H.R. 3625 — what changed

The Sarbanes-Oxley Act of 2002 is amended—

“(f) Whistleblower incentives and protection

“(1) Definitions—In this subsection the following definitions shall apply:

changed “(A) Covered proceeding—The term covered proceeding means any disciplinary proceeding by the Board initiated after the date of the enactment of this subsection that results in monetary sanctions exceeding $2,500.$250,000.

“(B) Original information—The term original information means information that—

“(i) is derived from the independent knowledge or analysis of a whistleblower;

“(ii) is not known to the Board from any other source, unless the whistleblower is the original source of the information; and

“(iii) is not exclusively derived from an allegation made in a disciplinary proceeding, in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.

“(C) Monetary sanctions—The term monetary sanctions means any civil money penalties imposed by the Board under subsection (c)(4) as modified by the Commission under section 107(c)(3).

changed “(D) Whistleblower—The term whistleblower means any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports, auditor independence, and the obligations and liabilities of accountants with respect thereto, including the rules of the Board issued pursuant to this Act, or professional standards governing auditors and accountants.Whistleblower

added “(i) In general—The term whistleblower means any individual who provides, or two or more individuals acting jointly who provide, information relating to a violation of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, including the rules of the Board issued pursuant to this Act, or professional standards.

added “(ii) Special rule—Solely for the purposes of paragraph (7), the term “whistleblower” shall also include any individual who takes an action described in paragraph 7(A), or two or more individuals acting jointly who take an action described in paragraph 7(A).

“(2) Awards

added “(A) In general—In any covered disciplinary proceeding, the Board shall pay an award or awards to one or more whistleblowers who voluntarily provided original information to the Board that resulted in the board imposing monetary sanctions, in an aggregate amount determined in the discretion of the Board but equal to—

removed “(A) In general—In any covered disciplinary proceeding, the Board shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the Board that resulted in the board imposing monetary sanctions, in an aggregate amount determined in the discretion of the Board but equal to—

“(i) not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed; and

removed “(ii) not more than 50 percent, in total, of what has been collected of the monetary sanctions.

removed “(B) Criteria—In determining the amount of an award made under subparagraph (A), the Commission shall take into consideration—

changed “(i) the significance “(ii) not more than 30 percent, in total, of the information provided by the whistleblower to the success what has been collected of the disciplinary proceeding;monetary sanctions.

changed “(ii) the degree “(B) Payment of assistance provided by the whistleblower and awards—Any amount paid under this subparagraph shall be paid from any legal representative of funds generated from the whistleblower in a disciplinary proceeding; andcollection of monetary sanctions.

changed “(iii) the programmatic interest “(3) Determination of the Board in deterring violations by making awards to whistleblowers who provide information that lead to successful enforcement.amount of award; denial of award

changed “(C) Denial “(A) Determination of award—No award under subparagraph (A) shall be made—amount of award

added “(i) Discretion—The determination of the amount of an award made under paragraph (2) shall be in the discretion of the Board.

added “(ii) Criteria—In determining the amount of an award made under subparagraph (A), the Board shall take into consideration—

added “(I) the significance of the information provided by the whistleblower to the success of the disciplinary proceeding;

added “(II) the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a disciplinary proceeding; and

added “(III) the programmatic interest of the Board in deterring violations by making awards to whistleblowers who provide information that lead to successful enforcement.

added “(B) Denial of award—No award under subparagraph (A) shall be made—

“(i) to any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Board, a member, officer, or employee of—

added “(I) an appropriate regulatory agency (as such term is defined in section 3 of the Securities Exchange Act of 1934);

removed “(I) an appropriate regulatory agency (as such term is defined in section 34 of the Securities Exchange Act of 1934);

“(II) the Department of Justice;

“(III) a self-regulatory organization (as such term is defined in section 34 of the Securities Exchange Act of 1934);

“(IV) the Public Company Accounting Oversight Board; or

“(V) a law enforcement organization;

“(ii) to any whistleblower who is convicted of a criminal violation related to the Board finding for which the whistleblower otherwise could receive an award under this section;

added “(iii) to any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j–1); and

added “(iv) to any whistleblower who fails to submit information to the Board in such form as the Board may, by rule, require.

added “(4) Representation

removed “(iii) to any whistleblower who fails to submit information to the Board in such form as the Board may, by rule, require;

removed “(iv) to any whistleblower who knowingly and willfully makes any false, fictitious, or fraudulent statement or representation; and

removed “(v) to any whistleblower who uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry.

removed “(D) Payment of awards—Any amount paid under subparagraph (A) shall be paid from any funds generated from the collection of monetary sanctions.

removed “(3) Representation

“(A) Permitted representation—Any whistleblower who makes a claim for an award under paragraph (2) may be represented by counsel.

“(B) Required representation

“(i) In general—Any whistleblower who anonymously makes a claim for an award under paragraph (2) shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based.

