Whistleblower Programs Improvement Act

II 116TH CONGRESS 1ST SESSION S. 2529 To amend the Commodity Exchange Act and the Securities Exchange Act of 1934 to modify provisions relating to whistleblower incentives and protection, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 23, 2019 Mr. GRASSLEY (for himself, Ms. BALDWIN, Ms. ERNST, and Mr. DURBIN) in- troduced the following bill; which was read twice and referred to the Com- mittee on Agriculture, Nutrition, and Forestry A BILL To amend the Commodity Exchange Act and the Securities Exchange Act of 1934 to modify provisions relating to whistleblower incentives and protection, 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 ‘‘Whistleblower Pro- 4 grams Improvement Act’’. 5 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2529 IS SEC. 2. WHISTLEBLOWER PROTECTIONS FOR INTERNAL 1 DISCLOSURES. 2 (a) COMMODITIES.—Section 23 of the Commodity 3 Exchange Act (7 U.S.C. 26) is amended— 4 (1) in subsection (a)(7)— 5 (A) by striking ‘‘The term’’ and inserting 6 the following: 7 ‘‘(A) IN GENERAL.—The term’’; and 8 (B) by adding at the end the following: 9 ‘‘(B) SPECIAL RULE.—Solely for the pur- 10 poses of subsection (h)(1), the term ‘whistle- 11 blower’ includes any individual who takes, or 2 12 or more individuals acting jointly who take, an 13 action described in subsection (h)(1)(A).’’; and 14 (2) in subsection (h)(1)(A)— 15 (A) in clause (i), by striking ‘‘or’’ at the 16 end; 17 (B) in clause (ii), by striking the period at 18 the end and inserting ‘‘; or’’; and 19 (C) by adding at the end the following: 20 ‘‘(iii) in providing information regard- 21 ing any conduct that the whistleblower rea- 22 sonably believes constitutes a violation of 23 any law, rule, or regulation subject to the 24 jurisdiction of the Commission to— 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2529 IS ‘‘(I) a person with supervisory 1 authority over the whistleblower at the 2 employer of the whistleblower, if that 3 employer is an entity registered with, 4 or required to be registered with, the 5 Commission, a self-regulatory organi- 6 zation, or a State securities commis- 7 sion or office performing like func- 8 tions; or 9 ‘‘(II) another individual working 10 for the employer described in sub- 11 clause (I) who the whistleblower rea- 12 sonably believes has the authority— 13 ‘‘(aa) to investigate, dis- 14 cover, or terminate the mis- 15 conduct; or 16 ‘‘(bb) to take any other ac- 17 tion to address the misconduct.’’. 18 (b) SECURITIES.—Section 21F of the Securities Ex- 19 change Act of 1934 (15 U.S.C. 78u–6) is amended— 20 (1) in subsection (a)(6)— 21 (A) by striking ‘‘The term’’ and inserting 22 the following: 23 ‘‘(A) IN GENERAL.—The term’’; and 24 (B) by adding at the end the following: 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2529 IS ‘‘(B) SPECIAL RULE.—Solely for the pur- 1 poses of subsection (h)(1), the term ‘whistle- 2 blower’ includes any individual who takes, or 2 3 or more individuals acting jointly who take, an 4 action described in subsection (h)(1)(A).’’; and 5 (2) in subsection (h)(1)(A)— 6 (A) in clause (ii), by striking ‘‘or’’ at the 7 end; 8 (B) in clause (iii), by striking the period at 9 the end and inserting ‘‘; or’’; and 10 (C) by adding at the end the following: 11 ‘‘(iv) in providing information regard- 12 ing any conduct that the whistleblower rea- 13 sonably believes constitutes a violation of 14 any law, rule, or regulation subject to the 15 jurisdiction of the Commission to— 16 ‘‘(I) a person with supervisory 17 authority over the whistleblower at the 18 employer of the whistleblower, if that 19 employer is an entity registered with, 20 or required to be registered with, the 21 Commission, a self-regulatory organi- 22 zation, or a State securities commis- 23 sion or office performing like func- 24 tions; or 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2529 IS ‘‘(II) another individual working 1 for the employer described in sub- 2 clause (I) who the whistleblower rea- 3 sonably believes has the authority 4 to— 5 ‘‘(aa) investigate, discover, 6 or terminate the misconduct; or 7 ‘‘(bb) take any other action 8 to address the misconduct.’’. 9 SEC. 3. PROMPT PAYMENT OF AWARDS. 10 (a) COMMODITIES.— 11 (1) IN GENERAL.—Section 23(b) of the Com- 12 modity Exchange Act (7 U.S.C. 26) is amended by 13 adding at the end the following: 14 ‘‘(3) TIMELY PROCESSING OF CLAIMS.— 15 ‘‘(A) INITIAL DISPOSITION.— 16 ‘‘(i) IN GENERAL.