Whistleblower Improvement Act of 2011 - Amends the Securities Exchange Act of 1934 and the Commodity Exchange Act to require a whistleblower employee, as a prerequisite to eligibility for a whistleblower award, to: (1) first report information relating to misconduct to his or her employer before reporting it to the Securities and Exchange Commission (SEC), and (2) report such information to the SEC within 180 days after reporting it to the employer.
Prohibits a whistleblower award to any whistleblower who fails to report the relevant information to his or her employer first, unless: (1) the employer lacks either a policy prohibiting retaliation for reporting potential misconduct or an internal reporting system allowing for anonymous reporting, or (2) the SEC determines that internal reporting was not a viable option.
Prohibits a whistleblower award to any whistleblower who has legal or compliance responsibilities and a fiduciary or contractual obligation to investigate internal reports of misconduct or violations if the information learned by the whistleblower during the course of his or her duties was communicated with the reasonable expectation that such person would take appropriate steps to respond.
Makes the whistleblower award discretionary instead of mandatory. Repeals the minimum award requirement.
Prohibits an award to a whistleblower found civilly liable or determined by the SEC to have been complicit in misconduct related to the pertinent violation.
Requires the SEC to notify the pertinent entity before commencing any enforcement action relating to information reported by a whistleblower, unless such notification would jeopardize investigative measures and impede the gathering of relevant facts.
Directs the Comptroller General to study what impact, if any, the whistleblower incentives program has had upon shareholder value.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2483 Introduced in House (IH)]
112th CONGRESS
1st Session
H. R. 2483
To amend the Securities Exchange Act of 1934 and the Commodity Exchange
Act to modify certain provisions relating to whistleblower incentives
and protection.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 11, 2011
Mr. Grimm (for himself, Mr. Garrett, Mr. Stivers, and Mr. Campbell)
introduced the following bill; which was referred to the Committee on
Financial Services, and in addition to the Committee on Agriculture,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of
the committee concerned
_______________________________________________________________________
A BILL
To amend the Securities Exchange Act of 1934 and the Commodity Exchange
Act to modify certain provisions relating to whistleblower incentives
and protection.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Whistleblower Improvement Act of
2011''.
SEC. 2. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Exclusion of Certain Compliance Officers and Internal Reporting
as a Condition of Award.--Section 21F of the Securities Exchange Act of
1934 (15 U.S.C. 78u-6) is amended--
(1) in subsection (b), by redesignating paragraph (2) as
paragraph (3) and inserting after paragraph (1) the following:
``(2) Internal reporting required.--In the case of a
whistleblower who is an employee providing information relating
to misconduct giving rise to the violation of the securities
laws that was committed by his or her employer or another
employee of the employer, to be eligible for an award under
this section, the whistleblower, or any person obtaining
reportable information from the whistleblower, shall--
``(A) first report the information described in
paragraph (1) to his or her employer before reporting
such information to the Commission; and
``(B) report such information to the Commission not
later than 180 days after reporting the information to
the employer.''; and
(2) in subsection (c)(2)--
(A) in subparagraph (C), by striking ``or'' at the
end; and
(B) by redesignating subparagraph (D) as
subparagraph (F) and inserting after subparagraph (C)
the following:
``(D) to any whistleblower who fails to first
report the information described in subsection (b)(1)
that is the basis for the award to his or her employer
before reporting such information to the Commission, in
the case where the misconduct giving rise to the
violation of the securities laws was committed by such
employer or an employee of the employer, unless the
whistleblower alleges and the Commission determines
that the employer lacks either a policy prohibiting
retaliation for reporting potential misconduct or an
internal reporting system allowing for anonymous
reporting, or the Commission determines in a
preliminary investigation not exceeding 30 days that
internal reporting was not a viable option for the
whistleblower based on--
``(i) evidence that the alleged misconduct
was committed by or involved the complicity of
the highest level of management; or
``(ii) other evidence of bad faith on the
part of the employer;
``(E) to any whistleblower who has legal,
compliance, or similar responsibilities for or on
behalf of an entity and has a fiduciary or contractual
obligation to investigate or respond to internal
reports of misconduct or violations or to cause such
entity to investigate or respond to the misconduct or
violations, if the information learned by the
whistleblower during the course of his or her duties
was communicated to such a person with the reasonable
expectation that such person would take appropriate
steps to so respond; and''.
