Congress Passes Major Whistleblower Reforms as Part of Wall Street Reform Bill

The Wall Street Reform and Consumer Protection Act (H.R. 4173) passed 60-39 by Congress today includes a number of provisions designed to protect employees who report fraud in the commodity and stock exchanges. This is one of the most important whistleblower laws ever passed.

The bill includes two qui tam provisions for Securities and Commodities whistleblowers, and three anti-retaliation provisions. It closes a major loophole in the Sarbanes-Oxley Act by covering subsidiaries of publicly traded companies. For the first time employees at "statistical rating organizations" such as Moody’s and Standard & Poor’s have whistleblower protection.

Although this bill is historic, it is important to note that these protections are for private employees. There is still work to be done to pass H.R. 1507, so that federal employees may also come forward to report waste, fraud and abuse without fear of retaliation.

The NWC has compiled the sections of this bill that pertain specifically to whistleblowers with a one-sentence summary of each (see below). Additionally, the NWC’s upcoming seminar, scheduled for July 23, 2010, has been updated to include a presentation of the whistleblower provisions in the Wall Street Reform Act. To register, click here.

Section 748
23(A) – qui tam for whistleblowers under the Commodities Exchange Act

23 sub (H) – anti-retaliation provision, which permits whistleblowers to go to federal court if they are retaliated against for filing fraud claims under the Commodities Exchange Act

Section 922

21F(a) qui tam for securities fraud: new qui tam rewards and incentives for whistleblowers who blow the whistle on securities violations

21F sub (H)(1) anti-retaliation provision for employees who file qui tam claims under securities law

(H)(1)(A)(iii) anti-retaliation for employees who make disclosures under SOX, any violation of SEC art or who make protected disclosures under obstruction of justice act

Claims filed in federal court – employees entitled to double back pay

(B) statistical ratings organizations (Moody’s & Standard & Poor’s) now protected under SOX anti-retaliation provisions (C) SOX whistleblower protection act enhanced and amended to increase the statute of limitations, guarantee jury trials, and prohibit mandatory arbitration agreements

Section 923 – Conforming amendments

Section 924 – SEC regulations to establish special whistleblower office and impose regulations enforcing whistleblower rules. 

Section 929A – SOX anti-retaliation law is clarified to ensure subsidiaries of publicly traded companies are fully protected under the whistleblower protection law

Section 966 – Federal employees are losers under the Act and regulators obtain no protections except a glorified "suggestion box"

Section 1057 – New whistleblower protection for employees who make disclosures to the newly created consumer protection board

Section 1079B – Amends the False Claims Act anti-retaliation law to provide for universal national 3 year statute of limitations to file wrongful discharge claims under the False Claims Act.

*Meryl Grenadier (NWC Fellow) drafted this post.

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