Financial Compensation for CFPB Whistleblowers Act

II 116TH CONGRESS 2D SESSION S. 3975 To amend the Consumer Financial Protection Act of 2010 to provide for whistleblower incentives and protection. IN THE SENATE OF THE UNITED STATES JUNE 17, 2020 Ms. CORTEZ MASTO (for herself, Mr. BROWN, Ms. WARREN, Ms. SMITH, Mr. DURBIN, Mr. MERKLEY, Mr. WYDEN, and Mr. BLUMENTHAL) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Consumer Financial Protection Act of 2010 to provide for whistleblower incentives and protection. 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 ‘‘Financial Compensa- 4 tion for CFPB Whistleblowers Act’’. 5 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 3975 IS SEC. 2. BUREAU WHISTLEBLOWER INCENTIVES AND PRO- 1 TECTION. 2 (a) IN GENERAL.—The Consumer Financial Protec- 3 tion Act (12 U.S.C. 5481 et seq.) is amended by adding 4 at the end of section 1017 the following: 5 ‘‘SEC. 1017A. WHISTLEBLOWER INCENTIVES AND PROTEC- 6 TION. 7 ‘‘(a) DEFINITIONS.—In this section: 8 ‘‘(1) ADMINISTRATIVE PROCEEDING OR COURT 9 ACTION.—The term ‘administrative proceeding or 10 court action’ means any judicial or administrative 11 action brought by the Bureau that results in mone- 12 tary sanctions exceeding $1,000,000. 13 ‘‘(2) FUND.—The term ‘Fund’ means the Con- 14 sumer Financial Civil Penalty Fund established 15 under section 1017(d)(1). 16 ‘‘(3) MONETARY SANCTIONS.—The term ‘mone- 17 tary sanctions’ means, with respect to any adminis- 18 trative proceeding or court action, any monies, in- 19 cluding penalties, disgorgement, restitution, interest, 20 ordered to be paid or other amounts of relief ob- 21 tained under section 1055(a)(2). 22 ‘‘(4) ORIGINAL INFORMATION.—The term 23 ‘original information’ means information that— 24 ‘‘(A) is derived from the independent 25 knowledge or analysis of a whistleblower; 26 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 3975 IS ‘‘(B) is not known to the Bureau from any 1 other source, unless the whistleblower is the 2 original source of the information; 3 ‘‘(C) is not exclusively derived from an al- 4 legation made in a judicial or administrative 5 hearing, in a governmental report, hearing, or 6 from the news media, unless the whistleblower 7 is a source of the information; and 8 ‘‘(D) is not exclusively derived from an al- 9 legation made in an audit, examination or in- 10 vestigation. 11 ‘‘(5) SUCCESSFUL ENFORCEMENT.—The term 12 ‘successful enforcement’ includes, with respect to 13 any administrative proceeding or court action 14 brought by the Bureau, any settlement of such pro- 15 ceeding or action. 16 ‘‘(6) WHISTLEBLOWER.—The term ‘whistle- 17 blower’ means any individual, or 2 or more individ- 18 uals acting jointly, who provides original information 19 relating to a violation of Federal consumer financial 20 law, consistent with any rule or regulation issued by 21 the Bureau under this section. 22 ‘‘(b) AWARDS.— 23 ‘‘(1) IN GENERAL.—In any administrative pro- 24 ceeding or court action the Bureau, subject to regu- 25 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 3975 IS lations prescribed by the Bureau and subject to sub- 1 section (c), shall pay an award or awards to 1 or 2 more whistleblowers who voluntarily provided origi- 3 nal information that led to the successful enforce- 4 ment of the covered administrative proceeding or 5 court action in an aggregate amount equal to— 6 ‘‘(A) not less than 10 percent, in total, of 7 what has been collected of the monetary sanc- 8 tions imposed in the action; and 9 ‘‘(B) not more than 30 percent, in total, of 10 what has been collected of the monetary sanc- 11 tions imposed in the action. 12 ‘‘(2) PAYMENT OF AWARDS.—Any amount paid 13 under paragraph (1) shall be paid from the Fund. 14 ‘‘(3) AWARD MINIMUM.—If the Bureau is un- 15 able to collect at least $1,000,000 of the monetary 16 sanctions imposed in the action, the Bureau shall 17 provide for an award to any single whistleblower 18 equal to the greater of— 19 ‘‘(A) 10 percent of the amount collected; or 20 ‘‘(B) $50,000. 21 ‘‘(c) DETERMINATION OF AMOUNT OF AWARD; DE- 22 NIAL OF AWARD.— 23 ‘‘(1) DETERMINATION OF AMOUNT OF 24 AWARD.— 25 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 3975 IS ‘‘(A) DISCRETION.—The determination of 1 the percentage amount of an award made under 2 subsection (b) shall be in the discretion of the 3 Bureau. 4 ‘‘(B) CRITERIA.