Section 1 Short Title
This Act may be cited as the “Whistleblower Augmented Reward and Nonretaliation Act of 2016” or the “WARN Act of 2016”.
Whistleblower Augmented Reward and Nonretaliation Act of 2016
A BILL
To strengthen incentives and protections for whistleblowers in the financial industry and related regulatory agencies, and for other purposes.
Sec. 2 Amendments to the Financial Institutions Anti-Fraud Enforcement Act of 1990
Rights of declarants— Section 2565(d) of the Financial Institutions Anti-Fraud Enforcement Act of 1990 (12 U.S.C. 4205(d)(1)(A)) is amended—
in paragraph (1)(A)—
by redesignating clause (ii) as clause (iii); and
by striking clause (i) and inserting the following:
“(i) Not less than 10 percent, in total, of what has been collected in any recovery imposed in the action or related actions.
“(ii) Not more than 30 percent, in total, of what has been collected in any recovery imposed in the action or related actions.”
by adding at the end the following new paragraph:
“(3) Appeals—Any determination regarding an award under this section may, within 30 days of such determination, be appealed to the appropriate court of appeals of the United States.”
Protection for declarants— The Financial Institutions Anti-Fraud Enforcement Act of 1990 (12 U.S.C. 4212) is amended by striking section 2572 and inserting the following:
“2572. Protection for declarants
“(a) Remedy—In a civil action, a person may obtain all relief necessary to make such person whole if such person—
“(1) was discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by an employer because of lawful acts done by the person on behalf of the person or others in furtherance of a prosecution under section 215, 225, 287, 656, 657, 1001, 1005, 1006, 1007, 1014, 1032, 1341, 1343, 1344, or 1517 of title 18 (including provision of information relating to, investigation for, initiation of, testimony for, or assistance in such a prosecution); and
“(2) did not act without direction from his or her employer to deliberately cause the violation disclosed.
“(b) Relief—Relief under subsection (a) shall include—
“(1) reinstatement with the same seniority status;
“(2) twice the amount of back pay and interest that the plaintiff would have had but for the discrimination; and
“(3) compensation for any special damages sustained as a result of the discrimination, including litigation costs, expert witness fees, and reasonable attorneys fees.
“(c) Burdens of proof—Complaints for relief shall be governed by the procedures, evidentiary standards, and burdens of proof in section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5567).”
Education— Section 2573 of the Financial Institutions Anti-Fraud Enforcement Act of 1990 (12 U.S.C. 4213) is amended—
by striking “The Attorney General” and inserting the following:
“(a) In general—The Attorney General”
by adding at the end the following:
“(b) Education—The Attorney General shall issue regulations requiring every employer covered by this Act to provide education and training to its employees on the rights and remedies provided under this section, including through individual notice to its employees, posting information on its website homepage, and providing mandatory training for its employees.”
Share of assets— Section 2580 of the Financial Institutions Anti-Fraud Enforcement Act of 1990 (12 U.S.C. 4225) is amended by striking subsection (c) and inserting the following:
“(c) Share of assets—When the United States recovers any asset or assets specifically identified in a valid declaration filed under section 4221 of this title and the Attorney General determines that the asset or assets would not have been recovered if the declaration had not been filed, the declarant shall have the right to share in the recovery in the amount of—
“(1) not less than 10 percent, in total, of what has been collected in any recovery imposed in the action or related actions; and
“(2) not more than 30 percent, in total, of what has been collected in any recovery imposed in the action or related actions.”
Review of Action by Attorney General— The Financial Institutions Anti-Fraud Enforcement Act of 1990 (12 U.S.C. 4228) is amended by striking section 2583 and inserting the following:
“2583. Review of action by the Attorney General
“Any determination regarding an award under this chapter may, within 30 days of such determination, be appealed to the appropriate court of appeals of the United States.”
Sec. 3 Amendments to the Federal Deposit Insurance Act
Employees of depository institutions and banking agencies— Section 33(a) of the Federal Deposit Insurance Act (12 U.S.C. 1831j(a)) is amended—
in paragraph (1)—
in the matter preceding subparagraph (A), by striking “provided information” and inserting “provided information, or refused to alter information previously provided,”; and
in subparagraph (A), by striking “a possible violation of any law or regulation” and inserting “a possible violation of any law, regulation, or agency statement of policy”; and
in paragraph (2)—
by striking “the Corporation” and inserting “any such agency or bank”;
by striking “provided information” and inserting “provided information, or refused to alter information previously provided,”; and
by striking “any possible violation of any law or regulation” and inserting “any possible violation of any law, regulation, or agency statement of policy”.
