In a March 18 reply, SEC Chairman Nominee Mr. Gensler sent Sen. Grassley the affirmative message that he shares the Senator’s “goals of ensuring that whistleblowers are encouraged to come forward when they see misbehavior, and that they be protected from retaliation.” The response, made public by Whistleblower Network News, on March 19, clearly reflects the nominee’s commitment to a strong SEC whistleblower program if confirmed.
Whistleblower Network News reported that Stephen M. Kohn, Chairman of the Board of Directors of the National Whistleblower Center and a whistleblower attorney with the law firm of Kohn, Kohn and Colapinto said, “This is great news for whistleblowers,” and that “Mr. Gensler’s answers are the strongest statements of support for whistleblowers ever given by an incoming SEC Chairman. They indicate that the SEC reward program will become even stronger under Gensler’s leadership,” and I could not agree more.
I previously wrote that Sen. Grassley’s questions to Mr. Gensler aimed to probe whether Mr. Gensler learned from his tenure as Chairman at the CFTC or if his confirmation would put the SEC program at risk of similar folly. The reply from Mr. Gensler is encouraging and shows that he is ready to take the helm at the SEC and lead the Commission forward to continued success. Of course, without other nominees, it is difficult to compare. Acting Chair Allison Heron Lee has been doing a phenomenal job and would also be an excellent candidate for the role.
In his response to Sen. Grassley, Mr. Gensler made a number of “if confirmed” statements that are in direct alignment with Sen. Grassley’s leading whistleblower initiatives. For example, in response to Sen. Grassley’s question on continuing recently departed Chairman Jay Claytons commitment to reducing assessment times of whistleblower claims, Mr. Gensler stated that “If confirmed, I commit to working with you and your staff to reduce processing times in SEC whistleblower award determinations. I agree that awards should be granted in a timely manner, as whistleblowers often have to incur significant expenses and withstand significant uncertainty and distress when waiting for the SEC’s determinations.” This answer is important because delay in whistleblower award decisions can be incredibly stressful and economically disastrous – particularly for whistleblowers who “incur significant expenses and withstand significant uncertainty and distress when waiting for the SEC’s determinations.”
This answer is critical because it demonstrates that Mr. Gensler understands the delay issue and its implications for qui tam whistleblowers who have been impacted by the SEC’s delayed processing. This area is one place Mr. Gensler can truly make a name for himself as SEC Chairman. Whistleblower programs are currently plagued by delay. With a completely defunct Merit Systems Protection Board and delays at the IRS,the SEC can continue to be recognized as the most effective avenue for reporting and obtaining an award by eliminating delays and benefiting all whistleblowers, setting the example for improvements at other programs.
Further, Mr. Gensler spoke to issues around funding and expressed support for the critically important and timely CFTC Fund Management Act stating, “if confirmed. I plan to request appropriations from Congress to cover the necessary expenses to pay for the operations of the SEC’s office. Regarding the CFTC, I support legislation such as your CFTC Fund Management Act which could assist that agency in ensuring the sound operation of their whistleblower program.” This statement is significant today because it reflects Gensler’s support for corrective action – even when he may have been part of the originating issue of how funds are distributed to the CFTC whistleblower program – and this shows a commitment not to make the same mistake going forward.
The SEC program must continue to be well funded and effective. Seeking monies from appropriations before there are any emergent problems would be effective. It is good to see that Mr. Gensler supports measures like, the CFTC Fund Management Act, outside of that strategy that ensure “the sound operation” of whistleblower programs when needed.
Finally, Mr. Gensler shed some light on the delay in issuing awards in the CFTC program when he was Chairman at the agency. His reply is honest and provides insight into how agencies start programs stating that while establishing the CFTC whistleblower program by “[w]orking with other commissioners at the CFTC, we were able to draft and finalize a rulemaking to implement Congress’s directives for the whistleblower program by October of 2011 and hire a Director of the Office of the Whistleblower by 2012. As we were standing-up a new program at the Commission, it took some time to establish rules governing the office and to educate the public about the new office as a place to report misconduct.” And, again, clearly differentiating the past from the future, stated that “If confirmed to lead the SEC, I will build on the work of past Chairs to ensure continued strength in the whistleblower program.”
These confidence-enhancing replies are a welcomed blast of transparency. Mr. Gensler must be commended for a quick and engaged response to Sen. Grassley’s challenging questions. And Sen. Grassley should be commended for continuing to carry the torch for whistleblower rights. The Chairman of the SEC is an incredibly important role for whistleblowers worldwide. Leadership is key while running a well-reputed program that has thus far set the tone for effective whistleblower protections.
In Mr. Kohn’s words, “It is vitally important that the Chairman of the SEC sends the right message both to Wall Street and Commission staff. Whistleblowers need top level support when they risk their jobs to report securities frauds and foreign bribery[.]” For the sake of continued exemplary protections, and the public interest, questions about the management of whistleblower programs should be of high priority for the Senate as they consider the confirmation of Mr. Gensler and any other nominees brought forward under the Biden administration.