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H.R. 3625: PCAOB Whistleblower Protection Act of 2019

The text of the bill below is as of Sep 23, 2019 (Referred to Senate Committee).


IIB

116th CONGRESS

1st Session

H. R. 3625

IN THE SENATE OF THE UNITED STATES

September 23, 2019

Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs

AN ACT

To establish a whistleblower program at the Public Company Accounting Oversight Board, and for other purposes.

1.

Short title

This Act may be cited as the PCAOB Whistleblower Protection Act of 2019.

2.

Whistleblower incentives and protection

The Sarbanes-Oxley Act of 2002 is amended—

(1)

in section 105 (15 U.S.C. 7215) by adding at the end the following:

(f)

Whistleblower incentives and protection

(1)

Definitions

In this subsection the following definitions shall apply:

(A)

Covered proceeding

The term covered proceeding means any disciplinary proceeding by the Board initiated after the date of the enactment of this subsection that results in monetary sanctions exceeding $250,000.

(B)

Original information

The term original information means information that—

(i)

is derived from the independent knowledge or analysis of a whistleblower;

(ii)

is not known to the Board from any other source, unless the whistleblower is the original source of the information; and

(iii)

is not exclusively derived from an allegation made in a disciplinary proceeding, in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information.

(C)

Monetary sanctions

The term monetary sanctions means any civil money penalties imposed by the Board under subsection (c)(4) as modified by the Commission under section 107(c)(3).

(D)

Whistleblower

(i)

In general

The term whistleblower means any individual who provides, or two or more individuals acting jointly who provide, information relating to a violation of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, including the rules of the Board issued pursuant to this Act, or professional standards.

(ii)

Special rule

Solely for the purposes of paragraph (7), the term whistleblower shall also include any individual who takes an action described in paragraph 7(A), or two or more individuals acting jointly who take an action described in paragraph 7(A).

(2)

Awards

(A)

In general

In any covered disciplinary proceeding, the Board shall pay an award or awards to one or more whistleblowers who voluntarily provided original information to the Board that resulted in the board imposing monetary sanctions, in an aggregate amount determined in the discretion of the Board but equal to—

(i)

not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed; and

(ii)

not more than 30 percent, in total, of what has been collected of the monetary sanctions.

(B)

Payment of awards

Any amount paid under this subparagraph shall be paid from any funds generated from the collection of monetary sanctions.

(3)

Determination of amount of award; denial of award

(A)

Determination of amount of award

(i)

Discretion

The determination of the amount of an award made under paragraph (2) shall be in the discretion of the Board.

(ii)

Criteria

In determining the amount of an award made under subparagraph (A), the Board shall take into consideration—

(I)

the significance of the information provided by the whistleblower to the success of the disciplinary proceeding;

(II)

the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a disciplinary proceeding; and

(III)

the programmatic interest of the Board in deterring violations by making awards to whistleblowers who provide information that lead to successful enforcement.

(B)

Denial of award

No award under subparagraph (A) shall be made—

(i)

to any whistleblower who is, or was at the time the whistleblower acquired the original information submitted to the Board, a member, officer, or employee of—

(I)

an appropriate regulatory agency (as such term is defined in section 3 of the Securities Exchange Act of 1934);

(II)

the Department of Justice;

(III)

a self-regulatory organization (as such term is defined in section 34 of the Securities Exchange Act of 1934);

(IV)

the Public Company Accounting Oversight Board; or

(V)

a law enforcement organization;

(ii)

to any whistleblower who is convicted of a criminal violation related to the Board finding for which the whistleblower otherwise could receive an award under this section;

(iii)

to any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws and for whom such submission would be contrary to the requirements of section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j–1); and

(iv)

to any whistleblower who fails to submit information to the Board in such form as the Board may, by rule, require.

(4)

Representation

(A)

Permitted representation

Any whistleblower who makes a claim for an award under paragraph (2) may be represented by counsel.

(B)

Required representation

(i)

In general

Any whistleblower who anonymously makes a claim for an award under paragraph (2) shall be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based.

(ii)

Disclosure of identity

Prior to the payment of an award, a whistleblower shall disclose the identity of the whistleblower and provide such other information as the Board may require, directly or through counsel, for the whistleblower.

(5)

No Contract Necessary

No contract with the Board is necessary for any whistleblower to receive an award under paragraph (2), unless otherwise required by the Board by rule.

(6)

Appeals

Any determination made under this subsection, including whether, to whom, or in what amount to make awards, shall be in the discretion of the Board. Any such determination, except the determination of the amount of an award if the award was made in accordance with this paragraph, may be appealed to the Commission not more than 30 days after the determination is issued by the Board. The Commission shall review the determination made by the Board in accordance with section 107(c).

