[Congressional Record Volume 165, Number 114 (Tuesday, July 9, 2019)]
[House]
[Pages H5276-H5278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WHISTLEBLOWER PROTECTION REFORM ACT OF 2019
Ms. WATERS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2515) to amend the Securities and Exchange Act of 1934 to
amend the definition of whistleblower, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2515
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 Protection
Reform Act of 2019''.
SEC. 2. WHISTLEBLOWER.
Section 21F of the Securities Exchange Act of 1934 (15
U.S.C. 78u-6) is amended--
(1) in subsection (a)(6)--
(A) by striking ``(6) Whistleblower.--The term'' and
inserting the following:
``(6) Whistleblower.--
``(A) In general.--The term''; and
(B) by adding the following new subparagraph at the end:
``(B) Special rule.--Solely for the purposes of subsection
(h)(1), the term `whistleblower' shall also include any
individual who takes an action described in subsection
(h)(1)(A), or 2 or more individuals acting jointly who take
an action described in subsection (h)(1)(A).''; and
(2) in subsection (h)(1)(A)--
(A) in clause (ii), by striking ``or'' at the end;
(B) in clause (iii), by striking the period at the end and
inserting ``; or''; and
(C) by adding at the end the following:
``(iv) in providing information regarding any conduct that
the whistleblower reasonably believes constitutes a violation
of any law, rule, or regulation subject to the jurisdiction
of the Commission to--
``(I) a person with supervisory authority over the
whistleblower at the whistleblower's employer, where such
employer is an entity registered with or required to be
registered with the Commission, a self-regulatory
organization, or a State securities commission or office
performing like functions; or
``(II) such other person working for the employer described
under subclause (I) who has the authority to investigate,
discover, or terminate misconduct.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
California (Ms. Waters) and the gentleman from Kentucky (Mr. Barr) each
will control 20 minutes.
The Chair recognizes the gentlewoman from California.
[[Page H5277]]
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
I thank Representative Green, the chairman of the Subcommittee on
Oversight and Investigations, for working with the gentleman from
Michigan (Mr. Huizenga) to craft this timely piece of legislation to
ensure that all whistleblowers reporting suspected securities law
violations are protected from retaliation by their employers.
In the Dodd-Frank Act, Congress provided the Securities and Exchange
Commission the authority to reward whistleblowers who voluntarily
provide the SEC with original information that leads to a successful
enforcement action with monetary sanctions exceeding $1 million.
{time} 1700
Realizing that these whistleblowers may be deterred by their
employers, Congress also required the SEC to issue regulations to
protect them from retaliatory efforts, such as firing or demotion; but
in 2018, the Supreme Court held that whistleblowers who report alleged
misconduct internally but not to the SEC are not protected by the
antiretaliation provisions of Dodd-Frank. This is not what Congress
intended. Indeed, requiring whistleblowers to race to the SEC in order
to be protected discourages them from reporting their suspicions to
their superiors.
The U.S. Chamber of Commerce highlighted the importance of internal
reporting in its 2010 letter to the SEC, stating: ``The experience of
the many companies with robust internal reporting programs, as well as
the empirical evidence, demonstrate that all stakeholders benefit when
those with knowledge of potential securities law violations report
internally, thus enabling management to promptly investigate and take
remedial action.''
By clarifying that whistleblowers who only report alleged misconduct
to the employers are also protected by the antiretaliation provisions
in the Dodd-Frank Act, this bill would encourage employees to
communicate potential securities law violations to their employers
without fear of being fired before they are able to report to the SEC.
Again, I thank Chairman Green and Mr. Huizenga for pushing this
important bill, and I urge my colleagues to join me in supporting it.
Mr. Speaker, I reserve the balance of my time.
Mr. BARR. Mr. Speaker, I yield myself such time as I may consume.
I rise in support of H.R. 2515, the Whistleblower Protection Reform
Act of 2019.
I would like to thank my colleagues, Congressman Green and
Congressman Huizenga, for their work on this commonsense, bipartisan
legislation.
Mr. Speaker, whistleblowers play a very important role in rooting out
bad behavior that harms the market as well as mom-and-pop investors.