“(ii) Disclosure of identity—Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide such other information as the Board may require, directly or through counsel, for the whistleblower.

removed “(4) No Contract Necessary—No contract with the Board is necessary for any whistleblower to receive an award under paragraph (2), unless otherwise required by the Board by rule.

removed “(5) Appeals—Any determination made under this subsection, including whether, to whom, or in what amount to make awards, shall be in the discretion of the Board. Any such determination, except the determination of the amount of an award if the award was made in accordance with this paragraph, may be appealed to the Commission not more than 30 days after the determination is issue by the Board. The Commission shall review the determination made by the Board in accordance with section 107(c).

removed “(6) Protection of whistleblowers

removed “(A) Prohibition against retaliation—No current or former employer may discharge, demote, suspend, threaten, blacklist, harass, directly or indirectly, actively or passively, or in any other manner discriminate against any whistleblower in the terms and conditions of employment, including compensation, because of any lawful act done by the whistleblower in—

changed “(i) providing information “(5) No Contract Necessary—No contract with the Board is necessary for any whistleblower to receive an award under paragraph (2), unless otherwise required by the Board in accordance with this subsection;by rule.

changed “(ii) initiating, testifying in, “(6) Appeals—Any determination made under this subsection, including whether, to whom, or assisting in any investigation or administrative action what amount to make awards, shall be in the discretion of the Board based upon or related to Board. Any such information;determination, except the determination of the amount of an award if the award was made in accordance with this paragraph, may be appealed to the Commission not more than 30 days after the determination is issued by the Board. The Commission shall review the determination made by the Board in accordance with section 107(c).

changed “(iii) making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), including section 10A(m) of such Act (15 U.S.C. 78f(m)), section 1513(e) of title 18, United States Code, and any other law, rule, or regulation subject to the jurisdiction “(7) Protection of the Commission; andwhistleblowers

changed “(iv) “(A) Prohibition against retaliation—No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in providing information regarding any conduct that the whistleblower reasonably believes constitutes other manner discriminate against, a violation of any law, rule, or regulation subject to whistleblower in the jurisdiction terms and conditions of employment because of any lawful act done by the Board to—whistleblower—

changed “(I) a person with supervisory authority over the whistleblower at the whistleblower’s employer, where such employer is an entity registered with or required “(i) in providing information to be registered with the Commission, a self-regulatory organization, or a State securities commission or office performing like functions; orBoard in accordance with this subsection;

added “(ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Board based upon or related to such information; or

added “(iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), including section 10A(m) of such Act (15 U.S.C. 78f(m)), section 1513(e) of title 18, United States Code, and any other law, rule, or regulation subject to the jurisdiction of the Securities Exchange Commission.

added “(iv) in providing information regarding any conduct that the whistleblower reasonably believes constitutes a potential violation of any law, rule, or regulation subject to the jurisdiction of the Board or the Commission (including disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 or the Securities Exchange Act of 1934) to—

added “(I) a person with supervisory authority over the whistleblower at the whistleblower’s employer, where such employer is an entity registered with or required to be registered with the Board, the Commission, a self-regulatory organization, or a State securities commission or office performing like functions; or

“(II) such other person working for the employer described under subclause (I) who has the authority to investigate, discover, or terminate misconduct.

removed “(B) Enforcement of prohibition against retaliation—Any whistleblower who alleges discharge or other discrimination or is otherwise aggrieved by an employer in violation of subparagraph (A) may seek relief—

removed “(i) by filing a complaint with the Secretary of Labor; or

removed “(ii) if the Secretary has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.

removed “(C) Procedure

changed “(i) In general—An action under subparagraph (B)(ii) shall be governed under the rules and procedures set forth in section 42121(b) “(B) Enforcement of title 49, United States Code.prohibition against retaliation

changed “(ii) Exception—Notification made “(i) Cause of action—An individual who alleges discharge or other discrimination in violation of subparagraph (A) may bring an action under section 42121(b)(1) this paragraph in the appropriate district court of title 49, the United States Code, shall be made to for the person named relief provided in the complaint and to the employer.subparagraph (C).

changed “(iii) Burdens “(ii) Subpoenas—A subpoena requiring the attendance of proof—An action brought a witness at a trial or hearing conducted under subparagraph (B)(ii) shall this subsection may be governed by the legal burdens of proof set forth served at any place in section 42121(b) of title 49, the United States Code.States.

changed “(iv) “(iii) Statute of limitations—An action under subparagraph (B) shall be commenced not later than 180 days after the date on which the violation occurs, or after the date on which the whistleblower became aware of the violation.limitations

changed “(v) Jury trial—A party to an “(I) In general—An action brought under subparagraph (B) shall this paragraph may not be entitled to trial by jury.brought—

changed “(D) Remedies—Any whistleblower who prevails in any action brought under this paragraph shall be entitled to all relief necessary to make “(aa) more than 6 years after the whistleblower whole, including—date on which the violation of subparagraph (A) occurred; or

changed “(i) reinstatement with “(bb) more than 3 years after the same seniority status that date when facts material to the whistleblower would right of action are known or reasonably should have had, but for been known by the discrimination;employee alleging a violation of subparagraph (A).