Reward for information leading to recoveries or civil penalties— Section 34 of such Act (12 U.S.C. 1831k) is amended—
by striking subsection (b) and inserting the following:
“(b) Percentage limitation—An appropriate Federal banking agency shall pay a reward—
“(1) not less than 10 percent, in total, of what has been collected as any fine, penalty, restitution, or forfeiture imposed in the action or related actions; and
“(2) not more than 30 percent, in total, of what has been collected as any fine, penalty, restitution, or forfeiture imposed in the action or related actions.”
by striking subsection (d) and inserting the following:
“(d) Review—Any determination regarding an award under this section may, within 30 days of such determination, be appealed to the appropriate court of appeals of the United States.”
Sec. 4 Amendments to the Securities Exchange Act of 1934
Narrow definition of whistleblower removed— Section 21F(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(a)) is amended by striking paragraph (6).
Delay— Section 21F(c)(1)(B) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(c)(1)(B)) is amended—
in clause (i)(IV), by striking “and” at the end; and
by adding at the end the following new clauses:
“(iii) shall not deny eligibility for an award that otherwise meets the requirements of this section if the information that forms the basis for the award is submitted within 90 days after knowledge of disclosed misconduct; and
“(iv) shall presume that reports are timely and not reduce the award due to delay, absent a finding of that disclosure was deliberately postponed ether because of culpability, interference with internal investigative processes, or attempts at self-enrichment.”
Prohibition against retaliation— Section 21F(h)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(h)(1)(A)) is amended—
in the matter preceding clause (i), by striking “in the terms and conditions of employment because of any lawful act done by the whistleblower” and inserting “with respect to compensation, terms, conditions, or privileges of employment because of any lawful act done by the applicant, employee, or former employee or perceived to have been done by the applicant, employee, or former employee (or any person acting pursuant to the request of the applicant, employee, or former employee), whether at the initiative of the applicant, employee, or former employee or in the ordinary course of the duties of the applicant, employee, or former employee”;
in clause (ii) by striking “; or” and inserting a semicolon;
in clause (iii) by striking the period at the end and inserting a semicolon; and
by adding at the end the following new clauses:
“(iv) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task the applicant, employee, or former employee (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition subject to the jurisdiction of, or enforceable by, the Commission; or
“(v) in providing, preparing to provide, or assisting in the provision of information to the employer or a person with supervisory authority over the employee (or other such person working for the employer who has the authority to investigate, discover, or terminate misconduct) relating to any violation of, or any act or omission that the applicant, employee, or former employee believes to be a violation of, any provision of this title or any other provision of law that is subject to the jurisdiction of the Commission, or any rule, order, standard, or prohibition prescribed by the Commission.”
Enforcement— Section 21F(h)(1)(B) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(h)(1)(B)) is amended by adding at the end the following new clause:
“(iv) Burdens of Proof—Except as otherwise provided in this section, complaints for relief shall be governed by the procedures, evidentiary standards, and burdens of proof in section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5567).”
Relief— Section 21F(h)(1)(C) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(h)(1)(C)) is amended—
in clause (ii) by striking “and”;
in clause (iii) by striking the period at the end and inserting a semicolon; and
by adding at the end the following new clauses:
“(iv) compensatory damages; and
“(v) punitive damages in an amount not to exceed $250,000.”
Confidentiality— Section 21F(h)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6(h)(2)) is amended by striking subparagraph (A) and inserting the following:
“(A) In general—Except as provided in subparagraphs (B), (C), and (D) of this subsection, the Commission and any officer or employee of the Commission may not disclose any identifying information about a whistleblower who has provided information to the Commission—
“(i) unless the Commission has obtained the written consent of the whistleblower;
“(ii) except in accordance with the provisions of section 552a of title 5, United States Code; or
“(iii) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission.”
