[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2483 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2483

To amend the Securities Exchange Act of 1934 and the Commodity Exchange 
 Act to modify certain provisions relating to whistleblower incentives 
                            and protection.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 11, 2011

  Mr. Grimm (for himself, Mr. Garrett, Mr. Stivers, and Mr. Campbell) 
 introduced the following bill; which was referred to the Committee on 
 Financial Services, and in addition to the Committee on Agriculture, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Securities Exchange Act of 1934 and the Commodity Exchange 
 Act to modify certain provisions relating to whistleblower incentives 
                            and protection.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Whistleblower Improvement Act of 
2011''.

SEC. 2. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

    (a) Exclusion of Certain Compliance Officers and Internal Reporting 
as a Condition of Award.--Section 21F of the Securities Exchange Act of 
1934 (15 U.S.C. 78u-6) is amended--
            (1) in subsection (b), by redesignating paragraph (2) as 
        paragraph (3) and inserting after paragraph (1) the following:
            ``(2) Internal reporting required.--In the case of a 
        whistleblower who is an employee providing information relating 
        to misconduct giving rise to the violation of the securities 
        laws that was committed by his or her employer or another 
        employee of the employer, to be eligible for an award under 
        this section, the whistleblower, or any person obtaining 
        reportable information from the whistleblower, shall--
                    ``(A) first report the information described in 
                paragraph (1) to his or her employer before reporting 
                such information to the Commission; and
                    ``(B) report such information to the Commission not 
                later than 180 days after reporting the information to 
                the employer.''; and
            (2) in subsection (c)(2)--
                    (A) in subparagraph (C), by striking ``or'' at the 
                end; and
                    (B) by redesignating subparagraph (D) as 
                subparagraph (F) and inserting after subparagraph (C) 
                the following:
                    ``(D) to any whistleblower who fails to first 
                report the information described in subsection (b)(1) 
                that is the basis for the award to his or her employer 
                before reporting such information to the Commission, in 
                the case where the misconduct giving rise to the 
                violation of the securities laws was committed by such 
                employer or an employee of the employer, unless the 
                whistleblower alleges and the Commission determines 
                that the employer lacks either a policy prohibiting 
                retaliation for reporting potential misconduct or an 
                internal reporting system allowing for anonymous 
                reporting, or the Commission determines in a 
                preliminary investigation not exceeding 30 days that 
                internal reporting was not a viable option for the 
                whistleblower based on--
                            ``(i) evidence that the alleged misconduct 
                        was committed by or involved the complicity of 
                        the highest level of management; or
                            ``(ii) other evidence of bad faith on the 
                        part of the employer;
                    ``(E) to any whistleblower who has legal, 
                compliance, or similar responsibilities for or on 
                behalf of an entity and has a fiduciary or contractual 
                obligation to investigate or respond to internal 
                reports of misconduct or violations or to cause such 
                entity to investigate or respond to the misconduct or 
                violations, if the information learned by the 
                whistleblower during the course of his or her duties 
                was communicated to such a person with the reasonable 
                expectation that such person would take appropriate 
                steps to so respond; and''.
    (b) Elimination of Minimum Award Requirement.--Subsection (b)(1) of 
such section is amended--
            (1) by striking ``shall'' and inserting ``may''; and