changed “(ii) 2 times “(II) Required action within 10 years—Notwithstanding subclause (I), an action under this paragraph may not in any circumstance be brought more than 10 years after the amount of back pay otherwise owed to date on which the whistleblower, with interest;violation occurs.

changed “(iii) consequential and compensatory damages;“(C) Relief—Relief for an individual prevailing in an action brought under this paragraph shall include—

changed “(iv) special damages, including damages “(i) reinstatement with the same seniority status that the individual would have had, but for emotional distress and reputational harm; andthe discrimination;

changed “(v) compensation for litigation costs, expert witness fees, and reasonable attorneys' fees.“(ii) two times the amount of back pay otherwise owed to the individual, with interest; and

changed “(E) Confidentiality“(iii) compensation for litigation costs, expert witness fees, and reasonable attorneys' fees.

changed “(i) In general—Except as provided in clause (ii), the Board and any officer or employee of the Board may not disclose any information without the written consent of the whistleblower, including information provided by the whistleblower to the Board, which could reasonably be expected to reveal the identity of the whistleblower unless and until the Board is required to disclose such information to a defendant or respondent in connection with a public proceeding instituted by the Commission or any entity described in clause (iv).“(D) Confidentiality

changed “(ii) Notice—If “(i) In general—Except as provided in clause (ii), the Board shall, before making and any officer or employee of the Board may not disclose any information, including information referred provided by a whistleblower to in clause (i) available the Board, which could reasonably be expected to reveal the identity of a whistleblower unless and until required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission or any entity described in clause (iv), provide notice to the whistleblower that such information is being made available.(iii).

changed “(iii) “(ii) Rule of construction—Nothing in this section is intended to limit, or shall be construed to limit, the ability of the Attorney General to present such evidence to a grand jury or to share such evidence with potential witnesses or defendants in the course of an ongoing criminal investigation.

changed “(iv) “(iii) Availability to government agencies

“(I) In general—Without the loss of its status as confidential in the hands of the Board, all information referred to in clause (i) may, in the discretion of the Board, when determined by the Board to be necessary to accomplish the purposes of this Act and to protect investors, be made available to—

“(aa) the Attorney General of the United States;

“(bb) an appropriate regulatory authority;

“(cc) a self-regulatory organization;

“(dd) a State attorney general in connection with any criminal investigation;

“(ee) any appropriate State regulatory authority;

“(ff) the Commission;

“(gg) a foreign securities authority; and

“(hh) a foreign law enforcement authority.

changed “(II) Confidentiality—Each of the entities described in items (aa) through (ff) of subclause (I) shall maintain such information as confidential in accordance with the requirements established under clause (i) and each of the entities described in subclauses (gg) and (hh) of subclause (I) shall maintain such information in accordance with such assurances of confidentiality as the Board determines appropriate.Confidentiality

changed “(III) Notice—If “(aa) In general—Each of the Board makes information referred to entities described in clause (i) available pursuant to items (aa) through (ff) of subclause (I), (I) shall maintain such information as confidential in accordance with the Board shallrequirements established under clause (i).

changed “(F) Rights retained—Nothing “(bb) Foreign authorities—Each of the entities described in this subsection subclauses (gg) and (hh) of subclause (I) shall be deemed to diminish the rights, privileges, or remedies maintain such information in accordance with such assurances of any whistleblower under any Federal or State law, or under any collective bargaining agreement.confidentiality as the Board determines appropriate.

changed “(G) Unenforceability“(E) Rights retained—Nothing in this subsection shall be deemed to diminish the rights, privileges, or remedies of any whistleblower under any Federal or State law, or under any collective bargaining agreement.

changed “(i) Waiver “(8) Provision of rights and remedies—The rights and remedies provided for in this section may false information—A whistleblower shall not be waived by any condition of employment, including a predispute arbitration agreement.entitled to an award under this section if the whistleblower—

changed “(ii) Required arbitration—Any provision of a predispute arbitration agreement that requires arbitration of a dispute arising under this paragraph shall be invalid “(A) knowingly and unenforceable.”willfully makes any false, fictitious, or fraudulent statement or representation; or

added “(B) uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry.

added “(9) Rulemaking authority—The Board shall have the authority to issue such rules and standards as may be necessary or appropriate to implement the provisions of this section consistent with the purposes of this section.

added “(10) Coordination—To the maximum extent practicable, the Board shall coordinate with the Office of the Whistleblower of the Securities Exchange Commission in carrying out this subsection.”