(b) Elimination of Minimum Award Requirement.--Subsection (b)(1) of
such section is amended--
(1) by striking ``shall'' and inserting ``may''; and
(2) by striking ``in an aggregate amount equal to--'' and
all that follows and inserting ``an amount determined by the
Commission but not more than 30 percent, in total, of what has
been collected of the monetary sanctions imposed in the action
or related actions.''.
(c) Exclusion of Whistleblowers Found Culpable.--Subsection
(c)(2)(B) of such section is amended by inserting ``, is found civilly
liable, or is otherwise determined by the Commission to have committed,
facilitated, participated in, or otherwise been complicit in misconduct
related to such violation'' after ``violation''.
(d) Rule of Construction Relating to Other Workplace Policies.--
Subsection (h)(1) of such section is amended by adding at the end the
following:
``(D) Rule of construction.--Nothing in this
paragraph shall be construed as prohibiting or
restricting any employer from enforcing any established
employment agreements, workplace policies, or codes of
conduct against a whistleblower, and any adverse action
taken against a whistleblower for any violation of such
agreements, policies, or codes shall not constitute
retaliation for purposes of this paragraph, provided
such agreements, policies, or codes are enforced
consistently with respect to other employees who are
not whistleblowers.''.
(e) Notification to Employer.--Paragraph (2) of subsection (h) of
such section is amended--
(1) in the paragraph heading, by striking
``confidentiality'' and inserting ``Notification to employer
and confidentiality'';
(2) by redesignating subparagraph (A) through (D) as
subparagraphs (B) through (E), respectively;
(3) by inserting a new subparagraph (A) as follows:
``(A) Notification of investigation.--
``(i) Notification required.--Prior to
commencing any enforcement action relating in
whole or in part to any information reported to
it by a whistleblower, the Commission shall
notify any entity that is to be subject to such
action of information received by the
Commission from a whistleblower who is an
employee of such entity to enable the entity to
investigate the alleged misconduct and take
remedial action, unless the Commission
determines in the course of a preliminary
investigation of the alleged misconduct, not
exceeding 30 days, that such notification would
jeopardize necessary investigative measures and
impede the gathering of relevant facts, based
on--
``(I) evidence that the alleged
misconduct was committed by or involved
the complicity of the highest level
management of the entity; or
``(II) other evidence of bad faith
on the part of the entity.
``(ii) Good faith.--Where an entity
notified under clause (i) responds in good
faith, which may include conducting an
investigation, reporting results of such an
investigation to the Commission, and taking
appropriate corrective action, the Commission
shall treat the entity as having self-reported
the information and its actions in response to
such notification shall be evaluated in
accordance with the Commission's policy
statement entitled `Report of Investigation
Pursuant to Section 21(a) of the Securities
Exchange Act of 1934 and Statement of the
Relationship of Cooperation to Agency
Enforcement Decisions'.''; and
(4) in the heading of subparagraph (B) (as redesignated by
paragraph (3)), by striking ``in general'' and inserting
``Confidentiality''.
SEC. 3. AMENDMENTS TO THE COMMODITY EXCHANGE ACT.
(a) Exclusion of Certain Compliance Officers and Internal Reporting
as a Condition of Award.--Section 23 of the Commodity Exchange Act (7
U.S.C. 26) is amended--
(1) in subsection (b), by redesignating paragraph (2) as
paragraph (3) and inserting after paragraph (1) the following:
``(2) Internal reporting required.--In the case of a
whistleblower who is an employee providing information relating
to misconduct giving rise to the violation of the securities
laws that was committed by his or her employer or another
employee of the employer, to be eligible for an award under
this section, the whistleblower, or any person obtaining
reportable information from the whistleblower, shall--
``(A) first reported the information described in
paragraph (1) to his or her employer before reporting
such information to the Commission; and
``(B) report such information to the Commission not
later than 180 days after reporting the information to
the employer.''; and
(2) in subsection (c)(2)--
(A) in subparagraph (C), by striking ``or'' at the
end; and
(B) by redesignating subparagraph (D) as
subparagraph (F) and inserting after subparagraph (C)
the following:
``(D) to any whistleblower who fails to first
report the information described in subsection (b)(1)
that is the basis for the award to his or her employer
before reporting such information to the Commission, in
the case where the misconduct giving rise to the
violation of the securities laws was committed by such
employer or an employee of the employer, unless the
whistleblower alleges and the Commission determines
that the employer lacks either a policy prohibiting
retaliation for reporting potential misconduct or an
internal reporting system allowing for anonymous
reporting, or the Commission determines in a
preliminary investigation not exceeding 30 days that
internal reporting was not a viable option for the
whistleblower based on--
``(i) evidence that the alleged misconduct
was committed by or involved the complicity of
the highest level of management; or
``(ii) other evidence of bad faith on the
part of the employer;
``(E) to any whistleblower who has legal,
compliance, or similar responsibilities for or on
behalf of an entity and has a fiduciary or contractual
obligation to investigate or respond to internal
reports of misconduct or violations or to cause such
entity to investigate or respond to the misconduct or
violations, if the information learned by the
whistleblower on the course of his or her duties was
communicated to such a person with the reasonable
expectation that such person would take appropriate
steps to so respond; and''.
