Financial Reform Passes - Major Whistleblowing Changes as Well
by Michael Fox
Thanks to Jacob Zuckerman at the Employment Law Group for his on the spot reporting about the new whistleblowing provisions contained in the major financial bill that was passed earlier today. See Dodd-Frank Bill Provides Robust Whistleblower Protection, including a link to a download of all the whistleblower provisions contained in the legislation.
Among the interesting provisions:
- A reward to whistleblowers who provide information to the SEC which results in monetary sanctions exceeding $1 million. There are lots of caveats and discretion given to the SEC, but if the award is below 30% of the amount recouped, the individual can file an appeal to a federal court of appeals.
- There is also protection for retaliation against anyone who provides information in accordance with this incentive program.
- There is a new Whistleblower statute for Financial Services employees which focuses on conduct related to consumer financial product or services, but has quite a broad scope of coverage.
- A reward to whistleblowers who provide information to the Commodity Futures Trading Commissions, with similar provisions relating to an appeal if the individual does not like the award they received, although it differs from the similar statute under the SEC in that it does not have a 30% standard that must be met before an appeal is filed.
- Closes a possible loophole in Sarbanes Oxley coverage by making it clear that subsidiaries of publicly traded companies are included if their results are included in the consolidated financial statements. The statute of limitations doubles to 180 days and precludes SOX claims from being covered by mandatory arbitration agreements.
- There is also a strengthening of the False Claims Act whistleblowers retaliation provision and sets the statute of limitations at three years.
Given that it takes a number of years for employment law legislation to work its way into the framework of the law of the workplace, it may be a few years before the impact of today's legislative action is really determined. And because they are statutory and industry specific, it may even take longer for these particularl statutes.
But it is a pretty impressive body of new law and those in the affected industries would do well to take note.