What This Bill Does
This bill strengthens protections for people who report violations of securities laws (laws about stocks, bonds and investments) to their employers or the Securities and Exchange Commission. The bill makes it harder for companies to punish whistleblowers (people who report wrongdoing) and requires faster processing of awards given to whistleblowers.
Who It Affects
Whistleblowers who report securities violations. Employees at companies regulated by the Securities and Exchange Commission. Companies and organizations that employ these workers. The Securities and Exchange Commission and its Division of Enforcement.
Key Provisions
• Whistleblowers can report violations to their supervisor or to a coworker with authority to investigate the misconduct and still receive legal protection, not just when reporting to the Securities and Exchange Commission (Sec. 2).
• Reports can be made in writing or orally if the oral report is documented (Sec. 2).
• Whistleblowers are entitled to a jury trial when someone sues them for retaliation (Sec. 2).
• The Securities and Exchange Commission must decide on whistleblower award claims within one year after the deadline for filing the claim or one year after all court cases end, whichever is later (Sec. 3).
• Companies cannot force whistleblowers to accept arbitration (a private dispute process) instead of going to court and cannot require workers to give up whistleblower rights and remedies (Sec. 4).
What Changes
If this becomes law, whistleblowers will have stronger protections when reporting violations to their employers instead of only when reporting to the Securities and Exchange Commission. Companies will no longer be able to require employees to give up whistleblower rights through employment contracts or arbitration agreements. The Securities and Exchange Commission will have deadlines for processing whistleblower awards.
Important Definitions
Whistleblower: Any person who reports conduct they reasonably believe violates a securities law, rule or regulation to either their supervisor, a coworker with authority to handle it, or the Securities and Exchange Commission (Sec. 2).
Effective Date
Not specified in bill text
II
118TH CONGRESS
1ST SESSION
S. 811
To amend the Securities Exchange Act of 1934 to further enhance anti-
retaliation protections for whistleblowers, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 15, 2023
Mr. GRASSLEY (for himself, Ms. WARREN, Ms. COLLINS, Mr. WARNOCK, and
Ms. CORTEZ MASTO) introduced the following bill; which was read twice
and referred to the Committee on Banking, Housing, and Urban Affairs
A BILL
To amend the Securities Exchange Act of 1934 to further
enhance anti-retaliation protections for whistleblowers,
and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘SEC Whistleblower
4
Reform Act of 2023’’.
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SEC. 2. WHISTLEBLOWER PROTECTIONS FOR INTERNAL
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DISCLOSURES.
7
(a) IN GENERAL.—Section 21F of the Securities Ex-
8
change Act of 1934 (15 U.S.C. 78u–6) is amended—
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(1) in subsection (a)(6)—
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(A) by striking ‘‘The term’’ and inserting
2
the following:
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‘‘(A) IN GENERAL.—The term’’; and
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(B) by adding at the end the following:
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‘‘(B) SPECIAL RULE.—Solely for the pur-
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poses of subsection (h)(1), the term ‘whistle-
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blower’ includes any individual who takes, or 2
8
or more individuals acting jointly who take, an
9
action described in subsection (h)(1)(A), that
10
the individual or 2 or more individuals reason-
11
ably believe relates to a violation of any law,
12
rule, or regulation subject to the jurisdiction of
13
the Commission, the Public Company Account-
14
ing Oversight Board, the Municipal Securities
15
Rulemaking Board, or a self-regulatory organi-
16
zation.’’; and
17
(2) in subsection (h)(1)—
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(A) in subparagraph (A)—
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(i) in the matter preceding clause (i),
20
by inserting ‘‘or post-employment’’ after
21
‘‘of employment’’;
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(ii) in clause (i), by inserting ‘‘, in
23
writing or orally if the oral report is docu-
24
mented,’’ after ‘‘to the Commission’’;
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(iii) in clause (ii), by striking ‘‘or’’ at
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the end;
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(iv) in clause (iii), by striking the pe-
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riod at the end and inserting ‘‘; or’’; and
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(v) by adding at the end the following:
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‘‘(iv) in providing information regard-
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ing any conduct that the whistleblower rea-
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sonably believes constitutes a violation of
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any law, rule, or regulation subject to the
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jurisdiction of the Commission to—
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‘‘(I) a person with supervisory
11
authority over the whistleblower at the
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employer of the whistleblower, if that
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employer is an entity registered with,
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or required to be registered with, or
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otherwise subject to the jurisdiction
16
of, the Commission, the Public Com-
17
pany Accounting Oversight Board, a
18
self-regulatory
organization,
or
a
19
State securities commission or office
20
performing like functions; or
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‘‘(II) another individual working
22
for the employer described in sub-
23
clause (I) who the whistleblower rea-
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sonably believes has the authority
1
to—
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‘‘(aa) investigate, discover,
3
or terminate the misconduct; or
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‘‘(bb) take any other action
5
to address the misconduct.’’; and
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(B) in subparagraph (B), by adding at the
7
end the following:
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‘‘(iv) JURY TRIAL.—A person against
9
which an action is brought under this sub-
10
section shall be entitled to a jury trial.’’.
