II 114th CONGRESS 2d Session S. 2591 IN THE SENATE OF THE UNITED STATES February 25, 2016 Ms. Baldwin introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To strengthen incentives and protections for whistleblowers in the financial industry and related regulatory agencies, and for other purposes.

1. Short Title This Act may be cited as the Whistleblower Augmented Reward and Nonretaliation Act of 2016 or the WARN Act of 2016 . 2. Financial Institutions Anti-Fraud Enforcement Act of 1990 The Financial Institutions Anti-Fraud Enforcement Act of 1990 ( 12 U.S.C. 4201 et seq. ) is amended— (1) in section 2565(d) ( 12 U.S.C. 4205(d) )— (A) in paragraph (1)(A), by striking clause (i) and inserting the following: (i) The declarant shall be entitled, with respect to the total recovery in the action or any related actions, to— (I) not less than 10 percent; and (II) not greater than 30 percent. ; and (B) by adding at the end the following: (3) Any determination regarding an award under this section may, not later than 30 days after the date on which the determination is made, be appealed to the appropriate court of appeals of the United States. ; (2) by striking section 2572 ( 12 U.S.C. 4212 ) and inserting the following: 2572. Protection for declarants (a) Remedy A person may obtain all relief necessary to make the person whole if— (1) an employer discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against the person in the terms and conditions of the employment of the person because of lawful acts taken by the person— (A) in furtherance of a prosecution under section 215, 225, 287, 656, 657, 1001, 1005, 1006, 1007, 1014, 1032, 1341, 1343, 1344, or 1517 of title 18, United States Code; and (B) including the provision of information that relates to, initiates, or assists— (i) a prosecution described in subparagraph (A); or (ii) the investigation of or testimony in a prosecution described in subparagraph (A); and (2) the person acted upon the direction of the employer of the person to deliberately cause the violation disclosed. (b) Relief Relief under subsection (a) shall include— (1) reinstatement with the same seniority status; (2) twice the amount of back pay and interest to which the person would have been entitled but for the action of the employer; and (3) compensation for any special damages sustained as a result of the action of the employer, including— (A) litigation costs; (B) expert witness fees; and (C) reasonable attorneys fees. (c) Burdens of proof Complaints for relief under this section shall be governed by the procedures, evidentiary standards, and burdens of proof under section 1057 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5567 ). ; (3) in section 2573 ( 12 U.S.C. 4213 )— (A) by striking The Attorney General and inserting the following: (a) In general The Attorney General ; and (B) by adding at the end the following: (b) Education The Attorney General shall issue regulations requiring every employer covered under this Act to provide education and training to the employees of the employer on the rights and remedies provided under this section, including by— (1) providing individual notice to the employees; (2) posting information on the home page of the website of the employer; and (3) providing mandatory training for the employees. ; (4) in section 2580 ( 12 U.S.C. 4225 ), by striking subsection (c) and inserting the following: (c) Share of assets When the United States recovers any asset specifically identified in a valid declaration filed under section 2576 and the Attorney General determines that the asset would not have been recovered if the declarant had not filed the declaration, the declarant shall have the right to share in the recovery in the amount of, with respect to the total amount of the recovery in the action or related actions— (1) not less than 10 percent; and (2) not greater than 30 percent. ; and (5) by striking section 2583 ( 12 U.S.C. 4228 ) and inserting the following: 2583. Review of action by the Attorney General Any determination regarding an award under this chapter may, not later than 30 days after the date on which the determination is made, be appealed to the appropriate court of appeals of the United States. . 3. Federal Deposit Insurance Act The Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq. ) is amended— (1) in section 33(a) ( 12 U.S.C. 1831j(a) )— (A) in paragraph (1)— (i) in the matter preceding subparagraph (A), by inserting (or refused to alter information previously provided) after provided information ; and (ii) in subparagraph (A), by striking a possible violation of any law or regulation and inserting a possible violation of any law, regulation, or agency statement of policy ; and (B) in paragraph (2), in the matter preceding subparagraph (A)— (i) by striking the Corporation and inserting any such entity ; (ii) by inserting (or refused to alter information previously provided) after provided information ; and (iii) by striking any possible violation of any law or regulation and inserting any possible violation of any law, regulation, or agency statement of policy, ; and (2) in section 34 ( 12 U.S.C. 1831k )— (A) by striking subsection (b) and inserting the following: (b) Percentage limitation An appropriate Federal banking agency, when paying a reward under subsection (a), shall pay a reward equivalent to— (1) not less than 10 percent of the amount of any fine, penalty, restitution, or forfeiture; and (2) not greater than 30 percent of the amount of any fine, penalty, restitution, or forfeiture. ; and (B) by striking subsection (d) and inserting the following: (d) Review Any determination regarding an award under this section may, not later than 30 days after the date on which the determination is made, be appealed to the appropriate court of appeals of the United States. . 