(7)

Protection of whistleblowers

(A)

Prohibition against retaliation

No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower—

(i)

in providing information to the Board in accordance with this subsection;

(ii)

in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Board based upon or related to such information; or

(iii)

in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), including section 10A(m) of such Act (15 U.S.C. 78f(m)), section 1513(e) of title 18, United States Code, and any other law, rule, or regulation subject to the jurisdiction of the Securities Exchange Commission.

(iv)

in providing information regarding any conduct that the whistleblower reasonably believes constitutes a potential violation of any law, rule, or regulation subject to the jurisdiction of the Board or the Commission (including disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 or the Securities Exchange Act of 1934) to—

(I)

a person with supervisory authority over the whistleblower at the whistleblower’s employer, where such employer is an entity registered with or required to be registered with the Board, the Commission, a self-regulatory organization, or a State securities commission or office performing like functions; or

(II)

such other person working for the employer described under subclause (I) who has the authority to investigate, discover, or terminate misconduct.

(B)

Enforcement of prohibition against retaliation

(i)

Cause of action

An individual who alleges discharge or other discrimination in violation of subparagraph (A) may bring an action under this paragraph in the appropriate district court of the United States for the relief provided in subparagraph (C).

(ii)

Subpoenas

A subpoena requiring the attendance of a witness at a trial or hearing conducted under this subsection may be served at any place in the United States.

(iii)

Statute of limitations

(I)

In general

An action under this paragraph may not be brought—

(aa)

more than 6 years after the date on which the violation of subparagraph (A) occurred; or

(bb)

more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the employee alleging a violation of subparagraph (A).

(II)

Required action within 10 years

Notwithstanding subclause (I), an action under this paragraph may not in any circumstance be brought more than 10 years after the date on which the violation occurs.

(C)

Relief

Relief for an individual prevailing in an action brought under this paragraph shall include—

(i)

reinstatement with the same seniority status that the individual would have had, but for the discrimination;

(ii)

two times the amount of back pay otherwise owed to the individual, with interest; and

(iii)

compensation for litigation costs, expert witness fees, and reasonable attorneys' fees.

(D)

Confidentiality

(i)

In general

Except as provided in clause (ii), the Board and any officer or employee of the Board may not disclose any information, including information provided by a whistleblower to the Board, which could reasonably be expected to reveal the identity of a whistleblower unless and until required to be disclosed to a defendant or respondent in connection with a public proceeding instituted by the Commission or any entity described in clause (iii).

(ii)

Rule of construction

Nothing in this section is intended to limit, or shall be construed to limit, the ability of the Attorney General to present such evidence to a grand jury or to share such evidence with potential witnesses or defendants in the course of an ongoing criminal investigation.

(iii)

Availability to government agencies

(I)

In general

Without the loss of its status as confidential in the hands of the Board, all information referred to in clause (i) may, in the discretion of the Board, when determined by the Board to be necessary to accomplish the purposes of this Act and to protect investors, be made available to—

(aa)

the Attorney General of the United States;

(bb)

an appropriate regulatory authority;

(cc)

a self-regulatory organization;

(dd)

a State attorney general in connection with any criminal investigation;

(ee)

any appropriate State regulatory authority;

(ff)

the Commission;

(gg)

a foreign securities authority; and

(hh)

a foreign law enforcement authority.

(II)

Confidentiality

(aa)

In general

Each of the entities described in items (aa) through (ff) of subclause (I) shall maintain such information as confidential in accordance with the requirements established under clause (i).

(bb)

Foreign authorities

Each of the entities described in subclauses (gg) and (hh) of subclause (I) shall maintain such information in accordance with such assurances of confidentiality as the Board determines appropriate.

(E)

Rights retained

Nothing in this subsection shall be deemed to diminish the rights, privileges, or remedies of any whistleblower under any Federal or State law, or under any collective bargaining agreement.

(8)

Provision of false information

A whistleblower shall not be entitled to an award under this section if the whistleblower—

(A)

knowingly and willfully makes any false, fictitious, or fraudulent statement or representation; or

(B)

uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry.

(9)

Rulemaking authority

The Board shall have the authority to issue such rules and standards as may be necessary or appropriate to implement the provisions of this section consistent with the purposes of this section.

(10)

Coordination

To the maximum extent practicable, the Board shall coordinate with the Office of the Whistleblower of the Securities Exchange Commission in carrying out this subsection.

; and

(2)

in section 109(c)(2) (15 U.S.C. 7219(c)(2), by striking all funds collected and inserting at least 50 percent of funds collected.

3.

Determination of budgetary effects

The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled Budgetary Effects of PAYGO Legislation for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.

Passed the House of Representatives September 19, 2019.

Cheryl L. Johnson,

Clerk.