Whistleblower Incentives and Protections (§ 922)
The legislation is intended to increase the reporting of securities laws violations by enhancing existing rewards and protections for whistleblowers. The existing whistleblower rewards program is limited to insider trading cases, caps rewards at 10% of the funds collected as sanctions, and, according to a recent report from the SEC’s Office of Inspector General, has enjoyed only “minimal” success. Under the new enhanced program, a whistleblower providing “original” information to the SEC that leads to a successful enforcement action resulting in monetary sanctions exceeding $1 million will be eligible for a reward of between 10% and 30% of the funds collected as sanctions. Whistleblower protections will also be enhanced: a whistleblower will now be able to sue a retaliating employer directly in federal court, whereas previously a whistleblower had to exhaust administrative remedies.
In addition, Congress has clarified that existing whistleblower protections under the Sarbanes-Oxley Act apply to both parent companies and affiliates whose financial information is included in the parent’s consolidated financial statements.