Lawsuit accuses SEC, ex-chair Clayton of denying whistleblower award

A lawsuit accuses the SEC and former chairman Jay Clayton of using false declarations to deny a whistleblower's award claim. 

Andrew Delaney has taken the SEC to federal court, alleging the agency torpedoed his whistleblower award by relying on two internal staff declarations that directly contradicted each other — and the agency's own records. 

The suit, filed April 13 in the Northern District of Texas (Delaney v. U.S. Securities and Exchange Commission, et al., Case No. 4:26-cv-00453), also names former SEC Chairman Walter Joseph Clayton III as a defendant in his individual capacity. 

According to the filing, the dispute stretches back to January 2016, when Goldman Sachs contracted Delaney in connection with politically exposed accounts in Southeast Asia. By June 2017, he had submitted whistleblower information to the SEC, and from October 2017 through February 2018, SEC staff communicated with him and requested additional information following his submission. 

Then came the 1MDB resolution. In October 2020, the Department of Justice, in coordination with the SEC, entered into a Deferred Prosecution Agreement with The Goldman Sachs Group, Inc. in connection with the 1MDB investigation. 

The lawsuit alleges the SEC then relied on contradictory declarations from its own attorneys to deny Delaney's claim. A September 2021 declaration from SEC attorney Eric Heining stated that Delaney's submission was not voluntary, that the agency received no information from him, and that there had been no contact or communication with him. Delaney alleges those statements were contradicted by the agency's own record. 

A second declaration, from SEC attorney Frank E. Correll, Jr. in April 2023, stated that SEC staff had in fact sent document requests to Goldman Sachs based on Delaney's information back in October 2017 — undercutting the earlier position that his information played no role. The filing also alleges Correll falsely stated Delaney had failed to identify account holders, which Delaney says he had. 

The SEC's Final Order in May 2023 denied the claim, stating Delaney did not contribute and that his information was duplicative. He appealed to the United States Court of Appeals for the District of Columbia Circuit, which denied relief. His petition for certiorari was also denied. Those proceedings dealt with the administrative determination — not the allegations of independent misconduct raised here. 

The lawsuit also surfaces what it frames as a conflict of interest. According to the filing, Clayton's wife, Gretchen Butler Clayton, was a financial adviser at Goldman Sachs. Clayton was appointed SEC chairman in May 2017. He resigned in November 2020, less than a month after the Goldman Sachs resolution, and according to the filing, returned to doing work for Goldman Sachs. 

Delaney is seeking $10 million in damages, vacatur, and remand. No determination has been made on any of the claims, and the SEC has not yet responded. 

For advisors and wealth professionals watching SEC enforcement closely, the case puts a spotlight on the whistleblower program's internal processes — and whether those who come forward can trust the system designed to protect them.