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State securities regulators have a long-standing commitment to protect investors and help maintain the integrity of the securities markets. Complaints often serve as the basis for investigations into possible securities law violations. In particular, whistleblower complaints can be a source of valuable firsthand information about wrongdoing that may otherwise not come to light. Such information can be crucial in preventing harm and recovering ill-gotten profits from wrongdoers. Unfortunately, whistleblowers often risk retaliation, including loss of employment, being blacklisted, and financial hardships. In order to encourage them to come forward, state legislatures should enact measures that provide adequate protections and financial incentives.


The NASAA Model Whistleblower Award and Protection Act establishes a state-level program that provides monetary awards to whistleblowers who report violations of state securities laws and protects such whistleblowers and internal reporters from retaliation by their employers.

The Model Act originated as a project of the NASAA State Legislation Committee. On April 2, 2020, the Committee circulated a draft of the Model Act for internal comments from NASAA member jurisdictions. On May 26, 2020, NASAA released a draft of the Model Act for a 30-day public comment period. The Committee considered comments from other state securities regulators. The Committee also received and considered comments from interested parties including investor protection advocacy organizations, trade associations representing the broker-dealer industry and investment adviser industry, private legal practitioners, and academics. On August 28, 2020, the NASAA Board of Directors approved the Committee’s request to submit the proposed Model Act to the NASAA membership for a vote. NASAA members subsequently voted to approve it on August 31, 2020.


Whistleblower Awards. The Model Whistleblower Act allows a state securities administrator to issue a monetary award to one or more whistleblowers who voluntarily provide original information that leads to the successful enforcement of an administrative or judicial action under the state’s securities laws. A whistleblower has the option to remain anonymous, but he or she must be represented by counsel and disclose their identity prior to payment of an award.

  •  Amount of an Award. The Act requires that a monetary award fall between 10% and 30% of the monetary sanctions, with the securities administrator having the discretion to determine the exact amount. In making that determination, the securities administrator considers several factors, such as how significant the information was to the success of the administrative or judicial action and the degree of assistance provided by the whistleblower in that action.
  • Disqualification. The Act disqualifies certain whistleblowers from receiving an award. These types of whistleblowers include, among others, individuals who are convicted of a felony in connection with the administrative or judicial action, make false statements as part of their submission, or have a legal duty to report the information.

Protections for Whistleblowers and Internal Reporters. The Model Whistleblower Act prohibits employers from retaliating against employees who report a possible violation of state or federal securities laws, participate in an investigation or enforcement action, make disclosures required or protected under the federal securities laws, or make disclosures to his or her supervisory authority on matters subject to the jurisdiction of the state securities regulator or the SEC. However, certain individuals, such as those who knowingly or recklessly make a false statement, are not protected.

  • Cause of Action. The Act creates a cause of action for an employee to bring an action against his or her employer for retaliation and outlines the statute of limitations, use of subpoenas, and the types of relief that a court may award.
  • Confidentiality. The Act exempts the identity of the whistleblower from state disclosure laws and makes certain confidentiality agreements unenforceable against communications between an individual and the state securities regulator.

Prefatory Notes. The prefatory notes contain a number of considerations that the adopting jurisdiction should consider. These considerations consist of express rulemaking authority, simple and accessible procedural requirements, separate funding sources for whistleblower awards, adoption of a policy on award-making by the securities administrator, and reference to the rules under SEC Regulation 21F where not inconsistent with the Act.


The NASAA Model Whistleblower Award and Protection Act is 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. Jurisdictions considering the model act as legislation or regulation also may need to consider certain small changes to terms.

Existing state-level whistleblower programs include:

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