Whistleblower Award and Protection Act Frequently Asked Questions

The Whistleblower Award and Protection Act authorizes the payment of monetary awards to individuals who report violations of securities laws that results in an action by the Securities Division of the Department of Financial Institutions. The Act also protects whistleblowers and internal reporters from retaliation for reporting violations of state or federal securities laws and regulations to the Securities Division, to any other law enforcement agency, or internally to their employer.

Under the Act, a whistleblower is an individual who, alone or with other individuals, provides the Securities Division or other law enforcement agency with information that relates to a possible violation of state or federal securities laws or rules that has occurred, is ongoing, or is about to occur.

An internal reporter is an employee who reports a possible violation of state or federal securities laws or regulations to a supervisor or another employee in the company with the authority to investigate, discover, or terminate misconduct relating to matters in the jurisdiction of the Securities Division or the U.S. Securities and Exchange Commission.

No. Under the Act a whistleblower is still eligible for an award and protection from retaliation if they report a potential violation to the Securities Division without first reporting the violation to their employer.

A whistleblower is eligible to receive an award if they:

• provide “original information” to the Securities Division that leads to the Division’s successful enforcement of an administrative or judicial action under the Securities Act of Washington, chapter 21.20 RCW,
• submit the information in the manner required by the Division, and
• are not otherwise disqualified from receiving an award.

Original information is information that is:

• Derived from the independent knowledge or analysis of a whistleblower;
• Not already known to the Securities Administrator or the Securities Division from any other source, unless the whistleblower is the original source of the information;
• Not exclusively derived from an allegation made in an administrative or judicial hearing, in a government report, hearing, audit, or investigation, or from the news media, unless the whistleblower is the source of the information; and
• Provided to the Securities Division for the first time after July 23, 2023.

A whistleblower is barred from receiving an award if they:

• Have been convicted of a felony in connection with the administrative or judicial action for which they could otherwise receive an award;
• Acquire the information by performing an audit on the company’s financial statements and the provision of that information violates 15 U.S. Code § 78j-1;
• Fail to submit the information to the Securities Division in the proper form;
• Knowingly or recklessly make a false, fictitious, or fraudulent statement or misrepresentation in connection with the whistleblower’s provision of the information, the administrative or judicial action, or in connection with the whistleblower’s other dealings with the Securities Division or any other authority regarding a related action, or
• Knowingly use a false writing or document with intent to mislead or otherwise hinder the Securities Administrator or another authority.

A whistleblower is also barred from receiving an award if they:

• Know or have a reckless disregard as to whether the information they provide is false, fictitious, or fraudulent;
• Have a legal duty to provide the information to the Securities Division;
• Are currently, or were at the time they acquired the information, a member, officer, or employee of the Department of Financial Institutions, the Securities and Exchange Commission, another state securities regulator, a self-regulatory organization (such as FINRA), the Public Company Accounting Oversight Board, or any law enforcement organization; or
• Are currently, or were at the time they acquired the information, a member, officer, or employee of a foreign government, any political subdivision, department, agency, or instrumentality of that government, or any other foreign financial regulatory authority as defined in 15 U.S.C. 78c(a)(52).

Anyone who is a spouse, parent, child, sibling, or resident of the same household as the Securities Administrator or any employee of the Department of Financial Institutions is also prohibited from receiving an award, as well as anyone who directly or indirectly acquires the information from a person prohibited by reason of their employment or their role as an auditor for a company, or who acquires it from a person with the intent to evade any provision of the statute.

The Whistleblower Award and Protection Act authorizes the Securities Administrator to, at their discretion, award between 10-30% of the monetary sanctions imposed and collected. The Securities Administrator will make a determination of the percentage to award based on:

• The significance of the original information provided by the whistleblower to the success of the administrative or judicial action;
• The degree of assistance provided by the whistleblower in connection with the administrative or judicial action;
• The programmatic interest of the Securities Administrator in deterring violations of the securities laws by making awards to whistleblowers who provide original information that leads to the successful enforcement of such laws; and
• Any other relevant factors.

A whistleblower must submit their information using the Securities Division’s complaint form. The complaint form includes an option for the whistleblower to indicate their status as a whistleblower.

Yes. To submit your information anonymously, you must submit it through an attorney on the Securities Division’s complaint form. Before receiving the award, a whistleblower who anonymously submitted information must disclose their identity and provide other information to the Securities Division although their identity is otherwise exempt from public disclosure.