            (2) by striking ``in an aggregate amount equal to--'' and 
        all that follows and inserting ``an amount determined by the 
        Commission but not more than 30 percent, in total, of what has 
        been collected of the monetary sanctions imposed in the action 
        or related actions.''.
    (c) Exclusion of Whistleblowers Found Culpable.--Subsection 
(c)(2)(B) of such section is amended by inserting ``, is found civilly 
liable, or is otherwise determined by the Commission to have committed, 
facilitated, participated in, or otherwise been complicit in misconduct 
related to such violation'' after ``violation''.
    (d) Rule of Construction Relating to Other Workplace Policies.--
Subsection (h)(1) of such section is amended by adding at the end the 
following:
                    ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed as prohibiting or 
                restricting any employer from enforcing any established 
                employment agreements, workplace policies, or codes of 
                conduct against a whistleblower, and any adverse action 
                taken against a whistleblower for any violation of such 
                agreements, policies, or codes shall not constitute 
                retaliation for purposes of this paragraph, provided 
                such agreements, policies, or codes are enforced 
                consistently with respect to other employees who are 
                not whistleblowers.''.
    (e) Notification to Employer.--Paragraph (2) of subsection (h) of 
such section is amended--
            (1) in the paragraph heading, by striking 
        ``confidentiality'' and inserting ``Notification to employer 
        and confidentiality'';
            (2) by redesignating subparagraph (A) through (D) as 
        subparagraphs (B) through (E), respectively;
            (3) by inserting a new subparagraph (A) as follows:
                    ``(A) Notification of investigation.--
                            ``(i) Notification required.--Prior to 
                        commencing any enforcement action relating in 
                        whole or in part to any information reported to 
                        it by a whistleblower, the Commission shall 
                        notify any entity that is to be subject to such 
                        action of information received by the 
                        Commission from a whistleblower who is an 
                        employee of such entity to enable the entity to 
                        investigate the alleged misconduct and take 
                        remedial action, unless the Commission 
                        determines in the course of a preliminary 
                        investigation of the alleged misconduct, not 
                        exceeding 30 days, that such notification would 
                        jeopardize necessary investigative measures and 
                        impede the gathering of relevant facts, based 
                        on--
                                    ``(I) evidence that the alleged 
                                misconduct was committed by or involved 
                                the complicity of the highest level 
                                management of the entity; or
                                    ``(II) other evidence of bad faith 
                                on the part of the entity.
                            ``(ii) Good faith.--Where an entity 
                        notified under clause (i) responds in good 
                        faith, which may include conducting an 
                        investigation, reporting results of such an 
                        investigation to the Commission, and taking 
                        appropriate corrective action, the Commission 
                        shall treat the entity as having self-reported 
                        the information and its actions in response to 
                        such notification shall be evaluated in 
                        accordance with the Commission's policy 
                        statement entitled `Report of Investigation 
                        Pursuant to Section 21(a) of the Securities 
                        Exchange Act of 1934 and Statement of the 
                        Relationship of Cooperation to Agency 
                        Enforcement Decisions'.''; and
            (4) in the heading of subparagraph (B) (as redesignated by 
        paragraph (3)), by striking ``in general'' and inserting 
        ``Confidentiality''.