4. Securities Exchange Act of 1934 Section 21F of the Securities Exchange Act of 1934 ( 15 U.S.C. 78u–6 ) is amended— (1) in subsection (a), by striking paragraph (6); (2) in subsection (c)(1)(B)— (A) in clause (i)(IV), by striking and at the end; (B) in clause (ii), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following: (iii) may not deny eligibility for an award that otherwise meets the requirements of this section if the information that forms the basis for the award is submitted not later than 90 days after a whistleblower gains knowledge of the disclosed misconduct; (iv) shall presume that a report made by a whistleblower is timely submitted; and (v) may not reduce the award due to delay, absent a finding that the disclosure was deliberately postponed because of— (I) culpability of the whistleblower; (II) interference by the whistleblower with internal investigative processes; or (III) attempts at self-enrichment by the whistleblower. ; (3) in subsection (h)— (A) in paragraph (1)— (i) in subparagraph (A)— (I) in the matter preceding clause (i)— (aa) by striking No employer and inserting No employer, prospective employer, or former employer, as applicable, ; and (bb) by striking a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower and inserting a whistleblower with respect to the compensation, terms, conditions, or privileges of employment of the whistleblower because of any lawful act done by the whistleblower or perceived to have been done by the whistleblower (or any person acting pursuant to a request of the whistleblower), whether at the initiative of the whistleblower or in the ordinary course of the duties of the whistleblower ; (II) in clause (ii) by striking or at the end; (III) in clause (iii) by striking the period at the end and inserting a semicolon; and (IV) by adding at the end the following: (iv) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task that the whistleblower (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition that is subject to the jurisdiction of, or enforceable by, the Commission; or (v) in providing, preparing to provide, or assisting in the provision of information to the employer, prospective employer, former employer, a person with supervisory authority over the employee, or another such person working for the employer with the authority to investigate, discover, or terminate as a result of misconduct relating to any violation of, or any act or omission that the whistleblower believes to be a violation of any— (I) provision of this title; (II) other provision of law that is subject to the jurisdiction of the Commission; or (III) rule, order, standard, or prohibition prescribed by the Commission. ; (ii) in subparagraph (B), by adding at the end the following: (iv) Burden of proof Except as otherwise provided in this section, complaints for relief shall be governed by the procedures, evidentiary standards, and burdens of proof in section 1057 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5567 ). ; and (iii) in subparagraph (C)— (I) in clause (ii), by striking and at the end; (II) in clause (iii), by striking the period at the end and inserting a semicolon; and (III) by adding at the end the following: (iv) compensatory damages; and (v) punitive damages in an amount not greater than $250,000. ; and (B) in paragraph (2), by striking subparagraph (A) and inserting the following: (A) In general Except as provided in subparagraphs (B), (C), and (D), neither the Commission nor any officer or employee of the Commission may disclose any identifying information about a whistleblower who has provided information to the Commission— (i) unless the Commission has obtained the written consent of the whistleblower; (ii) except in accordance with the provisions of section 552a of title 5, United States Code; or (iii) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission. ; and (4) by adding at the end the following: (k) Non-Waiverability of Rights and Remedies An employer, prospective employer, or former employer, as applicable, may not take any action to impede an individual who is about to or has assisted or engaged in activity protected by this section, including— (1) issuing, proposing, initiating, enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by sections 240.21F–4(b)(4)(i) and 240.21F–4(b)(4)(ii) of title 17, Code of Federal Regulations, as in effect on the date of the enactment of this subsection) with respect to such communications; (2) initiating, enforcing, or threatening to enforce any agreement, policy, form, or condition of employment, including by any predispute arbitration agreement, that waives the rights and remedies provided under this section; (3) requiring the individual to waive, release, or assign any monetary award that the individual may receive from the Commission; (4) conditioning the right of the individual to receive any contractual or employment-related benefit on a waiver, release, or assignment described in paragraph (3); (5) requiring the individual to disclose to any private party whether the individual has, or in the future intends to, communicate with the staff of the Commission about a possible violation of commodities law; (6) conditioning the right of the individual to receive any contractual or employment-related benefit on a representation that the individual has not communicated with, or provided documents or other information, to the staff of the Commission; (7) seeking civil or criminal liability for— (A) acquiring and communicating information to the Commission; or (B) engaging in other activity protected by this section; (8) seeking professional discipline through loss of license, certification, or other disciplinary activities for engaging in activity protected