Lawmakers Propose Additional Financial Whistleblower Protections

February 26, 2016

Financial whistleblowers found some support on Capitol Hill yesterday, when Senator Tammy Baldwin and Representative Elijah Cummings introduced the Whistleblower Augmented Reward and Non-Retaliation Act of 2016 (WARN Act), which would create significant new protections and rewards for financial whistleblowers. The Act would bolster important protections provided by the 2002 Sarbanes-Oxley Act and the 2010 Dodd-Frank Act.

The proposed WARN Act would prohibit employers from forcing employees to sign nondisclosure or confidentiality agreements that would require the employee to waive her rights to communicate with the government or force her to reveal any such communications to her employer. The Act would also prohibit retaliation against employees who refuse to participate in actions they believe violate financial laws, and provide the same whistleblower protections to regulators who disclose information relating to a bank’s safety or soundness.

The procedures and remedies available under the WARN Act would be very favorable to employees.  Whistleblowers would only need to prove that their actions were a contributing factor in the unfavorable personnel action taken against them. And the damages available to WARN Act whistleblowers would be among the most generous available under any whistleblower protection statute: reinstatement, two-times back pay, compensatory damages, and punitive damages.

Additionally, the WARN Act would increase whistleblower rewards available to financial whistleblowers. The Act provides whistleblower rewards similar to those provided by the Dodd-Frank Act to whistleblowers who disclose violations of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and the Federal Deposit Insurance Act (FDIA), awarding such whistleblowers between 10 percent and 30 percent of penalties and recoveries imposed as a result of the information they provide. The SEC Whistleblower Program has demonstrated the effectiveness of whistleblower reward programs like this, and it will benefit the public to expand those rewards to increase transparency and accountability in institutions whose practices are critical to the financial well-being of the country.

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