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Whistleblower Group Weighs in on Legislation Aimed at Crippling the Dodd-Frank Act

Washington, D.C. – WEBWIRE

On Friday, April 28, 2017, the U.S. House of Representative’s Committee on Financial Services held an additional hearing day on the Financial CHOICE Act, the bill aimed at crippling the Dodd-Frank Act. Stephen M. Kohn, a partner in the Washington, D.C. whistleblower law firm of Kohn, Kohn & Colapinto and the executive director of the National Whistleblower Center submitted written testimony at the invitation of the Committee. 

“It is absolutely critical that this Committee take no action that would restore the ‘days when corporate wrongdoing can be pushed into the dark corners of an organization,’” Kohn urged the Committee.  The Dodd-Frank Act’s Securities and Exchange Commission’s (SEC) whistleblower program has quickly become an indispensable tool for enforcing our laws, protecting shareholders and the American economy from the noxious influence of fraud in corporate America, and recovering billions of dollars for the American taxpayers.  The SEC’s enforcement actions from whistleblower tips have resulted in more than $953 million in financial remedies since 2011.

“The SEA whistleblower law targets these “dark corners” and incentivizes key sources of information that have greatly aided the SEC’s enforcement policies. Section 823 would undermine this progress, and constitutes a mistaken and troubling step backwards,” he explained.

Kohn specifically addressed Section 823 of the proposed legislation, the section that directly impacts the whistleblower protections afforded under the Securities and Exchange Act (“SEA”). This section would allegedly exclude opportunistic individuals from the SEA’s reward provisions if they are “culpable” for the violation for which they are reporting. It will have a devastating impact on the ability of law enforcement to obtain the evidence it needs to protect investors should it pass.

Kohn explained how such a change could be a determent to investors stating, “The SEC’s current rule is consistent with similar restrictions in other reward and whistleblower anti-retaliation laws. There is simply no reason to adopt the amendment set forth in the Draft Discussion document. Conversely, there are numerous reasons not to adopt the amendment, as it is overbroad and would seriously undermine other aspects of the SEC’s whistleblower program. Section 823 would harm investors, make investigations more costly and difficult, undercut the confidentiality provisions in both the SEA and the Sarbanes-Oxley Act (“SOX”), and prejudice employees seeking to do the “right thing” by taking the risk of losing their jobs and careers by lawfully reporting securities fraud to the appropriate authorities.”


 IRS Whistleblower
 SEC Whistleblower
 Financial Choice Act
 Dodd-Frank Act
 Corporate wrongdoing

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