The Act authorizes an award to be granted based on the sanctions that have been imposed and collected by the Securities Division. An award decision will be made by the Securities Administrator after the relevant administrative or judicial action has been completed and the amount imposed by sanction is actually received by the Division.

No. The Act authorizes awards that are, in the aggregate, 10-30% of the sanctions imposed and received by the Division. This means that the total award, which will not exceed 30% of the sanctions collected by the Division, will be split between all eligible whistleblowers in a particular enforcement action, with the amount awarded to each whistleblower determined in the discretion of the Securities Administrator based on the above factors.

The Act allows whistleblowers or internal reporters who suffer retaliation to sue for damages and other relief.

The Act protects whistleblowers and internal reporters from retaliation by their employer for providing information to the Securities Division or any other law enforcement agency, or reporting internally any potential violations of state of federal securities laws or regulations that have or are about to occur, or that are ongoing.

This protection from retaliation extends to the initiation of, cooperation with, or testimony in any investigation or administrative or judicial action of the Securities Administrator, Securities Division, or any other law enforcement agency that is based on or related to the information provided by the individual, or their making of any disclosure protected or required under RCW 21.20 or a related rule or under Sarbanes-Oxley, the Securities Act of 1933, the Securities Exchange Act of 1934, or any other law, rule or regulation under the SEC’s jurisdiction.

Additionally, the Act protects any information that could reasonably be expected to reveal the identity of a whistleblower from disclosure under the state’s Public Records Act, chapter 42.56 RCW.

No. The Act broadly protects a whistleblower or internal reporter from retaliation, and prevents an employer from directly or indirectly terminating, discharging, demoting, suspending, threatening, harassing, or retaliating in any other manner against a whistleblower or internal reporter.

Under the Act, individuals are not protected from retaliation if they:

• Knowingly or recklessly make a false, fictitious, or fraudulent statement or misrepresentation;
• Use a false writing or document knowing or with reckless disregard as to whether the writing or document contains false, fictitious, or fraudulent information; or
• Know or have reckless disregard as to whether the information is false or frivolous.

The Act allows whistleblowers or internal reporters who were retaliated against in violation of the Act to sue for damages and other relief. If the court finds that the whistleblower or internal reporter was retaliated against, the court can order:

• Reinstatement with the same compensation, fringe benefits, and seniority status that the whistleblower or internal reporter would have had but for the retaliation;
• Two times the amount of back pay otherwise owed to the whistleblower or internal reporter (plus interest);
• Compensation for litigation costs, expert witness fees, and reasonable attorneys' fees;
• Actual damages;
• An injunction to restrain a violation; or
• Any combination of the above remedies.

Additionally, there may be other legal action available to you under other laws, as nothing in the Act diminishes the rights, privileges, or remedies of any individual under any federal or state law, or under any collective bargaining agreement.

The Act includes a statute of limitations. The statute of limitations prevents a lawsuit from being brought for a retaliatory action after a specified period of time. The Act prevents a lawsuit from being brought after the later of:

• Six years after the date on which the retaliatory action occurred; or
• Three years after the date on when facts material to the action are known or reasonably should have been known by the whistleblower or internal reporter. However, even if these facts do not become known until later, the Act prohibits any lawsuit from being brought after ten years past the date of the retaliatory action.

The Act prohibits any person from taking any action that impedes an individual from communicating directly with the Securities Division about possible violations of securities laws or rules. This includes such person enforcing or threatening to enforce a confidentiality agreement to prevent a whistleblower from communicating with the Securities Division about these matters. Anyone who believes a violation has, may, or is continuing to occur, and who is not covered by an exception, is encouraged to report to the Securities Division using our complaint form.

The Act permits the enforcement of confidentiality provisions concerning communications covered by the attorney-client privilege. It also permits the enforcement of such a provision in relation to information obtained through an individual and their employer or firm’s legal representation of a client, and the individual is seeking to use the information to make a whistleblower submission for the individual's own benefit.

In either situation, these provisions cannot be enforced or threatened to be enforced if disclosure would otherwise be permitted by an attorney pursuant to applicable state attorney conduct rules or otherwise.

No. The Act prohibits the rights and remedies included in the Act from being waived by any agreement, policy form, or condition of employment, including by a pre-dispute arbitration agreement.

You can talk to a Securities Division representative at (360) 902-8760 or investorcomplaints@dfi.wa.gov. Please note that any written information that you provide may be subject to public disclosure under the Public Records Act unless you first indicate that you are seeking whistleblower status using the Securities Division’s complaint form. Please also note that the Securities Division cannot give any legal advice or endorse or recommend any particular attorney or law firm.