Alexis Ronickher Co-Authors Comments to NASAA’s Model Whistleblower Award and Protection Act

Katz, Marshall & Banks partner Alexis Ronickher – along with Eric Havian, Michael Ronickher, and Christopher McLamb of Constantine Cannon LLP – submitted a letter to the North American Securities Administrators Association (NASAA), providing proposed changes to the association’s Model Whistleblower Award and Protection Act, so that it better protects and incentivizes whistleblowers.

The Model Whistleblower Award and Protection Act was created to guide state legislators and help them develop laws similar to the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. Unfortunately, the Model Act falls short in several ways. Ms. Ronickher and her peers highlighted three changes that would better incentivize whistleblowers, and three that would better protect whistleblowers from retaliation.

On the incentive side, the Model Act makes rewards discretionary, excludes restitution as a possible basis for an award, and does not allow for anonymous reporting. These provisions disincentivize whistleblowers, and the authors suggest changing these sections to better resemble the language in the Dodd-Frank Act, which has proven to be successful at the federal level.

With regards to the Act’s protections against retaliation, the Model Act currently only offers protections for whistleblowers who report to government regulators, and not internal whistleblowers. Additionally, the Model Act only allows for remedies for economic damages, and unnecessarily raises the bar for retaliation coverage. The authors suggest protecting internal whistleblowers, expanding remedies to include non-economic damages and a non-waivable right to a jury trial, and adopting the “reasonable belief” standard of other anti-retaliation statutes to ensure that employees who blow the whistle in good faith are protected.

NASAA’s initiative of expanding Dodd-Frank Act protections and incentives to violations of state securities laws is a crucial mission to protect the public from fraud and abuse. But it is critical that practitioners submit feedback so that NASAA can provide a Model Act that is truly exemplary. 

Read the full letter here.