—In determining the per- 5 centage amount of an award made under sub- 6 section (b), the Bureau shall take into consider- 7 ation— 8 ‘‘(i) the significance of the informa- 9 tion provided by the whistleblower to the 10 successful enforcement of the administra- 11 tive proceeding or court action; 12 ‘‘(ii) the degree of assistance provided 13 by the whistleblower and any legal rep- 14 resentative of the whistleblower in an ad- 15 ministrative proceeding or court action; 16 ‘‘(iii) the programmatic interest of the 17 Bureau in deterring violations of Federal 18 consumer financial law (including applica- 19 ble regulations) by making awards to whis- 20 tleblowers who provide information that 21 leads to the successful enforcement of such 22 laws; and 23 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 3975 IS ‘‘(iv) such additional relevant factors 1 as the Bureau may establish by rule or 2 regulation. 3 ‘‘(2) DENIAL OF AWARD.—No award under 4 subsection (b) shall be made— 5 ‘‘(A) to any whistleblower who is, or was at 6 the time the whistleblower acquired the original 7 information submitted to the Bureau, a mem- 8 ber, officer, or employee of an entity described 9 in subclauses (I) through (V) of subsection 10 (h)(1)(C)(i); 11 ‘‘(B) to any whistleblower who is convicted 12 of a criminal violation related to the adminis- 13 trative proceeding or court action for which the 14 whistleblower otherwise could receive an award 15 under this section; 16 ‘‘(C) to any whistleblower who is found to 17 be liable for the conduct in the administrative 18 proceeding or court action, or a related action, 19 for which the whistleblower otherwise could re- 20 ceive an award under this section; 21 ‘‘(D) to any whistleblower who planned 22 and initiated the conduct at issue in the admin- 23 istrative proceeding or court action for which 24 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 3975 IS the whistleblower otherwise could receive an 1 award under this section; 2 ‘‘(E) to any whistleblower who submits in- 3 formation to the Bureau that is based on the 4 facts underlying the administrative proceeding 5 or court action previously submitted by another 6 whistleblower; and 7 ‘‘(F) to any whistleblower who fails to sub- 8 mit information to the Bureau in such form as 9 the Bureau may, by rule or regulation, require. 10 ‘‘(d) REPRESENTATION.— 11 ‘‘(1) PERMITTED REPRESENTATION.—Any 12 whistleblower who makes a claim for an award under 13 subsection (b) may be represented by counsel. 14 ‘‘(2) REQUIRED REPRESENTATION.— 15 ‘‘(A) IN GENERAL.—Any whistleblower 16 who anonymously makes a claim for an award 17 under subsection (b) shall be represented by 18 counsel if the whistleblower submits the infor- 19 mation upon which the claim is based. 20 ‘‘(B) DISCLOSURE OF IDENTITY.—Prior to 21 the payment of an award, a whistleblower shall 22 disclose the identity of the whistleblower and 23 provide such other information as the Bureau 24 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 3975 IS may require, directly or through counsel of the 1 whistleblower. 2 ‘‘(e) NO CONTRACT NECESSARY.—No contract or 3 other agreement with the Bureau is necessary for any 4 whistleblower to receive an award under subsection (b), 5 unless otherwise required by the Bureau by rule or regula- 6 tion. 7 ‘‘(f) APPEALS.—Any determination made under this 8 section, including whether, to whom, or in what amount 9 to make awards, shall be in the discretion of the Bureau. 10 Any such determination, except the determination of the 11 amount of an award if the award was made in accordance 12 with subsection (b), may be appealed to the appropriate 13 court of appeals of the United States not more than 30 14 days after the determination is issued by the Bureau. The 15 court shall review the determination made by the Bureau 16 in accordance with section 706 of title 5. 17 ‘‘(g) REPORTS TO CONGRESS.—Not later than Octo- 18 ber 30 of each year, the Bureau shall transmit to the 19 House Committee on Financial Services and the Senate 20 Committee on Banking, Housing, and Urban Affairs a re- 21 port on the Bureau’s whistleblower award program under 22 this section, including a description of the number of 23 awards granted and the types of cases in which awards 24 were granted during the preceding fiscal year. 25 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 3975 IS ‘‘(h) PROTECTION OF WHISTLEBLOWERS.— 1 ‘‘(1) CONFIDENTIALITY.— 2 ‘‘(A) IN GENERAL.