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Bipartisan Whistleblower Protection Bill Would Strengthen Law Enforcement Efforts Against Securities and Commodities Fraud

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Bipartisan Whistleblower Protection Bill Would Strengthen Law Enforcement Efforts Against Securities and Commodities Fraud

Washington, DC | September 24, 2019 – Yesterday, Senator Chuck Grassley (R-IA) along with Senators Joni Ernst (R-IA), Dick Durbin (D-IL), and Tammy Baldwin (D-WI) introduced the Whistleblower Programs Improvement Act (S.2529). This important piece of legislation will increase and broaden the scope of protections for securities and commodities fraud whistleblowers as well as rectify backlogs in processing whistleblower rewards. The bill comes on the heels of the similar Whistleblower Protection Reform Act of 2019 (H.R.2515), passed in the House in July by an overwhelming bipartisan majority.

Like the House bill, the Senate bill would effectively reverse the Supreme Court decision in Digital Realty Trust Inc. v. Somers, which interpreted the Dodd-Frank securities fraud law as only protecting whistleblowing to disclosures to the Securities and Exchange Commission (SEC), not disclosures to the responsible officials in the whistleblower’s company. According to a report by the Ethics & Compliance Initiative, 97% of corporate employees blow the whistle internally first. NWC filed an amicus brief in support of the whistleblowers who lost protections for internal disclosures in that case and has since been working to rectify this loss with allies in Congress.

Under S. 2529, whistleblowers who come forward with evidence of potential securities and commodities violations are protected from retaliation regardless of whether they report the violations within their companies or to the SEC. The bill also requires applicable federal agencies to respond to the whistleblower’s reward claim within one year. An effective reward program for whistleblowers has been shown to be essential to prosecution of securities and commodities fraud. Finally, the bill prohibits mandatory arbitration in Dodd-Frank Act whistleblower retaliation cases that are filed in federal court.

National Whistleblower Center founder and board chairman, Stephen Kohn, said,

This bill is absolutely needed. It ensures that SEC claims can be timely decided and that employees who report violations to their employers cannot be fired. For years the NWC has strongly supported the right of employees to engage in internal reporting. We urged the Supreme Court to protect these rights. Unfortunately, the Court listened to the Chamber of Commerce. We need Congress to fix this gaping loophole in corporate whistleblower protections.

Executive Director of the National Whistleblower Center, John Kostyack, stated:

The National Whistleblower Center applauds the four Senators for introducing S.2529. We urge other Senators to help get this critical legislation enacted so that whistleblowers aware of securities and commodities fraud know that they will be protected and rewarded when they step forward.

For more information, please contact Nick Younger at nick.younger@whistleblowers.org.

 

 

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