Additionally, businesses have a self-interest in detecting and
eliminating illegal activity as swiftly as possible within their
organizations. To that end, clarifying the concept of encouraging
employees to report alleged securities fraud activities to their
employers without fear of retaliation just makes simple common sense.
Businesses typically strive to comply with the law, and they have
incentives to do so from market pressures, but it is also because
unlawful activity hurts the company itself and it hurts its investors,
driving down the company's value, tarnishing the company's reputation,
repelling business partners and customers, and damaging the overall
marketplace. That is why, frankly, the vast majority of actors in the
private sector do the right thing.
For these reasons, many companies have implemented strong internal
reporting measures to detect and mitigate potential wrongdoing before
harm spreads. But if internal whistleblowers who report potential
securities law violations internally are not protected from
retaliation, what good are these internal reporting systems that these
companies have voluntarily established?
That notion might seem counterintuitive, but last year, in the
Digital Realty Trust case, the Supreme Court held that the
whistleblower antiretaliation protections of the Dodd-Frank Act do not
extend to internal whistleblowers; only those who report to the SEC are
protected from retaliation.
Now, this is not an error in the Supreme Court's judgment; it is
simply a faithful interpretation of the flawed drafting of the Dodd-
Frank law. This bill solves this problem by amending section 922 of
Dodd-Frank to clarify that whistleblowers who report alleged misconduct
internally with their employers but not to the SEC are protected by
Dodd-Frank's antiretaliation provisions.
By clarifying that Dodd-Frank's antiretaliation protections also
apply to internal whistleblowers, this bill addresses the Supreme
Court's interpretation and aligns Dodd-Frank's whistleblower
protections with other major whistleblower laws.
Again, I want to thank Congressman Green and Congressman Huizenga for
this important bipartisan legislation, which I proudly support. I urge
all of my colleagues to join me in supporting H.R. 2515.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield such time as he may consume to the
gentleman from Texas (Mr. Green), the chairman of the Subcommittee on
Oversight and Investigations and the sponsor of H.R. 2515.
Mr. GREEN of Texas. Mr. Speaker, I am honored to present this
legislation, but I am more honored to acknowledge something that is
exceedingly important.
The chairwoman of the committee, the Honorable Maxine Waters, has,
under her leadership in this Congress, produced many pieces of
bipartisan legislation. This is but a continuation of her legislative
record. I want to commend her for her efforts, and I would also like to
salute Mr. McHenry and the persons who are across the aisle for their
efforts, as well, in producing bipartisan legislation.
I thank Mr. Barr for his assistance and his help. He is the Oversight
ranking member, and he and I will be working together on many pieces of
legislation.
I am honored today to say that this piece of legislation was born as
a result of honorable intentions metamorphosing into unintended
consequences, honorable intentions.
When we passed Dodd-Frank in 2010, we sought to add additional
protections for whistleblowers above and beyond what was accorded in
Sarbanes-Oxley. In so doing, with the best of intentions, we found that
this legislation was taken before the Supreme Court of the United
States of America, and the Supreme Court concluded--and I don't quarrel
with their conclusion, but the Supreme Court concluded that the
legislation would apply only if the person who was a whistleblower took
the concern to the SEC first.
I don't quarrel with what the Supreme Court ruled. This is why we
have this piece of legislation to correct the best of intentions that
metamorphosed into unintended consequences.
Let's talk for just a moment about whistleblowers.
It is exceedingly important to do this because I want people to know
that whistleblowers are extraordinary people in the sense only of they
do extraordinary things. They are really ordinary people, but they do
extraordinary things.
These are the people who are willing to put their livelihoods on the
line. These are the people who are willing to take that step that many
of us would not take because, when you take that step as a
whistleblower, you will sometimes stand alone. But they understand that
it is better to stand alone than never to stand at all, and in so
doing, they are protecting us: consumers, members of the public.
So I commend the whistleblowers of the world who take these
extraordinary steps.
But we also want to do more than commend them. We want to protect
them. This legislation will protect those who are willing to step
forward, those who will see something and say something, something that
we encourage people to do.