—Except as pro- 17 vided in subparagraph (B), and subject to 18 clause (ii), the Commission shall make an 19 initial disposition with respect to a claim 20 submitted by a whistleblower for an award 21 under this section (referred to in this para- 22 graph as an ‘award claim’) not later than 23 1 year after the deadline established by the 24 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2529 IS Commission, by rule, for the whistleblower 1 to file the award claim. 2 ‘‘(ii) MULTIPLE ACTIONS.—If a cov- 3 ered judicial or administrative action in- 4 volves 1 or more related actions, the re- 5 quirement under clause (i) shall apply with 6 respect to the latest deadline with respect 7 to the actions. 8 ‘‘(B) EXCEPTIONS.— 9 ‘‘(i) INITIAL EXTENSION.—If the Di- 10 rector of the Division of Enforcement of 11 the Commission (referred to in this para- 12 graph as the ‘Director’), or the designee of 13 the Director, determines that an award 14 claim is sufficiently complex or involves 15 more than 1 whistleblower, or if other good 16 cause exists such that the Commission can- 17 not reasonably satisfy the requirement 18 under subparagraph (A), the Director or 19 the designee, as applicable, after providing 20 notice to the Chairman of the Commission 21 (referred to in this paragraph as the 22 ‘Chairman’), may extend the deadline with 23 respect to the satisfaction of that subpara- 24 graph by not more than 180 days. 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2529 IS ‘‘(ii) ADDITIONAL EXTENSIONS.—If, 1 after providing an extension under clause 2 (i), the Director, or the designee of the Di- 3 rector, determines that the Commission 4 cannot reasonably satisfy the requirement 5 under subparagraph (A) with respect to an 6 award claim, as extended under that 7 clause, the Director or the designee, as ap- 8 plicable, after providing notice to the 9 Chairman, may extend the period in which 10 the Commission may satisfy subparagraph 11 (A) by 1 additional 180-day period. 12 ‘‘(iii) NOTICE TO WHISTLEBLOWER 13 REQUIRED.—If the Director, or the des- 14 ignee of the Director, exercises authority 15 under clause (i) or (ii), the Director or the 16 designee, as applicable, shall submit to the 17 whistleblower who filed the award claim 18 that is subject to that action by the Direc- 19 tor or the designee a written notification of 20 that action by the Director or the designee. 21 ‘‘(C) APPLICABILITY.—This paragraph 22 shall apply only to an award claim that is time- 23 ly submitted under a deadline established by 24 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2529 IS the Commission after the date of enactment of 1 this paragraph.’’. 2 (2) RULES.—The Commodity Futures Trading 3 Commission may issue any rules that are necessary 4 to carry out paragraph (3) of section 23(b) of the 5 Commodity Exchange Act (7 U.S.C. 26(b)) (as 6 added by paragraph (1)). 7 (b) SECURITIES.— 8 (1) IN GENERAL.—Section 21F(b) of the Secu- 9 rities Exchange Act of 1934 (15 U.S.C. 78u–6(b)) 10 is amended by adding at the end the following: 11 ‘‘(3) TIMELY PROCESSING OF CLAIMS.— 12 ‘‘(A) INITIAL DISPOSITION.— 13 ‘‘(i) IN GENERAL.—Except as pro- 14 vided in subparagraph (B), and subject to 15 clause (ii), the Commission shall make an 16 initial disposition with respect to a claim 17 submitted by a whistleblower for an award 18 under this section (referred to in this para- 19 graph as an ‘award claim’) not later than 20 1 year after the deadline established by the 21 Commission, by rule, for the whistleblower 22 to file the award claim. 23 ‘‘(ii) MULTIPLE ACTIONS.—If a cov- 24 ered judicial or administrative action in- 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2529 IS volves 1 or more related actions, the re- 1 quirement under clause (i) shall apply with 2 respect to the latest deadline with respect 3 to the actions. 4 ‘‘(B) EXCEPTIONS.— 5 ‘‘(i) INITIAL EXTENSION.—If the Di- 6 rector of the Division of Enforcement of 7 the Commission (referred to in this para- 8 graph as the ‘Director’), or the designee of 9 the Director, determines that an award 10 claim is sufficiently complex or involves 11 more than 1 whistleblower, or if other good 12 cause exists such that the Commission can- 13 not reasonably satisfy the requirement 14 under subparagraph (A), the Director or 15 the designee, as applicable, after providing 16 notice to the Chairman of the Commission 17 (referred to in this paragraph as the 18 ‘Chairman’), may extend the deadline with 19 respect to the satisfaction of that subpara- 20 graph by not more than 180 days. 21 ‘‘(ii) ADDITIONAL EXTENSIONS.