1.This Act may be cited as the
Whistleblower Improvement Act of
2011
.
2.Amendments to the
Securities Exchange Act of 1934
(a)Exclusion of
certain compliance officers and Internal reporting as a condition of
awardSection 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 requiredIn 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 requirementSubsection (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 culpableSubsection (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 policiesSubsection
(h)(1) of such section is amended by adding at the end the following:
(D)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)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)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)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
.
3.Amendments to the
Commodity Exchange Act
(a)Exclusion of
certain compliance officers and Internal reporting as a condition of
awardSection 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 requiredIn 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
requirementSubsection (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 culpableSubsection (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 policiesSubsection
(h)(1) of such section is amended by adding at the end the following:
(D)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)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)
(i)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)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
.
4.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.