The proposed H.R. 2483, known as The Whistleblower Improvement Act of 2011 is poised to move through congress this year, and was recently approved by a subpanel of the House Financial Services Committee.It is now under consideration by the full committee.The bill, introduced in July 2011 by Rep. Michael Grimm (R-NY), would gut the whistleblower provisions of the Dodd-Frank Act, a 2010 measure that, among other things, created the SEC Whistleblower Office.For whistleblowers, this could be a potentially devastating measure that would strip protections and rewards and require internal reporting and handling of fraud by companies before it is brought to the program’s attention.The bill (nicknamed the “Throw the Whistleblowers to the Wolves Act” by Rep. Carolyn Maloney (D-NY), a member of the subpanel who voted against the measure) has been widely criticized for enabling law-breaking companies to cover up wrongdoing, and taking a step backwards in the fight against government fraud.
SEC Chairman Mary Shapiro wrote, in a December letter to Rep. Barney Frank (D-MA), that the newly implemented whistleblower program is already “providing significant benefits” and warned against making premature changes in light of “the absence of any evidence of problems with the current program.”Since the implementation of the Whistleblower program, the number of “high value tips” that SEC receives each month has increased dramatically.The SEC reported receiving 334 tips in the seven weeks following the date the final rules went into effect.The Chamber of Commerce, along with major corporations, supports the measure but it has met resistance from whistleblowers and agency officials who say it would discourage people from coming forward and tip off companies that they were under investigation, allowing for potential cover-ups before investigations could be carried out.
Grassroots organizations such as the Project on Government Oversight (POGO) are fighting back against the proposed bill.POGO wrote a letter to the House Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, before the measure was approved, expressing strong opposition and calling it a “an extreme approach that would silence would-be whistleblowers”. The House subpanel that approved the bill in December voted along party lines, and the measure is expected to move successfully through the House, though Ms. Shapiro predicted that it “faces almost zero chance of proceeding in the Senate, where Democrats who control the chamber have resisted efforts to undermine Dodd-Frank”.
Read our earlier post about The Whistleblower Improvement Act of 2011 here.
If you have information concerning a violation of the SEC or the commodities market, contact an attorney at Egan Young today for a free confidential consultation at 215-367-5151.