—Except as provided in 3 subparagraphs (B) and (C), the Bureau and 4 any officer or employee of the Bureau, shall not 5 disclose any information, including information 6 provided by a whistleblower to the Bureau, 7 which could reasonably be expected to reveal 8 the identity of a whistleblower, except in ac- 9 cordance with the provisions of section 552a of 10 title 5, United States Code, unless and until re- 11 quired to be disclosed to a defendant or re- 12 spondent in connection with a public proceeding 13 instituted by the Bureau or any entity described 14 in subparagraph (C). For purposes of section 15 552 of title 5, United States Code, this para- 16 graph shall be considered a statute described in 17 subsection (b)(3)(B) of such section 552. 18 ‘‘(B) EFFECT.—Nothing in this paragraph 19 is intended to limit the ability of the Attorney 20 General to present such evidence to a grand 21 jury or to share such evidence with potential 22 witnesses or defendants in the course of an on- 23 going criminal investigation. 24 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 3975 IS ‘‘(C) AVAILABILITY TO GOVERNMENT 1 AGENCIES.— 2 ‘‘(i) IN GENERAL.—Without the loss 3 of its status as confidential in the hands of 4 the Bureau, all information referred to in 5 subparagraph (A) may, in the discretion of 6 the Bureau, when determined by the Bu- 7 reau to be necessary or appropriate, be 8 made available to— 9 ‘‘(I) the Department of Justice; 10 ‘‘(II) an appropriate department 11 or agency of the Federal Government, 12 acting within the scope of its jurisdic- 13 tion; 14 ‘‘(III) a State attorney general in 15 connection with any criminal inves- 16 tigation; 17 ‘‘(IV) an appropriate department 18 or agency of any State, acting within 19 the scope of its jurisdiction; and 20 ‘‘(V) a foreign regulatory author- 21 ity. 22 ‘‘(ii) MAINTENANCE OF INFORMA- 23 TION.—Each of the entities, agencies, or 24 persons described in clause (i) shall main- 25 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 3975 IS tain information described in that clause 1 as confidential, in accordance with the re- 2 quirements in subparagraph (A). 3 ‘‘(2) RIGHTS RETAINED.—Nothing in this sec- 4 tion shall be deemed to diminish the rights, privi- 5 leges, or remedies of any whistleblower under section 6 1057, any other Federal or State law, or under any 7 collective bargaining agreement. 8 ‘‘(i) RULEMAKING AUTHORITY.—The Bureau shall 9 have the authority to issue such rules and regulations as 10 may be necessary or appropriate to implement the provi- 11 sions of this section consistent with the purposes of this 12 section. 13 ‘‘(j) ORIGINAL INFORMATION.—Information sub- 14 mitted to the Bureau by a whistleblower in accordance 15 with rules or regulations implementing this section shall 16 not lose its status as original information solely because 17 the whistleblower submitted such information prior to the 18 effective date of such rules or regulations, provided such 19 information was submitted after the date of enactment of 20 this section. 21 ‘‘(k) PROVISION OF FALSE INFORMATION.—A whis- 22 tleblower who knowingly and willfully makes any false, fic- 23 titious, or fraudulent statement or representation, or who 24 makes or uses any false writing or document knowing the 25 VerDate Sep 11 2014 22:05 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3975.IS S3975 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 3975 IS same to contain any false, fictitious, or fraudulent state- 1 ment or entry, shall not be entitled to an award under 2 this section and shall be subject to prosecution under sec- 3 tion 1001 of title 18, United States Code. 4 ‘‘(l) UNENFORCEABILITY OF CERTAIN AGREE- 5 MENTS.— 6 ‘‘(1) NO WAIVER OF RIGHTS AND REMEDIES.— 7 Except as provided under paragraph (3), and not- 8 withstanding any other provision of law, the rights 9 and remedies provided for in this section may not be 10 waived by any agreement, policy, form, or condition 11 of employment, including by any predispute arbitra- 12 tion agreement. 13 ‘‘(2) NO PREDISPUTE ARBITRATION AGREE- 14 MENTS.—Except as provided under paragraph (3), 15 and notwithstanding any other provision of law, no 16 predispute arbitration agreement shall be valid or 17 enforceable to the extent that it requires arbitration 18 of a dispute arising under this section. 19 ‘‘(3) EXCEPTION.—Notwithstanding paragraphs 20 (1) and (2), an arbitration provision in a collective 21 bargaining agreement shall be enforceable as to dis- 22 putes arising under subsection (a)(4), unless the Bu- 23 reau determines, by rule, that such provision is in- 24 consistent with the purposes of this title.’’. 25 VerDate Sep 11 2014 [Text truncated for display. 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