Additional protections for whistleblowers— Section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6) is amended by adding at the end the following new subsections:
“(k) Non-Waiverability of Rights and Remedies—An employer may not take any action to impede an individual who is about to or has assisted or engaged in activity protected by this section, including—
“(1) issuing, proposing, initiating, enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by sections 240.21F–4(b)(4)(i) and 240.21F–4(b)(4)(ii) of title 17, Code of Federal Regulations, as in effect on the date of the enactment of this Act) with respect to such communications;
“(2) initiating, enforcing, or threatening to enforce, any agreement, policy, form, or condition of employment, including by any predispute arbitration agreement, that waives the rights and remedies provided for in this section;
“(3) requiring an individual to waive, release, or assign any monetary award such individual may receive from the Commission, or conditioning an individual’s right to receive any contractual or employment-related benefit on such a waiver, release, or assignment;
“(4) requiring an individual to disclose to any private party whether such individual has, or in the future intends to, communicate with the Commission staff about a possible commodities law violation;
“(5) conditioning an individual’s right to receive any contractual or employment-related benefit on a representation that such individual has not communicated with, or provided documents or other information, to the Commission staff;
“(6) seeking civil or criminal liability for acquiring and communicating information to the Commission or other activity protected by this section;
“(7) seeking professional discipline through loss of license, certification, or other disciplinary activities for engaging in activity protected by this Act;
“(8) seeking professional discipline of attorneys for representation of activities protected by this Act, or other action that obstructs the whistleblower’s right to counsel; or
“(9) engaging in any other discrimination that would chill the exercise of activity protected by this section.
“(l) Internal Compliance Programs—The Commission shall issue regulations requiring each employer—
“(1) to have a procedure in place for an employee or former employee to report directly to the chief executive officer, a representative appointed by and reporting directly to the chief executive officer who is specifically designated to receive such a report, or through a hotline consistent with professional best practices to the audit committee of the board of directors, if such employee or former employee believes that violations of this section have occurred or are occurring at the place of employment or place of former employment; and
“(2) to not discriminate against an employee or former employee for such reports.
“(m) Extraterritoriality—The protections provided by this section shall also apply to foreign nationals living outside the United States.”
Sec. 5 Amendments to the Commodity Exchange Act
Narrow definition of whistleblower removed— Section 23(a) of the Commodity Exchange Act (7 U.S.C. 26(a)) is amended by striking paragraph (7).
in clause (i)(IV), by striking “and” at the end; and
by adding at the end the following new clauses:
“(iii) shall not deny eligibility for an award that otherwise meets the requirements of this section if the information that forms the basis for the award is submitted within 90 days after knowledge of disclosed misconduct; and
“(iv) shall presume that reports are timely and not reduce the award due to delay, absent a finding of that disclosure was deliberately postponed ether because of culpability, interference with internal investigative processes, or attempts at self-enrichment.”
Prohibition against retaliation— Section 23(h)(1)(A) of the Commodity Exchange Act (7 U.S.C. 26(h)(1)(A)) is amended—
by striking “in the terms and conditions of employment because of any lawful act done by the whistleblower” and inserting “with respect to compensation, terms, conditions, or privileges of employment because of any lawful act done by the applicant, employee, or former employee or perceived to have been done by the applicant, employee, or former employee (or any person acting pursuant to the request of the applicant, employee, or former employee), whether at the initiative of the applicant, employee, or former employee or in the ordinary course of the duties of the applicant, employee, or former employee”;
in clause (i), by striking “; or” and inserting a semicolon;
in clause (ii), by striking the period at the end and inserting a semicolon; and
by inserting the following new clauses:
“(iii) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task the applicant, employee, or former employee (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition subject to the jurisdiction of, or enforceable by, the Commission; or
“(iv) in providing, preparing to provide, or assisting in the provision of information to the employer or a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct) relating to any violation of, or any act or omission that the whistleblower believes to be a violation of, any provision of this title or any other provision of law that is subject to the jurisdiction of the Commission, or any rule, order, standard, or prohibition prescribed by the Commission.”
Enforcement— Section 23(h)(1)(B) of the Commodity Exchange Act (7 U.S.C. 26(h)(1)(B)) is amended by adding at the end the following new clause:
“(iv) Burdens of Proof—Except as otherwise provided in this section, complaints for relief shall be governed by the procedures, evidentiary standards, and burdens of proof in section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5567).”
in clause (ii) by striking “and”;
in clause (iii) by striking the period at the end and inserting a semicolon; and
by adding at the end the following new clauses:
“(iv) compensatory damages; and
“(v) punitive damages in an amount not to exceed $250,000.”
by striking subparagraph (A) and inserting the following:
“(A) In general—Except as provided in subparagraphs (B), (C), and (D) of this subsection, the Commission and any officer or employee of the Commission may not disclose any identifying information about a whistleblower who has provided information to the Commission—
“(i) unless the Commission has obtained the written consent of the whistleblower;
“(ii) except in accordance with the provisions of section 552a of title 5, United States Code; or
“(iii) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission”
by adding at the end the following new subparagraph:
“(D) Exempted Statute—For purposes of section 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section 552.”