You can't encourage people to see something and say something and
then allow them to do this without the protections that we should
properly accord them and that we intended to accord them under Dodd-
Frank. So I am honored today to have this piece of legislation that
will give whistleblowers the protection that we intended and will also
send a message that the companies that they work for can have the
[[Page H5278]]
opportunity to take corrective action before the SEC is informed.
Many of these companies want to do the right thing, and if given the
opportunity, they will--not all, many. I think we ought to give them an
opportunity to do the right thing; and to do so, we would want
whistleblowers to report internally before they take this to an
external source such as the SEC.
Mr. Speaker, this legislation is bipartisan. I am honored to tell you
that, among the persons who are the cosponsors, we have the Honorable
Carolyn Maloney; the Honorable Representative Gerald Connolly; the
Honorable Gregory Meeks; the Honorable Joyce Beatty, who is here in
this room with us currently; and the Honorable Vicente Gonzalez, all of
whom support it, along with the Honorable Emanuel Cleaver.
I would also add, it is endorsed by the National Whistleblower
Center, endorsed by the North American Securities Administrators
Association, endorsed by Public Citizen, endorsed by the Government
Accountability Project, endorsed by the Project On Government
Oversight, and endorsed by the Securities Industry and Financial
Markets Association.
It is another example of how, under the leadership of the Honorable
Maxine Waters, we continue to produce bipartisan legislation. I am
honored, Mr. Speaker, to have this honorable chairwoman presiding
today.
Mr. BARR. Mr. Speaker, I yield myself the balance of my time, and I
am prepared to close.
Mr. Speaker, again, I would thank Congressman Green and Congressman
Huizenga for their leadership on this extending of whistleblower
protections, and I yield back the balance of my time.
General Leave
Ms. WATERS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their
remarks.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from California?
There was no objection.
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, this is a very important measure that will increase
corporate accountability and help those companies committed to
ferreting out wrongdoing to take action without government involvement
and protects those workers who help them to do so.
I commend the gentleman from Texas and the gentleman from Michigan
for working in a bipartisan manner to bring this bill before the House.
Mr. Speaker, I urge my colleagues to join me in supporting this
important piece of legislation, and I yield back the balance of my
time.
Mr. HUIZENGA. Mr. Speaker, I rise today in support of H.R. 2919, the
Whistleblower Protection Reform Act of 2019.
Whistleblowers are an effective means of rooting out bad behavior
that harms the market as well as investors.
In fact, Section 922 of Dodd-Frank amended the Securities and
Exchange Act of 1934 to afford whistleblowers protection from
retaliation by their employers for reporting suspected misconduct.
Additionally, Section 922 allows for the SEC to provide monetary
awards to whistleblowers who provide ``original information'' resulting
in monetary sanctions over $1 million.
However, in February 2018, the Supreme Court held in Digital Realty
v. Somers that whistleblowers who report alleged misconduct internally
to their employer, as opposed to the SEC, are not protected by Dodd-
Frank's anti-retaliation provisions.
A whistleblower who reports directiy to their employee about alleged
misconduct shouldn't risk being retaliated against. That's why this
bipartisan bill has been carefully crafted to clarify the application
of the anti-retaliation provisions to whistleblowers provided within
the Dodd-Frank Act.
By further clarifying the anti-retaliation provisions of section 922
apply to those whistleblowers who report internally will encourage
employees to report potential misconduct instead of automatically
escalating the issue to the SEC.
Internal reporting may be more efficient and practical in some cases
as employers have a chance to correct, self-report, or take other
action.
Moreover, by clarifying the application of Dodd-Frank anti-
retaliation protections to internal whistleblowers, the bill aligns
with similar protections for internal whistleblowers within the
Whistleblower Protection Act and Sarbanes-Oxley.
I'd like to thank my colleague, Mr. Green for working with me on the
Whistleblower Protection Reform Act and I urge my colleagues to vote
yes.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from California (Ms. Waters) that the House suspend the
rules and pass the bill, H.R. 2515, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Ms. WATERS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________