This article originally appeared in New York Law Journal.
Earlier this month, U.S. Sens. Chuck Grassley, R-Iowa, and Elizabeth Warren, D-Massachusetts, reintroduced the SEC Whistleblower Reform Act of 2025 , a bipartisan effort to further strengthen the SEC Whistleblower Program. Similar to a previous version of the bill , the legislation would expedite the timing of award determinations and enhance retaliation protections for corporate insiders. The goal of these measures is to empower whistleblowers to come forward with tips that will allow enforcement authorities to swiftly stop and deter corporate and other financial wrongdoing.
By all measures, the SEC Whistleblower Program is a resounding success. Since the program launched in 2011, whistleblowers from all walks of life have come forward to report violations of the federal securities laws. Their actionable intelligence has allowed the government to recover over $6.3 billion in sanctions against bad actors. And last November, the SEC reported that more than 440 whistleblowers have earned over $2.2 billion in rewards to date. Those figures are simply astonishing.
With its substantial monetary incentives, robust employment protections, and the ability to report anonymously, the program has proven a potent tool in rooting out corporate fraud. Critically, the program costs taxpayers nothing. Awards are paid by an Investor Protection Fund financed through sanctions levied against fraudsters.
However, gaps still exist.
First, while the current law prohibits retaliation and provides those who are retaliated against with substantial protections, including double back pay, attorneys’ fees, reinstatement, and other damages, it only protects whistleblowers who report directly to the SEC. Since most employee whistleblowers first report through internal channels, this leaves them vulnerable to retaliation.
The SEC Whistleblower Reform Act of 2025 improves the program’s anti-retaliation protections by extending them to whistleblowers who report violations internally. This change makes sense when you consider that company insiders represent the lion’s share of SEC whistleblowers (62% in FY24), and often possess the highest quality tips. The change also aligns with the SEC’s reward guidelines, which provide larger monetary awards for whistleblowers who report internally. Companies should embrace this change, too, as many have clamored for reforms to boost internal compliance programs and encourage internal reporting.
Second, unlike claims under the Sarbanes-Oxley Act, retaliation claims under the SEC Whistleblower Program may be subject to arbitration agreements. More than half of American workers are subject to arbitration agreements, which generally require employees to waive their right to pursue claims against their employer in civil court. Private arbitration largely benefits the employer at the expense of the employee. It is a far less transparent process and offers limited discovery compared to the public court system. Moreover, arbitrators rule far more frequently in favor of employers-who are repeat customers of arbitration services-than employees.
The bipartisan bill would exempt retaliation claims from mandatory arbitration. This ensures SEC whistleblowers can have their day in court, giving them a public forum to assert their claims.
The Grassley-Warren bill mandates prompt award determinations, ensuring whistleblowers get their well-earned payments without unreasonable delay. While there are exceptions, the SEC would generally have one year from the deadline for submitting award claims to issue its determination, though there are some exceptions. This fully aligns with the goals of the program. The faster whistleblowers can get paid, the more incentive they have to report information to the SEC. If the SEC seeks an extension beyond the one-year period, the Act also requires the director of the agency’s enforcement division to give whistleblowers written notice.
Even in an era of increasingly divided government, protecting whistleblowers and streamlining the reward process has bipartisan support. Other co-sponsors of the SEC Whistleblower Reform Act include U.S. Sens. Susan Collins, R-Maine; Raphael Warnock, D-Georgia, and Catherine Cortez Masto, D-Nevada.
If signed into law, this crucial piece of legislation will address significant gaps in the current program. Its passage will ultimately help maintain the integrity of the financial markets while protecting whistleblowers, investors, and the public at large.
Dave Jochnowitz is co-chair of the whistleblower and retaliation practice at Outten & Golden.