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(b) APPLICABILITY.—The amendments made by sub-
12
section (a) shall apply to any claim involving a violation
13
of section 21F(h)(1) of the Securities Exchange Act of
14
1934 (15 U.S.C. 78u–6(h)(1)), including a claim in an
15
enforcement action or proceeding brought by the Securi-
16
ties and Exchange Commission, that is—
17
(1) pending in any appropriate judicial or ad-
18
ministrative forum, as of the date of enactment of
19
this Act; or
20
(2) filed after the date of enactment of this Act.
21
SEC. 3. PROMPT PAYMENT OF AWARDS.
22
Section 21F(b) of the Securities Exchange Act of
23
1934 (15 U.S.C. 78u–6(b)) is amended by adding at the
24
end the following:
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‘‘(3) TIMELY PROCESSING OF CLAIMS.—
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‘‘(A) INITIAL DISPOSITION.—
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‘‘(i) IN
GENERAL.—Except as pro-
3
vided in subparagraph (B), the Commis-
4
sion shall make an initial disposition with
5
respect to a claim submitted by a whistle-
6
blower for an award under this section (re-
7
ferred to in this paragraph as an ‘award
8
claim’) not later than the later of—
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‘‘(I) the date that is 1 year after
10
the deadline established by the Com-
11
mission, by rule, for the whistleblower
12
to file the award claim; or
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‘‘(II) the date that is 1 year after
14
the final resolution of all litigation, in-
15
cluding any appeals, concerning the
16
covered action or related action.
17
‘‘(ii)
MULTIPLE
ACTIONS.—If
an
18
award claim involves 1 or more related ac-
19
tions, the requirement under clause (i)
20
shall apply with respect to the latest dead-
21
line with respect to the actions.
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‘‘(B) EXCEPTIONS.—
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‘‘(i) INITIAL EXTENSION.—If the Di-
24
rector of the Division of Enforcement of
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•S 811 IS
the Commission (referred to in this para-
1
graph as the ‘Director’), or the designee of
2
the Director, determines that an award
3
claim is sufficiently complex or involves
4
more than 1 whistleblower, or if other good
5
cause exists such that the Commission can-
6
not reasonably satisfy the requirements
7
under subparagraph (A), as determined by
8
the Director or the designee, as applicable,
9
the Director or the designee, after pro-
10
viding notice to the Chairman of the Com-
11
mission (referred to in this paragraph as
12
the ‘Chairman’), may extend the deadline
13
with respect to the satisfaction of those re-
14
quirements by not more than 180 days.
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‘‘(ii) ADDITIONAL
EXTENSIONS.—If,
16
after providing an extension under clause
17
(i), the Director, or the designee of the Di-
18
rector, determines that good cause exists
19
such that the Commission cannot reason-
20
ably satisfy the requirement under sub-
21
paragraph (A), the Director or the des-
22
ignee of the Director, may extend the
23
deadline described in clause (i) as needed
24
for 1 or more additional successive 180-
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day periods only after providing notice to
1
and receiving approval from the Commis-
2
sion.
3
‘‘(iii) NOTICE
TO
WHISTLEBLOWER
4
REQUIRED.—If the Director, or the des-
5
ignee of the Director, exercises authority
6
under clause (i) or (ii), the Director or the
7
designee, as applicable, shall submit to the
8
whistleblower who filed the award claim
9
that is subject to that action by the Direc-
10
tor or the designee a written notification of
11
that action.
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‘‘(C)
APPLICABILITY.—This
paragraph
13
shall apply only to an award claim that the Di-
14
rector of the designee of the Director deter-
15
mines is timely submitted under a deadline es-
16
tablished by the Commission after the date of
17
enactment of this paragraph.’’.
18
SEC. 4. NONENFORCEABILITY OF CERTAIN PROVISIONS.
19
(a) IN GENERAL.—Section 21F of the Securities Ex-
20
change Act of 1934 (15 U.S.C. 78u–6) is amended by add-
21
ing at the end the following:
22
‘‘(k) NONENFORCEABILITY OF CERTAIN PROVISIONS
23
WAIVING RIGHTS AND REMEDIES OR REQUIRING ARBI-
24
TRATION.—
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‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The
1
rights and remedies provided in this section may not
2
be waived by any agreement, policy form, or condi-
3
tion of employment, including by a predispute arbi-
4
tration agreement.
5
‘‘(2) PREDISPUTE ARBITRATION AGREEMENT.—
6
No predispute arbitration agreement shall be valid
7
or enforceable if the agreement requires the arbitra-
8
tion of a dispute arising under this section.’’.
9
(b) APPLICABILITY.—Subsection (k) of section 21F
10
of the Securities Exchange Act of 1934 (15 U.S.C. 78u–
11
6), as added by subsection (a), shall apply with respect
12
to any action that is filed on or after, or that is pending
13
as of, the date of enactment of this Act.
14
SEC. 5. RULEMAKING AUTHORITY.
15
The Securities and Exchange Commission may issue
16
any rules that are necessary or appropriate to carry out
17
this Act consistent with the purposes of section 21F of
18
the Securities Exchange Act of 1934 (15 U.S.C. 78u–6),
19
as amended by this Act.
20
Æ
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