A bipartisan group of Senators introduced Wednesday the Whistleblower Programs Improvement Act, which, among other measures, protects securities fraud whistleblowers who report violations internally from retaliation.
The bill, sponsored by Senate Finance Committee Chairman Chuck Grassley, R-Iowa, along with Sens. Tammy Baldwin, D-Wis.; Joni Ernst, R-Iowa; and Richard Durbin, D-Ill.;, does the following:
- Requires the Securities and Exchange Commission and the Commodity Futures Trading Commission to issue rulings on whistleblower reward cases within one year of the filing of applications for a reward;
- Protects securities fraud whistleblowers who report violations of securities or commodity trading laws internally to their managers or compliance programs from retaliation; and
- Prohibits mandatory arbitration in Dodd-Frank Act whistleblower retaliation cases filed in federal court.
“There’s no reason why those who want to report wrongdoing internally should face potential retaliation from the exact people they are reporting to, Grassley said in a statement. “Internal disclosures can be the fastest and most effective way for a company to remedy problems, prevent fraud and protect investors. Our bill will ensure that those who do the right thing and report violations will be protected.”
Stephen Kohn, a partner in the whistleblower law firm of Kohn, Kohn and Colapinto and the chairman of the Board of Directors of the National Whistleblower Center, added in a statement supporting the bill that the Whistleblower Programs Improvement Act “is essential to ensure that Wall Street whistleblowers are protected and that corporate crooks can be held accountable.”
“The long delays in issuing rewards under the Dodd-Frank Act are seriously harming whistleblowers and the credibility of the Dodd-Frank Act whistleblower reward laws,” Kohn said, adding that whistleblowers often have to wait over four years to obtain a reward.
The bill, Kohn argued, will also end mandatory arbitration in securities whistleblower cases and protect whistleblowers who report violations internally to their managers.
Forcing whistleblowers “to litigate their wrongful discharge cases in corporate-controlled mandatory arbitration proceedings is the kiss of death for most whistleblowers,” Kohn said. “Mandatory arbitration denies whistleblowers their day in court.”