Public Interest Groups Urge Lawmakers to Oppose Anti-Whistleblower Proposal

By BRYAN RAHIJA

The SEC is preparing to vote tomorrow morning on its final rule to implement the whistleblower program enacted in the Dodd-Frank financial reform bill--but efforts to gut the program are already underway.

A host of advocacy groups representing the rights and interests of, well, just about everyone except financial titans, sent a letter today urging the House Committee on Financial Services to oppose one of those efforts.

The offending proposal, a draft bill to amend the whistleblower incentives and protections programs at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) submitted by Rep. Michael Grimm (R-NY), may be one of the worst legislative proposals we've seen in a long time. From the letter:

The Grimm draft bill is an extreme approach that would silence would-be whistleblowers, endanger critical inside informants, undermine investigations, hamstring enforcement at the SEC and CFTC, and provide lawbreaking financial firms with an escape hatch from accountability....

....The Grimm draft bill would gut the whistleblower programs before they begin, and resembles the proposals made by industry without consideration for the stakeholders the whistleblower rules are designed to protect: investors and taxpayers. There are no evidence-based improvements to investigations and enforcement or whistleblower program best practices to be found in the proposal.

As we noted in a press release, 22 organizations have signed on to the letter so far, including POGO, the Government Accountability Project, Taxpayers Against Fraud, Americans for Financial Reform (a coalition of more than 250 national and state organizations working together for strong Wall Street reform), and the Taxpayer Protection Alliance.

“We hope that the SEC Commissioners and Congress will not be persuaded by the self-serving industry proposals to weaken the program which are embodied in the Grimm draft bill,” said Angela Canterbury, POGO’s director of public policy. “Instead, we urge the SEC to put into place regulations that create the most effective whistleblower program to best incentivize whistleblowers and serve investors and taxpayers.”

Get the full analysis of Grimm's anti-whistleblower proposal in our letter.

Bryan Rahija edits POGO's blog.