Senate, House & 68 IGs Unite Behind Strong Whistleblowing
Policy: 2019 Year-In-Review

Amid recent calls by certain individuals to reveal the
identity of “the Ukraine whistleblower”, many potential SEC
whistleblowers, and
SEC whistleblower lawyers, have been wondering whether the U.S. government’s
whistleblowing policy
is still on their side.  It is.

Year-end is a time when many people reflect upon the year that
has just passed.  In that spirit, now is a perfect time to
review some of the federal government’s resolutions, bills,
and public statements from 2019, and what they reveal about
the federal government’s current whistleblowing policy.

2019 validated the predictions that I made shortly after the
2016 national election (see my post
here), and shortly before the 2018 mid-term elections (see my
post
here).

Throughout 2019, the whistleblowing policy of the U.S.
Legislative Branch was consistently in support of
SEC whistleblowers.  During
the year, both the U.S. Senate and the U.S. House of
Representatives introduced bipartisan bills to expand CFTC and
SEC whistleblower program protections.

The Senate also passed a resolution designating a National
Whistleblower Appreciation Day, to increase public awareness
of whistleblowers and the critical role they play in helping
the government to identify and combat fraud and corruption.

On the Executive side, the Inspectors General of approximately
68 federal government agencies publicly proclaimed their
support for maintaining strong whistleblower protections.  In
doing so, they reinforced their ongoing whistleblowing policy
of encouraging, supporting, and protecting their
whistleblowers.  These included the Inspectors General of the
U.S. Securities and Exchange Commission (“SEC”) and the
Commodity Futures Trade Commission (“CFTC”).

Senate Declares U.S. Whistleblowing Policy, Cites Founding
Fathers In Support Of National Whistleblower Appreciation Day

Back on May 8 of this year,
Resolution 194
was submitted to the U.S. Senate (S. Res. 194).  That
Resolution proposed designating July 30, 2019 as “National
Whistleblower Appreciation Day”.

On July 23, 2019, the
Senate voted
on the Resolution.  By
unanimous
consent, the Senate agreed to the Resolution without amendment.

The
text of the Resolution
begins by explaining that as far back as 1777, “the Founding
Fathers unanimously supported the whistleblowers in words and
deeds”.

242 years later, Resolution 194 reaffirms that the
whistleblowing policy of the United States remains unchanged:

it is the public policy of the United States to encourage …
honest and good faith reporting of misconduct, fraud,
misdemeanors, and other crimes to the appropriate authority at
the earliest time possible.

In addition to creating National Whistleblower Appreciation
Day, the Resolution encourages each U.S. executive agency to
inform its employees, contractors, and members of the public
“about the legal right of a United States citizen to ‘blow the
whistle’ to the appropriate authority by honest and good faith
reporting of misconduct, fraud, misdemeanors, or other
crimes”.

House Advances Whistleblowing Policy With New SEC
Whistleblower Protection Bill

While the National Whistleblower Appreciation Day Resolution
was under consideration in the Senate, the U.S. House of
Representatives passed a bill expanding SEC whistleblower
protections.  The title of the House bill is the
“Whistleblower Protection Reform Act of 2019” (H.R. 2515).

The House bill is a direct response to the U.S. Supreme
Court’s ruling in the Digital Realty case.  In that
case, the Supreme Court held that the Dodd-Frank Act’s
anti-retaliation provisions do not protect people who blow the
whistle internally to their employers without also submitting
their information to the SEC.  [For my post about the
Digital Realty case, click
here.  To listen to my interview on Bloomberg Radio about the
case, click
here.]

The bipartisan bill was
submitted to a vote in the House on July 9, 2019.  The
legislative history
of the bill explains that it was designed “to ensure that all
whistleblowers reporting suspected securities law violations
are protected from retaliation by their employers”.

On the floor of the House, the Supreme Court’s ruling in the
Digital Realty case was addressed repeatedly. 
Representative Waters
summed up the sentiment among her colleagues best:  “This [the
Digital Realty ruling] is not what Congress intended”.

Representative Barr added
that “whistleblowers play a very important role in rooting out
bad behavior that harms the market as well as mom-and-pop
investors”.  He further explained:  “By clarifying that
Dodd-Frank’s antiretaliation protections also apply to
internal whistleblowers, this bill addresses the Supreme
Court’s interpretation and aligns Dodd-Frank’s whistleblower
protections with other major whistleblower laws”.

According to
Representative Huizenga,
“A whistleblower who reports directly to their employee [sic]
about alleged misconduct shouldn’t risk being retaliated
against”.

Representative Green
eloquently expressed the House’s whistleblowing policy:

I want people to know that whistleblowers are extraordinary
people in the sense only of they do extraordinary things. 
They are really ordinary people, but they do extraordinary
things.

These are people who are willing to put their livelihoods on
the line.

