NWC Launches National Campaign to Stop Grimm Act
Washington, D.C. January 24, 2012. Today, the National Whistleblowers Center launched a national campaign against the Grimm Act (H.R. 2483). The bill, sponsored by Rep. Michael Grimm [R-NY13], systematically rolls back every whistleblower provision included in the Dodd-Frank Wall Street Reform Act. It has passed the initial mark-up and is poised for full approval.
The NWC has called upon its grassroots network to oppose the bill, calling it an act of war on whistleblowers. The NWC objects to the following measures of the bill, which systematically dismantle the current, effective whistleblower process from beginning to end:
- Gag orders legalized -- The bill permits companies
to enforce, "any established employment agreements, workplace policies,
or codes of conduct," regardless of the impact on the right of an
employee to report corporate crimes. This means that companies can force
employees to sign agreements forfeiting their whistleblower rights.
- Retaliation legalized -- "Any adverse action taken
against a whistleblower for any violation of such agreements, policies,
or codes shall not constitute retaliation" (emphasis added).
- Law enforcement crippled -- The Grimm Act requires
the SEC to, "promptly notify any entity that is to be subject to [an
investigation]" before beginning an investigation. Tipping off companies
suspected of violating the law allows the corporations to intimidate
witnesses and tamper with evidence before the investigation begins.
- Anonymity destroyed -- The Grimm Act allows, and
in most cases requires, the SEC to, "disclose to the employer's audit
committee such information provided by the whistleblower." This means
that the SEC would not only be unable to guarantee confidentiality, but
it would be required to turn whistleblowers over to the very
corporations accused of wrongdoing.
- Accountability minimized -- The Dodd-Frank Act
provides incentives for companies to self-report violations, including
reduced fines and penalties. The Grimm Act creates a gaping loophole,
allowing companies to claim they self-reported even when a whistleblower
makes a report to the SEC. This applies even if the company initially
covered up problems and retaliated against the whistleblower.
- Whistleblowers disqualified -- The Dodd-Frank Act
reasonably excludes persons found guilty of fraud from obtaining the
benefits of the new SEC whistleblower program. However, the Grimm Act
disqualifies employees who in any way "participated in" the violation.
This means that low- and mid-level employees, such as a secretary who
took a phone call or a clerk who made a photocopy, are excluded from the
whistleblower program. This subtle-but-deliberate language would cut
out the vast majority of whistleblowers from protection, as almost every
whistleblower "participates" in the violations they uncover.
- Awards program broken -- The Grimm Act makes
whistleblower awards discretionary, returning the SEC whistleblower
program to its pre-Dodd Frank Act status. The old program was completely
discredited by a 2010 report by the SEC Inspector General.
This document reported that the SEC helped only five people and awarded
only $159,537 during 20 years of operating a discretionary program. The
report lamented that the discretionary program was, "not fundamentally
well-designed to be successful," and made recommendations that were
implemented by the Dodd-Frank Act. The Grimm Act turns back the clock.
Stephen M. Kohn, Executive Director of the National Whistleblowers Center, issued the following statement about the Grimm Act:
The Grimm Act is a license to steal. It undermines every major
whistleblower protection achieved for corporate employees in the past 20
years. Employees witness fraud every single day, and they are going to
stay silent if this bill is passed. It stacks the deck in favor of those
who are accused of waste, fraud, and abuse, and it removes the only
incentive David has to fight Goliath. This is a green light for
corporate fraud. It must be stopped.
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