Yesterday, top Democrats called on the Securities and Exchange Commission (SEC) to ensure adequate protection of financial sector whistleblowers, after a wave of corporate maneuvers designed to suppress reporting of securities law violations. Increased congressional oversight comes just months after GAP and Labaton Sucharow launched a campaign to strengthen protections for corporate whistleblowers through a rulemaking petition to the SEC.
A letter from Financial Services Ranking Member Maxine Waters (D-CA) and Oversight and Government Reform Ranking Democrat Elijah Cummings (D-MD), joined by six other committee members, calls on SEC Chair Mary Jo White to take concrete measures to ensure the effectiveness of its Whistleblower Program, established under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Specifically, they called for clarification of overly restrictive nondisclosure agreements, so that employees are “clearly informed that these agreements in no way restrict their right to voluntarily report securities law violations to the Commission.” The letter also addressed the chilling effect that job-related harassment and retaliation through litigation could have on future reporting of misconduct.
Congressional concerns are shared by more than 50 organizations and companies, representing nearly two million citizens and 250 groups, who sent a letter to the SEC in July to engage in appropriate rulemaking to clarify and strengthen whistleblower protections, among other measures to safeguard its Whistleblower Program.
To date, more than 6,000 whistleblower tips, complaints, and referrals have been sent to the SEC from every state in the U.S. and 55 countries around the world. Notwithstanding the program’s laudable achievements over its four year lifespan, Monday’s letter shrewdly cautioned:
[T]his success may be fleeting if corporate actions that chill the environment for whistleblowers are not promptly and adequately addressed … Taken together, preemptive legal maneuvering to silence prospective whistleblowers and retaliation against known whistleblowers undermine the continued success of the SEC’s Whistleblower Program and its crucial role in protecting investors. We urge the Commission to send a strong message to industry, including by bringing enforcement actions if necessary, that such acts will not be tolerated.
The letter concludes by requesting prompt information on what action the SEC is taking, as well as any challenges that it is facing, in addressing the mistreatment of financial-sector whistleblowers.
Ranking Members Waters and Cummings were joined by Reps. Gwen Moore (WI), Jackie Speier (CA), Keith Ellison (MN), Tammy Duckworth (IL), Stephen Lynch (MA) and Matt Cartwright (PA).
During a period of great distrust in big banks and government regulators, GAP applauds the letter’s signatories for exercising congressional oversight authority so that corporate truth-tellers can safely report financial misconduct.
View the full letter here.
For more information on GAP and Labaton Sucharow’s campaign, and to take action to protect corporate whistleblowers, go to our SEC Reform page.
Shanna Devine is Legislative Director for the Government Accountability Project, the nation’s leading whistleblower protection and advocacy organization.