These are people who are willing to take that extra step
that many of us would not take because, when you take that
step as a whistleblower, you will sometimes stand alone. 
But they understand that it is better to stand alone than
never to stand at all, and in so doing, they are protecting
us:  consumers, members of the public.

So I commend the whistleblowers of the world who take these
extraordinary steps.

But we also want to do more than commend them.  We want to
protect them.  This legislation will protect those who are
willing to step forward, those who see something and say
something, something that we encourage people to do.

On July 9, 2019, the House passed the bill by an
overwhelming vote
of 410 in favor, with only 12 against, and 10 not voting.

Senate Reinforces National Whistleblowing Policy With Its Own
SEC Whistleblower Protection Bill

After receiving H.R. 2515 from the House, on September 23,
2019 a bipartisan group of
Senators introduced their own bill
to the U.S. Senate (S.2529).  The Senate bill is called the
“Whistleblower Programs Improvement Act” (“WPIA”).

Like the House bill, the Senate bill responds to the U.S.
Supreme Court’s ruling in the Digital Realty case by
extending Dodd-Frank’s anti-retaliation protections to
employees who blow the whistle internally to their employers,
even if they do not also submit their information to the SEC.

However, the Senate bill goes further than the House bill by
adding provisions requiring the prompt determination of
SEC whistleblower award
claims (S.2529, Section 3(b)(3)). The amount of time that it
takes for the SEC to issue meritorious whistleblower awards
has been a subject of discussion for some time.  It even
prompted part of a letter that
U.S. Senator Grassley sent
to the SEC Chairman in September 2018 (Grassley Letter, pp. 6-7).  At the time, Senator Grassley was the Chairman
of the U.S. Senate’s Committee On The Judiciary.  Presently he
serves as the Chairman of the Senate Finance Committee.

If passed in its current form, the WPIA would require the SEC
to make an initial determination of an
SEC whistleblower reward
claim within one year following the deadline for the
submission of award claims in that action.

Under certain circumstances, the WPIA would allow the SEC to
extend the date to determine the award.  The SEC would be
allowed to extend the deadline twice, each time for an
additional 180 days.  So, under the WPIA, the total time from
the deadline to submit award claims, to the initial award
determination, would be no more than two years.

Moreover, under the WPIA, the SEC would be required to provide
the whistleblower award claimant with a written notification
if it extends its one-year deadline to determine the award
claim.

In a
press release
on his official website,
Senator Grassley stated,
“Our bill will ensure that those who do the right thing and
report violations will be protected”.

Senator Baldwin added,
“This bipartisan legislation seeks to extend critical
protections for those who want to blow the whistle on crime,
fraud, and abuse so we can hold bad actors accountable and
protect those who are doing the right thing”.

Senator Durbin confirmed
the Senate’s whistleblowing policy:

There has long been a bipartisan consensus that if
whistleblowers are being retaliated against for reporting
wrongdoing, Congress has a responsibility to step in. 
Whistleblowers deserve to be protected.  Period.

68 Inspectors General Express Common Whistleblowing Policy

On August 12, 2019, the anonymous
Ukraine whistleblower sent a letter
expressing concerns to the Chairman of the U.S. Senate’s
Select Committee on Intelligence, and to the Chairman of the
U.S. House of Representatives’ Permanent Select Committee on
Intelligence.

In or about October 2019, certain individuals began calling
for the Ukraine whistleblower’s identity to be revealed.  This
prompted a large reaction from politicians, lawyers, the
media, organizations, and others to protect the
whistleblower’s confidentiality.

In response to the Ukraine whistleblower situation, on October
22, 2019, approximately
68 Inspectors General sent a joint letter
to the Assistant Attorney General in the U.S. Department of
Justice’s Office of Legal Counsel, expressing their collective
agreement on whistleblowing policy.

The Inspectors General declared in their letter that
“Whistleblowers play an essential public service in coming
forward with such information, and they should never suffer
reprisal or even the threat of reprisal for doing so”.  They
further stated:

We agree with Senator Charles Grassley, Chairman and
co-founder of the U.S. Senate’s Whistleblower Caucus, who
noted recently regarding this matter, that whistleblowers
“ought to be heard out and protected” and “we should always
work to respect whistleblowers’ requests for confidentiality.”

Among the co-signatories to the letter were the SEC’s
Inspector General (IG Letter, p. 6) and the CFTC’s Inspector
General (IG Letter, p. 5) — the two agencies for whom
Congress created whistleblower programs in the Dodd-Frank Act
of 2010.

For Part 2 of my 2019 Year-In-Review, click
here. ->

For Part 3 of my 2019 Year-In-Review, click
here. ->

* * *

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The Pickholz Law Offices LLC is a law firm that focuses on
representing clients involved with investigations conducted by
the U.S. Securities and Exchange Commission, FINRA, and other
securities regulators.

The Pickholz Law Offices has represented employees, officers,
and others in SEC whistleblower cases involving financial
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