Today the House passed the PCAOB Whistleblower Protection Act of 2019 (PCAOB WPA) by voice vote. If enacted into law, the PCAOB WPA would establish a whistleblower reward program at the PCAOB similar to the SEC whistleblower program and would protect whistleblowers against retaliation for disclosing violations of PCAOB rules or federal securities laws, including the Sarbanes Oxley Act.
PCAOB Whistleblower Reward Program
Whistleblower Protection for Disclosures About Potential Violations of Audit Regulations and Federal Securities Laws
The PCAOB WPA includes a strong whistleblower protection provision that prohibits employers from retaliating against employees who report potential violations of public company accounting laws or regulations or potential violations of federal securities laws to the PCAOB or their employers. In particular, protected whistleblowing includes:
- providing information to the PCAOB whistleblower program or initiating, testifying in, or assisting in any investigation or administrative action of the PCAOB based upon or related to such information;
- making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002, the Securities Exchange Act of 1934, section 1513(e) of title 18, United States Code, and any other law, rule, or regulation subject to the jurisdiction of the SEC; and
- providing information regarding any conduct that the whistleblower reasonably believes constitutes a violation of any law, rule, or regulation subject to the jurisdiction of the PCAOB to-
- 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 Commission, a self-regulatory organization, or a State securities commission or office performing like functions; or
- such other person working for the employer who has the authority to investigate, discover, or terminate misconduct.
Similar to the Dodd-Frank whistleblower protection provision, PCAOB whistleblower claims can be brought directly in federal court. A prevailing whistleblower is entitled to make-whole relief, including:
- reinstatement with the same seniority status that the whistleblower would have had, but for the discrimination;
- 2 times the amount of back pay otherwise owed to the whistleblower, with interest; and
- compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.
Hopefully the Senate will act promptly to enact the PCAOB WPA.