On March 31, Senators Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) introduced the SEC Whistleblower Reform Act of 2022 in order to further strengthen the highly successful Securities and Exchange Commission (SEC) Whistleblower Program. The bill bolsters the program’s anti-retaliation protections and ensures that award claims are processed by the agency in a more timely manner.
“This law is urgently needed,” said leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto. “Whistleblowers who have been fired often have to wait over four years for any compensation. This amendment closes that painful loophole.”
As noted by the senators’ press release, the bipartisan proposal has been endorsed by Whistleblower Network News and the National Whistleblower Center. It is cosponsored by Senators Catherine Cortez-Masto (D-NV), Susan Collins (R-ME) and Raphael Warnock (D-GA).
The bill aims to ensure the prompt payment of whistleblower awards by setting mandatory deadlines for the SEC to issue award determinations. In general, the bill would require that the SEC issues a determination no later than “the date that is 1 year after the deadline established by the Commission, by rule, for the whistleblower to file the award claim” or “the date that is 1 year after the final resolution of all litigation, including any appeals, concerning the covered action or related action.”
The bill also extends anti-retaliation protections to whistleblowers who report misconduct internally to supervisors. Currently, as ruled by the Supreme Court in Digital Realty Trust, Inc. v. Somers, protections only apply when a whistleblower contacts the SEC or other select officials. The bill also clarifies that whistleblowers cannot waive their rights through a predispute arbitration agreement.
“SEC whistleblowers are critical for rooting out fraud and protecting investors, and those who often put their career at risk to report wrongdoing should be shielded from retaliation,” said Grassley. “While I’m pleased that the program has been an overwhelming success, we can still do more to strengthen protections, speed up claim processing and close other loopholes.”
“The American people must have confidence that they can report violations of securities laws without retaliation from their employer,” said Warren. “That is why I am glad to partner with Senator Grassley to introduce the SEC Whistleblower Reform Act of 2022 to expand and strengthen whistleblower protections.”