A bill that critics warn weakens whistleblower protections quietly moved through a House subcommittee last month and now has supporters like the U.S. Chamber of Commerce pushing the full committee to quickly pass it.
The Whistleblower Improvement Act of 2011, introduced by Rep. Michael Grimm (R-N.Y.), would require whistleblowers, with some exceptions, to report criminal activity internally in addition to filing a complaint with the Securities and Exchange Commission.
Supporters of the bill say the internal reports allow companies to stop criminal activity early, relieving the pressure on an overburdened SEC that is failing to address complaints. The House Subcommittee on Capital Markets and Government Sponsored Enterprises passed the bill last month, moving it to the full Financial Services Committee.
Tom Quaadman, the vice president of the Chamber's Center for Capital Markets Competitiveness, said he could not discuss the specifics of the Chamber's strategy, but described it as a "shoe-leather lobbying campaign." The Chamber has partnered with organizations like the Retail Industry Leaders Association and corporations like AT&T and UPS to explain to SEC officials the problems with current whistleblower rules.
Quaadman acknowledged that the bill, if it gets out of the House, faces a tougher road in the Senate. That has allowed the bill's opponents to relax a bit so far, but a coalition of groups is ready to launch a major counter-campaign if the bill starts gaining momentum, said Angela Canterbury, the Project on Government Oversight's public policy director.
She said the bill's progress was a "response to industry pressure."
The bill's critics, including POGO, the AFL-CIO and Americans for Financial Reform, also wrote a letter to lawmakers warning of its impact on whistleblower protections.
The bill, the letter said, "is an extreme approach that would silence would-be whistleblowers, endanger critical inside informants, undermine investigations, hamstring enforcement at the SEC and [Commodity Futures Trading Commission], and provide lawbreaking financial firms with an escape hatch from accountability."