NY Attorney General Floats Whistleblower Incentive Bill

Schneiderman’s announcement comes a day after the Securities and Exchange Commission is probing whether companies are muzzling corporate whistleblowers.

The Wall Street Journal reported Wednesday that in recent weeks the agency has sent letters to a number of companies asking for years of nondisclosure agreements, employment contracts and other documents, according to people familiar with the matter and an agency letter viewed by The Journal. “The inquiries come as SEC officials have expressed concern about a possible corporate backlash against whistleblowers,” The Journal says.

Schneiderman’s bill would also guarantee the confidentiality of the whistleblower’s information, and make it illegal for any employer to retaliate in response.

“The rewards paid to whistleblowers will be drawn from monetary recoveries paid by those who commit wrongdoing, and not out of state funds, making this a cost-free way to increase the government’s ability to detect frauds and obtain recoveries,” he said.

The bill would also do the following:

• Provide monetary rewards to individuals who voluntarily provide original information, not previously known to the attorney general, which leads to monetary sanctions for financial fraud or misconduct in the securities industry. Whistleblowers would receive 10%-30% of the money obtained in a securities fraud case.
• Create a Financial Services Whistleblower Awards program within the state’s Department of Financial Services to reward whistleblowers for tips to that agency.
• Strengthen existing labor protections to make it explicitly unlawful for employers to discharge, demote, suspend or otherwise harass employees who report suspicious or fraudulent activity to supervisory or internal compliance staff.

— Check out Former American Realty Executive Drops Whistleblower Lawsuit on ThinkAdvisor.