(b) Cap on Award in Certain Circumstances and Elimination of
Minimum Award Requirement.--Subsection (b)(1) of such section is
amended--
(1) by striking ``shall'' and inserting ``may''; and
(2) by striking ``in an aggregate amount equal to--'' and
all that follows and inserting ``in an amount determined by the
Commission but not more than 30 percent, in total, of what has
been collected of the monetary sanctions imposed in the action
or related actions.''.
(c) Exclusion of Whistleblowers Found Culpable.--Subsection
(c)(2)(B) of such section is amended by inserting ``, is found civilly
liable, or is otherwise determined by the Commission to have committed,
facilitated, participated in, or been complicit in misconduct related
to such a violation'' after ``violation''.
(d) Rule of Construction Relating to Other Workplace Policies.--
Subsection (h)(1) of such section is amended by adding at the end the
following:
``(D) Rule of construction.--Nothing in this
paragraph shall be construed as prohibiting or
restricting any employer from enforcing any established
employment agreements, workplace policies, or codes of
conduct against a whistleblower, and any adverse action
taken against a whistleblower for any violation of such
agreements, policies, or codes shall not constitute
retaliation for purposes of this paragraph, provided
such agreements, policies, or codes are enforced
consistently with respect to other employees who are
not whistleblowers.''.
(e) Notification to Employer.--Paragraph (2) of subsection (h) of
such section is amended--
(1) in the paragraph heading, by striking
``confidentiality'' and inserting ``Notification to employer
and confidentiality'';
(2) by redesignating subparagraph (A) through (D) as
subparagraphs (B) through (E), respectively;
(3) by inserting a new subparagraph (A) as follows:
``(A) Notification to employer.--
``(i) Notification required.--Prior to
commencing any enforcement action relating in
whole or in part to any information reported to
it by a whistleblower, the Commission shall
promptly notify any entity that is to be
subject to such enforcement of information
received by the Commission from a whistleblower
who is an employee of such entity to enable the
entity to investigate the alleged misconduct
and take remedial action, unless the Commission
determines in the course of a preliminary
investigation not exceeding 30 days of the
alleged misconduct, that such notification
would jeopardize necessary investigative
measures and impede the gathering of relevant
facts, based on--
``(I) evidence that the alleged
misconduct was committed by or involved
the complicity of the highest level
management of the entity; or
``(II) other evidence of bad faith
on the part of the entity.
``(ii) Good faith.--Where an entity
notified under clause (i) responds in good
faith, which may include conducting an
investigation, reporting results of such an
investigation to the Commission, and taking
appropriate corrective action, the Commission
shall treat the entity as having self-reported
the information and its actions in response to
such notification shall be evaluated
accordingly.''; and
(4) in the heading of subparagraph (B) (as redesignated by
paragraph (3)), by striking ``in general'' and inserting
``Confidentiality''.
SEC. 4. STUDY.
The Comptroller General shall conduct a study to determine what
impact, if any, the whistleblower incentives program established under
section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u-6)
and section 23 of the Commodity Exchange Act (7 U.S.C. 26) has had on
shareholder value. The Comptroller General shall transmit to Congress a
report on the study not later than 18 months after the date of
enactment of this Act.
<all>
Hearings Held by the Subcommittee on Capital Markets and Government Sponsored Enterprises Prior to Introduction and Referral.
Introduced in House
Introduced in House
Referred to the Committee on Financial Services, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on General Farm Commodities and Risk Management.
Referred to the Subcommittee on Capital Markets and Government Sponsored Enterprises.
Subcommittee Consideration and Mark-up Session Held.
Forwarded by Subcommittee to Full Committee (Amended) by the Yeas and Nays: 19 - 14 .
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