WASHINGTON—Republicans members of a House subcommittee have approved a bill that would modify the Dodd-Frank Wall Street Reform and Consumer Protection Act requirement that whistle-blowers to report potential misconduct to their company before going to the Securities and Exchange Commission.
Despite vigorous company lobbying before its passage, Dodd-Frank permits workers to go to the SEC first rather than their own firms.
The primary sponsor of H.R. 2483, the Whistleblower Improvement Act of 2011, is Rep. Michael G. Grimm, R-N.Y.
The bill, which now goes to the full House Finance Services Committee, was approved last week on a 19-14 party-line vote by the House Subcommittee on Capital Markets and Government Sponsored Enterprises, with Republicans supporting the measure.
Under an amendment to the bill proposed by Rep. Grimm that the subcommittee approved, its language was changed so that instead of saying an employee must report misconduct first “to his or her employer,” the employee would have to report the information to “a person at his or her employer with legal, compliance, financial reporting, or similar responsibilities, or to the board of directors or a committee thereof, of such employer.”
Under the bill, the provisions would not apply in cases where the employer does not have a policy prohibiting retaliation for reporting misconduct; has no internal reporting system that permits anonymous reporting; or where it is determined that internal reporting “was not a viable option for the whistle-blower.”
In a statement issued in July, Rep. Grimm said, “For decades, companies have maintained effective internal reporting mechanism to help them stop criminal activity early with the help of tips from anonymous whistle-blowers.
“The overreaching provisions of Dodd-Frank make these internal programs obsolete, open the floodgates of claims to an already overburdened SEC, and delay action on escalating crimes within a company. The Whistleblower Improvement Act corrects these provisions in Dodd-Frank that have the potential to cause more harm than good.”