House Passes PCAOB Whistleblower Protection Act

On September 24, the House of Representatives passed the PCAOB Whistleblower Protection Act of 2019. If the Act were to go into law, it would establish a new whistleblower reward program at the Public Company Accounting Oversight Board modeled after the highly successful SEC whistleblower program. It would also enact new protections for whistleblowers against retaliation if they disclose violations of PCAOB rules or federal securities laws.

What to know about the bill

Under the PCAOB program, eligible whistleblowers would be able to receive anywhere from 10 to 30 percent of the fines collected from PCAOB disciplinary actions if the total monetary sanctions are greater than $250,000. This is very similar to the SEC program, in which the percentages are the same but the minimum sanctions must be more than $1 million.

The hope is that implementing this type of whistleblower program would incentivize more whistleblowers to come forward with their information whenever they suspect wrongdoing in the form of PCAOB rules violations, or various securities laws.

Protected whistleblowing under the act would include the following:

• Giving information to the PCAOB whistleblower program or testifying in, assisting in or initiating any investigation or administrative action of the PCAOB
• Making protected disclosures under the Sarbanes-Oxley Act, the Securities Exchange Act of 1934, or any other federal law or regulation under SEC jurisdiction
• Providing information about any conduct the whistleblower can reasonably believe to be a violation of any law or regulation

These whistleblower claims can be brought directly in federal court, similar to the whistleblower protection provisions found in the Dodd-Frank Act.

For more information about the proposed new PCAOB whistleblower protection act, contact an experienced attorney at Kardell Law Group.