by this section; (9) seeking professional discipline of attorneys for representation of activities protected by this section, or any other action that obstructs the right to counsel of the individual; and (10) engaging in any other discrimination that would chill the exercise of activity protected by this section. (l) Internal compliance programs The Commission shall promulgate regulations requiring each employer— (1) to have a procedure in place for an employee, applicant for employment, or former employee who believes that violations of this section have occurred or are occurring at the place of employment, place of prospective employment, or place of former employment to report— (A) directly to the chief executive officer of the employer; (B) to a representative appointed by and reporting directly to the chief executive officer who is specifically designated to receive such a report; or (C) through a hotline consistent with professional best practices to the audit committee of the board of directors; and (2) not to discriminate against an employee, applicant for employment, or former employee for making a report under paragraph (1). (m) Extraterritoriality The protections provided by this section shall apply to foreign nationals living outside the United States. . 5. Commodity Exchange Act Section 23 of the Commodity Exchange Act ( 7 U.S.C. 26 ) is amended— (1) in subsection (a), by striking paragraph (7); (2) in subsection (c)(1)(B)— (A) in clause (i)(IV), by striking and at the end; (B) in clause (ii), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following: (iii) may not deny eligibility for an award that otherwise meets the requirements of this section if the information that forms the basis for the award is submitted not later than 90 days after a whistleblower gains knowledge of the disclosed misconduct; (iv) shall presume that a report made by a whistleblower is timely submitted; and (v) may not reduce the award due to delay, absent a finding that the disclosure was deliberately postponed because of— (I) culpability of the whistleblower; (II) interference by the whistleblower with internal investigative processes; or (III) attempts at self-enrichment by the whistleblower. ; (3) in subsection (h)— (A) in paragraph (1)— (i) in subparagraph (A)— (I) in the matter preceding clause (i)— (aa) by striking No employer and inserting No employer, prospective employer, or former employer, as applicable, ; and (bb) by striking a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower and inserting a whistleblower with respect to the compensation, terms, conditions, or privileges of employment of the whistleblower because of any lawful act done by the whistleblower or perceived to have been done by the whistleblower (or any person acting pursuant to a request of the whistleblower), whether at the initiative of the whistleblower or in the ordinary course of the duties of the whistleblower ; (II) in clause (i), by striking or at the end; (III) in clause (ii), by striking the period at the end and inserting a semicolon; and (IV) by adding at the end the following: (iii) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task the whistleblower (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition subject to the jurisdiction of, or enforceable by, the Commission; or (iv) in providing, preparing to provide, or assisting in the provision of information to the employer, the former employer, the prospective employer, a person with supervisory authority over the employee, or another such person working for the employer with the authority to investigate, discover, or terminate as a result of misconduct relating to any violation of, or any act or omission that the whistleblower believes to be a violation of any— (I) provision of this title; (II) other provision of law that is subject to the jurisdiction of the Commission; or (III) rule, order, standard, or prohibition prescribed by the Commission. ; (ii) in subparagraph (B), by adding at the end the following: (iv) Burden of proof Except as otherwise provided in this section, complaints for relief shall be governed by the procedures, evidentiary standards, and burdens of proof in section 1057 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5567 ). ; and (iii) in subparagraph (C)— (I) in clause (ii), by striking and at the end; (II) in clause (iii), by striking the period at the end and inserting a semicolon; and (III) by adding at the end the following: (iv) compensatory damages; and (v) punitive damages in an amount not greater than $250,000. ; and (B) in paragraph (2)— (i) by striking subparagraph (A) and inserting the following: (A) In general Except as provided in subparagraphs (B), (C), and (D), neither the Commission nor any officer or employee of the Commission may disclose any identifying information about a whistleblower who has provided information to the Commission— (i) unless the Commission has obtained the written consent of the whistleblower; (ii) except in accordance with the provisions of section 552a of title 5, United States Code; or (iii) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission. ; and (ii) by adding at the end the following: (D) Exempted statute For purposes of section 552 of title 5, United States Code, this paragraph shall be considered a statute described in subsection (b)(3)(B) of such section 552. ; and (4) by adding at the end the following: (o) Non-Waiverability of rights and remedies An employer, former employer, or prospective employer, as applicable, may not take any action to impede an individual who is about to or has assisted or engaged in activity protected by this section, including— (1) issuing, proposing, initiating, enforcing, or threatening to enforce, a confidentiality agreement (other than agreements