By DANA LIEBELSON
POGO sent a letter yesterday strongly opposing legislation that would gut protections for whistleblowers included in the Dodd-Frank Act. The bill, euphemistically named the Whistleblower Improvement Act of 2011 (H.R. 2483), is scheduled for mark-up tomorrow by a subcommittee of the House Committee on Financial Services.
One couldn’t be blamed for confusing H.R. 2483 with the highly-lauded Whistleblower Protection Enhancement Act of 2011 (H.R. 3289). Skimming through the headlines, they appear interchangeable—but that’s not the case. According to the letter:
This legislation, introduced by Representative Michael Grimm (R-NY), is an extreme approach that would silence would-be whistleblowers, endanger critical inside informants, undermine investigations, hamstring enforcement at the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC), and provide law-breaking financial firms with an escape hatch from accountability.
Specifically, H.R. 2483 takes aim at a thoughtfully-crafted provision in the financial reform law that provides expanded incentives and protections to whistleblowers who inform regulators—like the SEC and CFTC—about corporate fraud, waste and abuse.
It does this by requiring “internal reporting”—meaning that a whistleblower would have to first report information relating to misconduct to his or her employer before making a disclosure to regulators.
This is obviously highly problematic for whistleblowers. Take for instance, the case of Mike Helms—the whistleblower who was retaliated against for disclosing gaps in military health care for injured civilians. Although Helms’ case didn’t involve financial misconduct, he had to submit his disclosures to his employers in advance.
“My having to submit every single disclosure over five years, multiple times, to the agency contributed directly to the retaliation I received,” Helms told POGO. “[This requirement] should be mitigated by having protections.”
Over my entire career, I have watched stock traders and corporations engage in common run-of-the-mill timing frauds that have cheated stock holders out of tens of billions of dollars. This legislation would do nothing to discourage those frauds. (Emphasis original)
H.R. 2483 has a slew of other provisions that firebomb protections for whistleblowers: POGO investigator Michael Smallberg has outlined those more extensively here.
The letter of opposition to the bill is signed by POGO and twenty-five other organizations, including Americans for Financial Reform, the Government Accountability Project and OpenTheGovernment.org. It has been sent to the Chairman and Ranking Member of the Subcommittee on Capital Markets and Government Sponsored Enterprises, in anticipation of tomorrow’s mark-up.
"Calling this bill a 'Whistleblower Improvement Act' is almost a cruel joke since it will only protect companies that rip off investors and retaliate against whistlebowers," said Smallberg. "If Congress is serious about giving regulators the tools they need to avert another financial crisis, they should leave this bill on the cutting room floor."
Dana Liebelson is POGO’s Beth Daley Impact Fellow.
Image via Flickr user FArepublicans.