—If, 22 after providing an extension under clause 23 (i), the Director, or the designee of the Di- 24 rector, determines that the Commission 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2529 IS cannot reasonably satisfy the requirement 1 under subparagraph (A) with respect to an 2 award claim, as extended under that 3 clause, the Director or the designee, as ap- 4 plicable, after providing notice to the 5 Chairman, may extend the period in which 6 the Commission may satisfy subparagraph 7 (A) by 1 additional 180-day period. 8 ‘‘(iii) NOTICE TO WHISTLEBLOWER 9 REQUIRED.—If the Director, or the des- 10 ignee of the Director, exercises authority 11 under clause (i) or (ii), the Director or the 12 designee, as applicable, shall submit to the 13 whistleblower who filed the award claim 14 that is subject to that action by the Direc- 15 tor or the designee a written notification of 16 that action by the Director or the designee. 17 ‘‘(C) APPLICABILITY.—This paragraph 18 shall apply only to an award claim that is time- 19 ly submitted under a deadline established by 20 the Commission after the date of enactment of 21 this paragraph.’’. 22 (2) RULES.—The Securities and Exchange 23 Commission may issue any rules that are necessary 24 to carry out paragraph (3) of section 21F(b) of the 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2529 IS Securities Exchange Act of 1934 (15 U.S.C. 78u– 1 6(b)), as added by paragraph (1). 2 SEC. 4. MISCELLANEOUS PROVISIONS. 3 (a) CFTC WHISTLEBLOWER PROGRAM EDUCATION 4 INITIATIVES.—Section 23(g)(2) of the Commodity Ex- 5 change Act (7 U.S.C. 26(g)(2)) is amended— 6 (1) in subparagraph (A), by striking ‘‘and’’ at 7 the end; 8 (2) in subparagraph (B), by striking the period 9 at the end and inserting ‘‘; and’’; and 10 (3) by adding at the end the following: 11 ‘‘(C) the funding of initiatives designed to 12 educate stakeholders regarding the incentives 13 and protections available under this section, in- 14 cluding the benefits of those incentives and pro- 15 tections.’’. 16 (b) DEPOSITS INTO CFTC CONSUMER PROTECTION 17 FUND.—Section 23(g)(3)(A) of the Commodity Exchange 18 Act (7 U.S.C. 26(g)(3)(A)) is amended by striking 19 ‘‘$100,000,000’’ and inserting ‘‘$150,000,000’’. 20 (c) AVAILABILITY OF CERTAIN CFTC INFORMATION 21 TO GOVERNMENT AGENCIES.—Section 23(h)(2)(C) of the 22 Commodity Exchange Act (7 U.S.C. 26(h)(2)(C)) is 23 amended— 24 (1) in clause (i)— 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 2529 IS (A) in subclause (II), by striking ‘‘jurisdic- 1 tion;’’ and inserting the following: ‘‘jurisdiction, 2 including— 3 ‘‘(aa) the Federal Trade 4 Commission; 5 ‘‘(bb) the Internal Revenue 6 Service; and 7 ‘‘(cc) the Department of 8 State;’’; and 9 (B) in subclause (VI), by inserting ‘‘or 10 other foreign law enforcement authority’’ before 11 the period at the end; and 12 (2) in clause (ii)— 13 (A) by striking ‘‘Each’’ and inserting the 14 following: 15 ‘‘(I) IN GENERAL.—Each’’; 16 (B) in subclause (I) (as so designated), by 17 inserting ‘‘subclauses (I) through (V) of’’ before 18 ‘‘clause (i)’’; and 19 (C) by adding at the end the following: 20 ‘‘(II) FOREIGN AUTHORITIES.— 21 An entity described in subclause (VI) 22 of clause (i) shall maintain informa- 23 tion described in that clause in ac- 24 cordance with such assurances of con- 25 VerDate Sep 11 2014 02:23 Sep 25, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2529.IS S2529 pamtmann on DSKBC07HB2PROD with BILLS 13 •S 2529 IS fidentiality as the Commission deter- 1 mines appropriate.’’. 2 (d) TECHNICAL CORRECTIONS.— 3 (1) REVIEW.—Section 23(f)(3) of the Com- 4 modity Exchange Act (7 U.S.C. 26(f)(3)) is amend- 5 ed by striking ‘‘section 7064’’ and inserting ‘‘section 6 706’’. 7 (2) EXISTING COMMODITIES PROVISION.— 8 (A) IN GENERAL.—Section 21F of the Se- 9 curities Exchange Act of 1934 (15 U.S.C. 78u– 10 6) is amended by adding at the end the fol- 11 lowing: 12 ‘‘(k) NONENFORCEABILITY OF CERTAIN PROVISIONS 13 WAIVING RIGHTS AND REMEDIES OR REQUIRING ARBI- 14 TRATION.— 15 ‘‘(1) WAIVER OF RIGHTS AND REMEDIES.—The 16 rights and remedies provided in this section may not 17 be waived by any agreement, policy form, or condi- 18 tion of employment, including by a predispute arbi- 19 tration agreement. 20 ‘‘(2) PREDISPUTE ARBITRATION AGREEMENT.— 21 No predispute arbitratio [Text truncated for display. 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