August 28, 2020
We are writing to further comment on the U.S. Securities and Exchange Commissions (SEC)or Commission) proposed amendments to the whistleblower program.1We are filing this comment in order request that the Commission rely upon its regulatory and enforcement authority under the Sarbanes-Oxley Act(SOXor the Act)to ensure that internal whistleblowers continue to be fully protected under the Commissions regulations.
The Commission, in its amicus brief before the U.S. Supreme Court in Digital, identified four provisions of SOX thatcover whistleblowing and/or would justify fully protecting internal whistleblowing. The Commission argued that the DFA provided sufficient statutory authority to empower the SEC to promulgate regulations protecting the SOX disclosures referenced above:The whistleblower protection provisions of Sarbanes-Oxley . . . protect disclosures to any federal regulatory or law enforcement agency, any Member of Congress or any committee of Congress, or a person with supervisory authority over the employee. 18 U.S.C. 1514A(a)(1). A Sarbanes-Oxley provision . . . 15 U.S.C. 78j-1(m), expressly protects internal disclosures about auditing matters. Other provisions of Sarbanes-Oxley and the Exchange Act require certain auditors and attorneys to disclose certain information internally. 15 U.S.C. 78j-1(b) and 7245. . .And another provision . . . 18 U.S.C. 1513(e). . . protects reports to law
enforcement officers about federal offenses, necessarily requires reporting to an entity other than the Commission. Brief of the United States as Amicus Curie, Digital Reality v. Somers, 583 U.S. ___ (2018).2Although the Court ruled that the Dodd-Frank Actdid not contain authorityto protect internal whistleblowers from retaliation,theSarbanes-Oxley Actdoesdirectly provide theauthorityto do so. SOX requires the SEC to treat violations of the Act analogously to violations of the Securities Exchange Act of 1934 (SEA), and the Dodd-Frank Act (DFA) grants the SEC authority to enforce SOXs anti-retaliation provisions. Digital did not interpret the Commissions authority to protect internal whistleblowers pursuant to the authority granted to the Commission under SOX, as the Act directly providesstatutory authority for the SEC to enforce and promulgate regulations under the Act. On the face of Section 3 of SOX, it is indisputable that the Commission can amend the current whistleblower rules regarding retaliation and ensure that internal whistleblowing remains fully protected.3Specifically, Section 3(a)confers explicit rulemaking authority to the SEC necessary to enforce any provision of SOX, including its anti-retaliation provisions, charging the SEC with promulgating such rules and regulations such rules and regulations, as may be necessary or appropriate ... in furtherance of this Act. 15 U.S.C. 7202(a)(emphasis added). Further, Section 3(b) provides that a violation ofany provision of SOX,or any rule or regulation issued thereunder, constitutes for all purposes ... a violation of the Securities Exchange Act, and incursthe same penalties. 15 U.S.C. 7202(b)(1). This gives the SEC authority to enforce all provisions under SOX. Section 806 of SOX provides protection against retaliation when a whistleblower discloses information that the whistleblower reasonably believes constitutes a violation of the securities laws to a person with supervisory authority over the whistleblower (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct). P.L. 107-204, 806,codified at18 U.S.C. 1514A(a)(1)(C) see also LETTER FROM THE SENATE JUDICIARY COMMITTEE(Nov. 9, 2004). This section ensures that internal whistleblower reports to compliance, audit committees, or directors are included as violations enforceable underSOX.
Public Policy Strongly Supports Amending the Commissions Whistleblower Retaliation to Continue to Support Internal Whistleblowers
U.S. DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
Madhuri Trivedi
Plaintiff,
v.
General Electric Company,
Address: General Electric Company
Case No.:1:19-cv-11862-PBS
Judge: Chief Judge Patti B. Saris
Claims
Whistleblower Retaliation under Dodd-Frank Act, 15 U.S.C. 78u-6(h)
SEC Rule17 CFR 240.21F-2
Securities Exchange Act of 1934,15
U.S.C. 78j(b),Rule 17 C.F.R. 240.10b-5
Wrongful termination in violation of public policy
Violations of whistleblower protections under Sarbanes-Oxley Act ,8 U.S.C. 1514A, et seq. ,Pub. L. 107-204