On March 15, Senators Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) introduced the Securities and Exchange Commission (SEC) Whistleblower Reform Act of 2023 in order to further strengthen the highly successful SEC Whistleblower Program. The bill bolsters the Dodd-Frank Act’s anti-retaliation protections and ensures that the agency processes award claims in a more timely manner.
“This is an important bill that needs to be quickly passed,” said leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto.
“The bill fixes the three big problems with Dodd-Frank: It covers internal whistleblowers who report to corporate compliance, it addresses the long delays that have bogged down the program, and it makes sure that nondisclosure agreements do not silence whistleblowers,” continued Kohn, who also serves as the Chairman of the Board of the National Whistleblower Center.
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.
Established by the Dodd-Frank Act in 2010, the SEC Whistleblower Program has become the gold standard of whistleblower award programs. The program has allowed the agency to collect over $6.3 billion from fraudsters and return over $1.5 billion to harmed investors. Overall, the SEC has awarded over $1.3 billion to over 300 whistleblowers.
“Whistleblowers bring sunshine to the corners of our government and the private sector where waste, fraud and abuse are taking place in the shadows,” said Senator Grassley. “The American people have whistleblowers to thank for recovering billions of valuable taxpayer dollars. I’m proud to once again lead this push for greater government accountability by protecting the whistleblower process at the SEC.”
The SEC Whistleblower Reform Act of 2023 is cosponsored by Senators Catherine Cortez-Masto (D-NV), Susan Collins (R-ME) and Raphael Warnock (D-GA).
Further Reading:
Grassley, Warren Reintroduce Bill to Strengthen SEC Whistleblower Program
