03:
So in that sense, Florida is broader

[00:33:22] Speaker 03:
than most jurisdictions because it has this exception.

[00:33:28] Speaker 03:
Did the commission grapple with that?

[00:33:31] Speaker 05:
So that argument was not raised at any point during the briefing, but I think the core point is, your honor, that even under existing Florida precedent, even under the commentary to the Florida rule, it has to be, it's,

[00:33:48] Speaker 05:
I can try to find, or we can send a system to supplemental if the court wants.

[00:33:52] Speaker 05:
Actually, I think it's cited in our brief.

[00:33:54] Speaker 05:
It has to be a representation necessary in carrying out, it has to be a disclosure necessary in carrying out the representation.

[00:34:03] Speaker 05:
So whatever the disconnect may be between the ABA model rule or rules,

[00:34:09] Speaker 05:
It's undisputed that there was nothing about, I would argue it's undisputed, about counsel's role as a senior immigration, I don't want to disclose the whole title, but it was an immigration attorney at the client who participated in assisting periodically with offering materials.

[00:34:29] Speaker 05:
There's nothing about that empowered this individual to be an oversight compliance official who might somehow have it.

[00:34:37] Speaker 05:
have it such that it was necessary in the course of his representation, necessary, that's the word in the rule, Florida, to disclose this information to the commission.

[00:34:52] Speaker 05:
May I answer one?

[00:34:53] Speaker 05:
And I know I've gone on too long, Judge Pan.

[00:34:55] Speaker 05:
One thing my opposing counsel said, he mentioned that the staff attorney at the SEC's declaration stated that,

[00:35:06] Speaker 05:
that declaration, there had been no evidence found that attorney knew of the client's wrongdoing.

[00:35:15] Speaker 05:
That's not entirely accurate.

[00:35:17] Speaker 05:
What the declaration says, and this is on page 62 of the Joint Appendix Paragraph 13, is that the commission found that the claimant did not know, and I'm paraphrasing, that the misstatement representations that were put into

[00:35:33] Speaker 05:
his assistance into the offering documents were wrong or misrepresentations.

[00:35:43] Speaker 05:
And what the clients, what the attorney here subsequently learned is as time goes on is that there had been misappropriations by various parties here.

[00:35:54] Speaker 05:
So I just wanted to clarify that it's a narrower than the representation and it will speak for itself.

[00:36:01] Speaker 06:
Thank you, James.

[00:36:04] Speaker 06:
All right, Mr. Cummings, why don't you take two minutes?

[00:36:09] Speaker 06:
Thank you, Your Honor.

[00:36:12] Speaker 06:
Microphone.

[00:36:16] Speaker 04:
Returning to that last point that what my client subsequently learned, what the claimant subsequently learned was that his

[00:36:26] Speaker 04:
clients principle was involved.

[00:36:29] Speaker 04:
So, Judge Wilkins, you're correct that there's no evidence in the record that he reported it to his client because his client wasn't the individual, it was the company.

[00:36:40] Speaker 04:
But if I direct you to page 92 of the joint appendix, this is from the final order, claimant brought his concerns to the employer's manager before reporting to the SEC

[00:36:50] Speaker 04:
but did not feel that his actions effectively address the situation.

[00:36:54] Speaker 04:
Dropping down to the footnote, according to the claimant, the employer did not have a compliance department or compliance officer for claimant to report his concerns to

[00:37:03] Speaker 04:
and claimant did not believe that further reporting to the employer's manager would be useful in preventing harm to investors.

[00:37:11] Speaker 04:
Claimant resigned from the employer due to increasing concerns about the employer's manager about a year after submitting the tip.

[00:37:19] Speaker 04:
Again, he made the tip.

[00:37:22] Speaker 04:
He did not know that his client was involved and his client was not the individual, but the company.

[00:37:30] Speaker 04:
He learned about the company

[00:37:32] Speaker 04:
The company's involvement, he resigned and he continued to participate in the investigation.

[00:37:40] Speaker 04:
When he made the team in 2014, he would have qualified indisputably for the award.

[00:37:45] Speaker 03:
Why did he say that he was reporting a crime by his client repeatedly later on then?

[00:37:54] Speaker 06:
Your honor, I

[00:37:56] Speaker 04:
I don't know, but I believe that hindsight and the eight years participating in this investigation, they have changed his view of the world.

[00:38:06] Speaker 04:
But from the four corners of the TCR, when he made it, he said he wanted the project to be successful.

[00:38:12] Speaker 03:
Is there precedent that says that the SEC is only allowed to consider the four corners of the TCR and can't consider statements that are made afterwards?

[00:38:25] Speaker 06:
No, Your Honor.

[00:38:29] Speaker 06:
Unless there are any other questions, we respectfully ask that reverse the commission's decision for an award.

[00:38:35] Speaker 06:
Thank you.