dealing with information covered by sections 240.21F–4(b)(4)(i) and 240.21F–4(b)(4)(ii) of title 17, Code of Federal Regulations, as in effect on the date of the enactment of this subsection) with respect to such communications; (2) initiating, enforcing, or threatening to enforce any agreement, policy, form, or condition of employment, including by any predispute arbitration agreement, that waives the rights and remedies provided for in this section; (3) requiring the individual to waive, release, or assign any monetary award that the individual may receive from the Commission; (4) conditioning the right of the individual to receive any contractual or employment-related benefit on a waiver, release, or assignment described in paragraph (3); (5) requiring the individual to disclose to any private party whether the individual has, or in the future intends to, communicate with the staff of the Commission about a possible violation of this Act; (6) conditioning the right of the individual to receive any contractual or employment-related benefit on a representation that the individual has not communicated with, or provided documents or other information, to the staff of the Commission; (7) seeking civil or criminal liability for— (A) acquiring and communicating information to the Commission; or (B) engaging in other activity protected by this section; (8) seeking professional discipline through loss of license, certification, or other disciplinary activities for engaging in activity protected by this section; (9) seeking professional discipline of attorneys for representation of activities protected by this section, or any other action that obstructs the right to counsel of the individual; and (10) engaging in any other discrimination that would chill the exercise of activity protected by this section. (p) Internal compliance programs The Commission shall issue regulations requiring each employer— (1) to have a procedure in place for an employee, applicant for employment, or former employee who believes that violations of this section have occurred or are occurring at the place of employment, prospective employment, or place of former employment to report— (A) directly to the chief executive officer of the employer; (B) to a representative appointed by and reporting directly to the chief executive officer who is specifically designated to receive such a report; or (C) through a hotline consistent with professional best practices to the audit committee of the board of directors; and (2) not to discriminate against an employee, applicant for employment, or former employee for making a report under paragraph (1). (q) Extraterritoriality The protections provided by this section shall apply to foreign nationals living outside the United States. . 6. Sarbanes-Oxley Act Section 1514A of title 18, United States Code, is amended— (1) in subsection (a)— (A) in the matter preceding paragraph (1), by striking in the terms and conditions of employment because of any lawful act done by the employee and inserting with respect to compensation, terms, conditions, or privileges of employment because of any lawful act done by an employee, applicant for employment, or former employee or perceived to have been done by an employee, applicant for employment, or former employee (or any person acting pursuant to the request of such an individual), whether at the initiative of the employee, applicant for employment, or former employee or in the ordinary course of the duties of the employee, applicant for employment, or former employee ; (B) in paragraph (1)(C), by striking ; or and inserting a semicolon; (C) in paragraph (2), by striking the period at the end and inserting a semicolon; and (D) by adding at the end the following: (3) in objecting to, or refusing to participate in, any activity, policy, practice, or assigned task the employee, applicant for employment, or former employee (or other such person) reasonably believed to be in violation of any law, rule, order, standard, or prohibition subject to the jurisdiction of or enforced by the Securities and Exchange Commission; or (4) in providing, preparing to provide, or assisting in the provision of information to the employer or a person with supervisory authority over the employee, applicant for employment, or former employee (or such other person working for the employer who has the authority to investigate, discover, or terminate employment as a result of misconduct) relating to any violation of, or any act or omission that the employee, applicant for employment, or former employee believes to be a violation of any— (A) provision of this title; (B) provision of law that is subject to the jurisdiction of the Securities and Exchange Commission; or (C) rule, order, standard, or prohibition prescribed by the Commission. ; (2) in subsection (c)— (A) in paragraph (2)(B), by inserting double before the amount of ; and (B) by adding at the end the following: (3) Punitive damages Relief for any action under paragraph (1) may include punitive damages in an amount not greater than $250,000. ; and (3) by adding at the end the following: (f) Confidentiality Neither the Securities and Exchange Commission, the Secretary of Labor, nor any officer or employee of the Commission or the Secretary may disclose any identifying information about an employee, applicant for employment, or former employee described in subsection (a) who has provided information to the Commission or the Secretary— (1) unless the Commission or the Secretary has obtained the written consent of the employee, applicant for employment, or former employee; (2) except in accordance with the provisions of section 552a of title 5; or (3) unless required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission or the Secretary. .