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Will the Federal Government “WARN” Employers in the Financial Sector Not to Mess with Whistleblowers?

On February 25, 2016, Senator Tammy Baldwin (D-Wis.) and Rep. Elijah Cummings (D-Md.) introduced the Whistleblower Augmented Reward and Non-Retaliation Act of 2016 ("WARN Act"), aimed at bolstering whistleblower protections under the primary legislation governing financial crimes and disclosures -- Dodd-Frank and Sarbanes-Oxley. Under the proposed bill, Congress would increase bounty awards available under these financial whistleblower statutes, create whistleblower protections for a new category of employees, extend the award structure to other federal legislation and significantly limit efforts that can be taken by employers to stifle whistleblowers.

Mr. Cummings introduced the bill in the House, H.R. 4619 (114th): Whistleblower Augmented Reward and Nonretaliation Act of 2016, which was then referred to the Committee on Financial Services, and the Committees on Agriculture and the Judiciary, for an unspecified time period, so that each committee could consider how the bill would impact matters under the jurisdiction of the committee concerned.  In the Senate, the companion bill, Whistleblower Augmented Reward and Nonretaliation Act of 2016, S. 2591 - 114th Congress, has been read twice and referred to the Committee on Banking, Housing, and Urban Development.

Although the Dodd-Frank Act expanded protections for financial whistleblowers in 2010, the new measures would address various actions that banks have taken to circumvent the law. For example, presently, Wall Street banks and other employers in the financial sector may impair employees from exercising their rights, impose very restrictive confidentiality agreements or require employees to waive their whistleblower rights as a condition of their employment. The WARN Act would preclude confidentiality agreements that require the employee to first disclose any allegations of wrongdoing to his or her employer. Additionally, the proposed legislation provides that "[a]n employer may not take any action to impede an individual who is about to or has assisted or engaged in activity protected by this section" specifically including issuing, enforcing, or threatening to enforce pre-dispute arbitration agreements that waive the employee's rights or remedies under the law, certain confidentiality agreements or agreements by an employee to waive or release any monetary payment the employee might receive from whistleblowing.

The legislation would tighten provisions requiring government agencies to protect the identity of whistleblowers, including prohibiting the disclosure of "any identifying information about a whistleblower."  These protections are critical because industry-wide blacklisting has imposed severe consequences on whistleblowers, even if they have had remedies available against their particular employer. The WARN Act would also increase civil remedies and punitive damages, including reinstatement, twice the amount of accrued back pay (with interest), and further compensation for any special damages such as litigation costs.

In addition to strengthening provisions for Dodd-Frank and SOX whistleblowers, the WARN Act would also encompass various other federal statutes.  The proposed legislation would expand protections to financial whistleblowers at federal banking regulators, including the Federal Deposit Insurance Corporation and the Federal Reserve. The proposed legislation would also amend the Financial Institutions Anti-Fraud Enforcement Act (FIAEA) and the Federal Deposit Insurance Act (FDIA) so that whistleblowers would be eligible to receive between 10%-30% of penalties and recoveries imposed, consistent with payments under Dodd-Frank and SOX.   Under current law, awards under the FDIA are capped at a measly $100,000 and awards under the FIAEA are subject to diminishing payout percentages as the amounts recovered by the government increase.

Given the vast impact of financial fraud on both the government and the public, one must hope that this WARN Act will be passed.

If you have discovered evidence of government fraud, contact an experienced False Claims Act attorney before blowing the whistle. You may be entitled to a substantial reward and the legal protections afforded to whistleblowers under state and federal laws. The attorneys of Berger & Montague are nationally recognized experts in Whistleblower/Qui Tam actions with over a decade of experience pursuing these complex fraud cases. For more information or to schedule your confidential consultation, use the form on this page or call us at 1-800-424-6690.

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