Additional protections for whistleblowers— Section 23 of the Commodity Exchange Act (7 U.S.C. 26) is amended by adding at the end the following new subsections:
“(o) Non-Waiverability of rights and remedies—An employer may not take any action to impede an individual who is about to or has assisted or engaged in activity protected by this section, including—
“(1) issuing, proposing, initiating, enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by section 165.2(k) of title 17, Code of Federal Regulations, as in effect on the date of the enactment of this Act) with respect to such communications;
“(2) initiating, enforcing, or threatening to enforce, any agreement, policy, form, or condition of employment, including by any predispute arbitration agreement, that waives the rights and remedies provided for in this section;
“(3) requiring an individual to waive, release, or assign any monetary award such individual may receive from the Commission, or conditioning an individual’s right to receive any contractual or employment-related benefit on such a waiver, release, or assignment;
“(4) requiring an individual to disclose to any private party whether such individual has, or in the future intends to, communicate with the Commission staff about a possible violation of this Act;
“(5) conditioning an individual’s right to receive any contractual or employment-related benefit on a representation that such individual has not communicated with, or provided documents or other information, to the Commission staff;
“(6) seeking civil or criminal liability for acquiring and communicating information to the Commission or other activity protected by this section;
“(7) seeking professional discipline through loss of license, certification or other disciplinary activities for engaging in activity protected by this Act;
“(8) seeking professional discipline of attorneys for representation of activities protected by this Act, or other action that obstructs the whistleblower’s right to counsel; or
“(9) engaging in any other discrimination that would chill the exercise of activity protected by this section.
“(p) Internal Compliance Programs—The Commission shall issue regulations requiring each employer—
“(1) to have a procedure in place for an employee or former employee to report directly to the chief executive officer, a representative appointed by and reporting directly to the chief executive officer who is specifically designated to receive such a report, or through a hotline consistent with professional best practices to the audit committee of the board of directors, if such employee or former employee believes that a violation of this section has occurred or is occurring at the place of employment or place of former employment; and
“(2) to not discriminate against an employee or former employee for such reports.
“(q) Extraterritoriality—The protections provided by this section shall also apply to foreign nationals living outside the United States.”
Sec. 6 Amendments to the whistleblower protections under the Sarbanes-Oxley Act
Section 1514A of title 18, United States Code, is amended—
in subsection (a)—
in the matter preceding paragraph (1), by striking “in the terms and conditions of employment because of any lawful act done by the employee” and inserting “with respect to compensation, terms, conditions, or privileges of employment because of any lawful act done by the applicant, employee, or former employee or perceived to have been done by the applicant, employee, or former employee (or any person acting pursuant to the request of the applicant, employee, or former employee), whether at the initiative of the applicant, employee, or former employee or in the ordinary course of the duties of the applicant, employee, or former employee”;
in paragraph (1)(C), by striking “; or” and inserting a semicolon;
in paragraph (2), by striking the period at the end and inserting a semicolon; and
by adding at the end the following:
“(3) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task the applicant, employee, or former employee (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition subject to the jurisdiction of, or enforceable by, the Securities and Exchange Commission; or
“(4) in providing, preparing to provide, or assisting in the provision of information to the employer or a person with supervisory authority over the applicant, employee, or former employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct) relating to any violation of, or any act or omission that the whistleblower believes to be a violation of, any provision of this title or any other provision of law that is subject to the jurisdiction of the Securities and Exchange Commission, or any rule, order, standard, or prohibition prescribed by the Commission.”
in subsection (c)(2)(B), by inserting “double” before “back pay”;
in subsection (c), by adding at the end the following:
“(3) Punitive Damages—Relief for any action under paragraph (1) may include punitive damages in an amount not to exceed $250,000.”
by adding at the end the following:
“(e) Confidentiality—Neither the Securities and Exchange Commission, the Secretary of Labor, nor any officer or employee of the Commission or the Secretary may disclose any identifying information about an employee of a company described in subsection (a) who has provided information to the Commission or the Secretary—
“(1) unless the Commission or the Secretary has obtained the written consent of the whistleblower;
“(2) except in accordance with the provisions of section 552a of title 5, United States Code; or
“(3) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission or the Secretary.”