WASHINGTON, D.C. (August 31, 2020) —The North American Securities Administrators Association (NASAA) announced today that its membership has voted to adopt a model act designed to help states provide a safe environment for individuals to come forward to report suspected wrongful securities practices to state securities regulators.
“Through this model act, we hope to encourage individuals with knowledge of potential securities law violations to report it to state regulators in the interest of investor protection,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities. “Providing a safe environment for whistleblowers to come forward can lead to the earlier detection of securities law violations, which, in turn, provides regulators with greater opportunities to prevent harm to additional investors by disrupting alleged misconduct sooner.”
Among other provisions, the NASAA Model Whistleblower Award and Protection Act provides a state’s securities regulator with the authority to make monetary awards to whistleblowers based on the amount of monetary sanctions collected in any related administrative or judicial action, up to 30 percent of the amount recovered. The model act also would protect whistleblower confidentiality, prohibit retaliation by an employer against a whistleblower, and create a cause of action and provide relief for whistleblowers retaliated against by their employer.
The model act draws upon the whistleblower award provisions contained in Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as well as from current state law in Indiana and Utah.
The model act was developed by NASAA’s Board-level State Legislation Committee led by Montana Deputy Securities Commissioner Lynne Egan, and its Whistleblower Protections/Awards Working Group, led by Faith Anderson, Chief of Registration & Regulatory Affairs with the Washington Securities Division.
The NASAA Model Whistleblower Award and Protection Act will be made available to NASAA members for consideration in their jurisdictions. The act may be adopted as legislation during state legislative sessions or implemented by regulation. Whether adoption is by legislation or regulation depends on individual jurisdictions.
Text of the model act is available here.