SEC. 3. AMENDMENTS TO THE COMMODITY EXCHANGE ACT.

    (a) Exclusion of Certain Compliance Officers and Internal Reporting 
as a Condition of Award.--Section 23 of the Commodity Exchange Act (7 
U.S.C. 26) is amended--
            (1) in subsection (b), by redesignating paragraph (2) as 
        paragraph (3) and inserting after paragraph (1) the following:
            ``(2) Internal reporting required.--In the case of a 
        whistleblower who is an employee providing information relating 
        to misconduct giving rise to the violation of the securities 
        laws that was committed by his or her employer or another 
        employee of the employer, to be eligible for an award under 
        this section, the whistleblower, or any person obtaining 
        reportable information from the whistleblower, shall--
                    ``(A) first reported the information described in 
                paragraph (1) to his or her employer before reporting 
                such information to the Commission; and
                    ``(B) report such information to the Commission not 
                later than 180 days after reporting the information to 
                the employer.''; and
            (2) in subsection (c)(2)--
                    (A) in subparagraph (C), by striking ``or'' at the 
                end; and
                    (B) by redesignating subparagraph (D) as 
                subparagraph (F) and inserting after subparagraph (C) 
                the following:
                    ``(D) to any whistleblower who fails to first 
                report the information described in subsection (b)(1) 
                that is the basis for the award to his or her employer 
                before reporting such information to the Commission, in 
                the case where the misconduct giving rise to the 
                violation of the securities laws was committed by such 
                employer or an employee of the employer, unless the 
                whistleblower alleges and the Commission determines 
                that the employer lacks either a policy prohibiting 
                retaliation for reporting potential misconduct or an 
                internal reporting system allowing for anonymous 
                reporting, or the Commission determines in a 
                preliminary investigation not exceeding 30 days that 
                internal reporting was not a viable option for the 
                whistleblower based on--
                            ``(i) evidence that the alleged misconduct 
                        was committed by or involved the complicity of 
                        the highest level of management; or
                            ``(ii) other evidence of bad faith on the 
                        part of the employer;
                    ``(E) to any whistleblower who has legal, 
                compliance, or similar responsibilities for or on 
                behalf of an entity and has a fiduciary or contractual 
                obligation to investigate or respond to internal 
                reports of misconduct or violations or to cause such 
                entity to investigate or respond to the misconduct or 
                violations, if the information learned by the 
                whistleblower on the course of his or her duties was 
                communicated to such a person with the reasonable 
                expectation that such person would take appropriate 
                steps to so respond; and''.
    (b) Cap on Award in Certain Circumstances and Elimination of 
Minimum Award Requirement.--Subsection (b)(1) of such section is 
amended--
            (1) by striking ``shall'' and inserting ``may''; and
            (2) by striking ``in an aggregate amount equal to--'' and 
        all that follows and inserting ``in an amount determined by the 
        Commission but not more than 30 percent, in total, of what has 
        been collected of the monetary sanctions imposed in the action 
        or related actions.''.
    (c) Exclusion of Whistleblowers Found Culpable.--Subsection 
(c)(2)(B) of such section is amended by inserting ``, is found civilly 
liable, or is otherwise determined by the Commission to have committed, 
facilitated, participated in, or been complicit in misconduct related 
to such a violation'' after ``violation''.
    (d) Rule of Construction Relating to Other Workplace Policies.--
Subsection (h)(1) of such section is amended by adding at the end the 
following:
                    ``(D) Rule of construction.--Nothing in this 
                paragraph shall be construed as prohibiting or 
                restricting any employer from enforcing any established 
                employment agreements, workplace policies, or codes of 
                conduct against a whistleblower, and any adverse action 
                taken against a whistleblower for any violation of such 
                agreements, policies, or codes shall not constitute 
                retaliation for purposes of this paragraph, provided 
                such agreements, policies, or codes are enforced 
                consistently with respect to other employees who are 
                not whistleblowers.''.
    (e) Notification to Employer.--Paragraph (2) of subsection (h) of 
such section is amended--
            (1) in the paragraph heading, by striking 
        ``confidentiality'' and inserting ``Notification to employer 
        and confidentiality'';
            (2) by redesignating subparagraph (A) through (D) as 
        subparagraphs (B) through (E), respectively;
            (3) by inserting a new subparagraph (A) as follows:
                    ``(A) Notification to employer.--
                            ``(i) Notification required.--Prior to 
                        commencing any enforcement action relating in 
                        whole or in part to any information reported to 
                        it by a whistleblower, the Commission shall 
                        promptly notify any entity that is to be 
                        subject to such enforcement of information 
                        received by the Commission from a whistleblower 
                        who is an employee of such entity to enable the 
                        entity to investigate the alleged misconduct 
                        and take remedial action, unless the Commission 
                        determines in the course of a preliminary 
                        investigation not exceeding 30 days of the 
                        alleged misconduct, that such notification 
                        would jeopardize necessary investigative 
                        measures and impede the gathering of relevant 
                        facts, based on--
                                    ``(I) evidence that the alleged 
                                misconduct was committed by or involved 
                                the complicity of the highest level 
                                management of the entity; or
                                    ``(II) other evidence of bad faith 
                                on the part of the entity.
                            ``(ii) Good faith.--Where an entity 
                        notified under clause (i) responds in good 
                        faith, which may include conducting an 
                        investigation, reporting results of such an 
                        investigation to the Commission, and taking 
                        appropriate corrective action, the Commission 
                        shall treat the entity as having self-reported 
                        the information and its actions in response to 
                        such notification shall be evaluated 
                        accordingly.''; and
            (4) in the heading of subparagraph (B) (as redesignated by 
        paragraph (3)), by striking ``in general'' and inserting 
        ``Confidentiality''.

SEC. 4. STUDY.

    The Comptroller General shall conduct a study to determine what 
impact, if any, the whistleblower incentives program established under 
section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u-6) 
and section 23 of the Commodity Exchange Act (7 U.S.C. 26) has had on 
shareholder value. The Comptroller General shall transmit to Congress a 
report on the study not later than 18 months after the date of 
enactment of this Act.
                                 <all>