Republican Senators Urge Stronger Whistleblower Protections

Recently, two Committee Chairmen in the U.S. Senate sent a
letter to the Acting Chairman of the Commodity Futures Trading
Commission urging the CFTC to take stronger actions to protect
whistleblowers.  That letter, signed by two ranking
Republicans, may come as
some relief for a potential CFTC or
SEC whistleblower, or for a
CFTC or
SEC whistleblower lawyer, concerned over all of the recent calls to repeal the
Dodd-Frank Act.

Calls To Repeal The Dodd-Frank Act

President Trump campaigned on a platform of “repeal
Dodd-Frank”.  Since President Trump’s swearing in last month,
he has made several statements about repealing Dodd-Frank, as
have many Republican Senators and Congressmen.  Some rules
enacted under Dodd-Frank have already come under attack.  News
articles about the likelihood and effects of a repeal of the
Dodd-Frank Act have appeared in the media almost daily.

The Dodd-Frank Act Whistleblower Programs

The CFTC whistleblower program was created by the Dodd-Frank
Act.  So was the
SEC whistleblower program.  Naturally, the calls to repeal Dodd-Frank have caused some
concern among potential and active CFTC and SEC
whistleblowers.

What needs to be remembered is that the “Dodd-Frank Act” is
not synonymous with either the SEC whistleblower program or
the CFTC whistleblower program.

As I wrote about in my 3-part post following the November 2016
Presidential election, the SEC whistleblower provisions are
stand-alone provisions.  It is entirely possible to amend
other sections of the Dodd-Frank Act while leaving the SEC
whistleblower provisions intact; to move the SEC whistleblower
provisions into a new replacement Act; to amend the Securities
Exchange Act of 1934 to add the whistleblower provisions
directly to it; or even to move the SEC whistleblower
provisions into their own separate Act without the need to use
any other Act as a vehicle.  The CFTC whistleblower program
could be maintained in a similar manner.

Rep. Hensarling’s Recent Memo

Late last week, U.S. House of Representatives Financial
Services Committee Chair Jeb Hensarling (R-Texas) supposedly
circulated a memo that has been reported in the media as
“taking aim” at the SEC whistleblower program.  While I have
not yet seen the memo, my understanding is that it was focused
on banning co-conspirators in a crime from receiving an
SEC whistleblower award.

Under the SEC  whistleblower rules already, if someone is
convicted in a criminal case for the conduct they are
reporting, they cannot receive an
SEC whistleblower reward.  Presumably, the memo seeks to extend that to people who
are found civilly liable as co-conspirators in SEC cases, as
well.

From what I have heard so far, the Hensarling memo did not
call for dismantling the SEC whistleblower program itself.  It
would be bizarre if it did, considering that on the House
Financial Services Committee website is a page with a “Whistle
Blower Form”, and a big picture box link captioned “Blow the
Whistle”, alongside a picture of and a quote from Chairman
Hensarling.

[Edit: The House Committee’s “Blow the Whistle” webpage was
live as of February 14, 2017, the original date of this
article.  At that time, the Republican Party held a majority
in the House.  After a Democratic majority was seated in the
House in January 2019, a new whistleblower page captioned
“Whistleblower Form” was posted on the House Committee on
Financial Services’ website.  That Form can be found
here
(as of February 15, 2018).]

The Senators’ Letter Demonstrates
Bi–Partisan
Support For Whistleblowers

In the second part of my post-election article, I noted that,
once enacted, whistleblower programs have historically enjoyed
bi-partisan support.  The two Republican Senators’ recent
letter extends that bi-partisan support to the present.

The
letter
was signed by Pat Roberts, the
Republican Chairman of the
Senate Agriculture Committee, and Charles E. Grassley, the
Republican Chairman of the
Senate Judiciary Committee who has been a long-time supporter
of whistleblower rights and protections.  It was copied to the
Democratic Ranking
Minority Members of those two Committees.

In their letter, among other things, Senators Roberts and
Grassley stated:

Whistleblowers perform an invaluable public service.  Yet,
they often face intimidation, retaliation, and prohibited
personnel practices…. It is vital that employees … are
reminded about their ability to make protected disclosures….
retaliation against whistleblowers will not be tolerated.

This is strong language by two ranking
Republican Senators in
support of whistleblower rights and protections, and should
give potential CFTC and SEC whistleblowers a measure of
confidence in light of the recent Hensarling memo.

It is also reminiscent of a letter written in 2014, signed by
eight Democratic Members
of Congress, in which they urged the then-SEC Chair to take
greater measures to protect SEC whistleblowers.

Additional Information

If you would like to read the prior posts mentioned above, you
can find them by clicking on the following links:

For Part 1 of my post-election article, click
here. ->

For Part 2 of my post-election article, click
here. ->

For Part 3 of my post-election article, click
here. ->

For my article about the 2014 letter to the SEC, click
here. ->

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