The Vermont Statutes Online

Title 9 : Commerce and Trade

Chapter 150 : Securities Act

Subchapter 006 : ADMINISTRATION AND JUDICIAL REVIEW

• § 5617. Vermont Whistleblower Award and Protection Act

  (a) Purpose. The purpose of this section is to provide:

  (1) protection from retaliation for whistleblowers and internal reporters who comply with the requirements in this section; and

  (2) monetary awards to whistleblowers who voluntarily provide original information that leads to the successful enforcement of an administrative or judicial action under chapter 150 of this title.

  (b) Definitions. As used in this section,

  (1) “Monetary sanction” means any monies, including penalties, disgorgement, and interest ordered to be paid as a result of an administrative or judicial action.

  (2) “Original information” means information that is:

  (A) derived from the independent knowledge or analysis of a whistleblower;

  (B) not already known to the Commissioner from any other source, unless the whistleblower is the original source of the information;

  (C) not exclusively derived from an allegation made in an administrative or judicial hearing; in a governmental report, hearing, audit, or investigation; or from the news media, unless the whistleblower is the source of the information; and

  (D) provided to the Commissioner for the first time after the date of the enactment of this section.

  (3) “Whistleblower” means an individual who, alone or jointly with others, provides the State or other law enforcement agency with information pursuant to the provisions set forth in this section, and the information relates to a possible violation of state or federal securities laws, including any rules or regulations adopted or promulgated under such laws, that has occurred, is ongoing, or is about to occur.

  (c) Authority to make a whistleblower award. Subject to the provisions of this section, the Commissioner may award an amount to one or more whistleblowers who voluntarily provide, in writing, in the form and manner required by the Commissioner, original information that leads to the successful enforcement of an administrative or judicial action under chapter 150 of this title.

  (d) Anonymous whistleblower complaints. Any individual who anonymously makes a claim for a whistleblower award shall be represented by counsel if the individual anonymously submits the information upon which the claim is based. Prior to the payment of an award, a previously anonymous whistleblower shall disclose the whistleblower’s identity and provide such other information as the Commissioner may require, directly or through counsel for the whistleblower. Failure to provide such information shall be a basis to deny compensation under this section.

  (e) Amount of a whistleblower award. If the Commissioner determines to make one or more awards under this section, the aggregate amount of awards that may be awarded in connection with an administrative or judicial action may not be less than 10 percent nor more than 30 percent of the monetary sanctions imposed and collected in the related administrative or judicial action.

  (f) Discretion to determine the amount of a whistleblower award. The determination of the amount of an award made under this section shall be in the discretion of the Commissioner consistent with subsections (e) and (h) of this section.

  (g) Source of payment of whistleblower award. Any whistleblower awards paid under this section shall be paid from the fund established in section 5616 of this title.

  (h) Factors used to determine the amount of a whistleblower award. In determining the amount of an award under this section, the Commissioner shall consider:

  (1) the significance of the original information provided by the whistleblower to the success of the administrative or judicial action;

  (2) the degree of assistance provided by the whistleblower in connection with the administrative or judicial action;

  (3) the programmatic interest of the Commissioner 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

  (4) any other factors the Commissioner considers relevant.

  (i) Disqualification from award. The Commissioner shall not provide an award to a whistleblower under this section if the whistleblower:

  (1) is convicted of a crime in connection with the administrative or judicial action for which the whistleblower otherwise could receive an award;

  (2) acquires the original information through the performance of an audit of financial statements required under the securities laws and for whom providing the original information violates 15 U.S.C. § 78j-1;

  (3) fails to timely submit information to the Commissioner in such form as the Commissioner may prescribe;

  (4) knowingly or recklessly makes a false, fictitious, or fraudulent statement or representation as part of, or in connection with, the original information provided or the administrative or judicial proceeding for which the original information was provided;

  (5) in the whistleblower’s submission, its other dealings with the Commissioner, or in its dealings with another authority in connection with a possible violation or related action, knowingly or recklessly makes any false, fictitious, or fraudulent statement or representation or uses or provides any false writing or document knowing that or having a reckless disregard as to whether it contains any false, fictitious, or fraudulent statement or entry;

  (6) has a legal duty to report the original information to the Commissioner;

  (7) is, or was at the time the whistleblower acquired the original information submitted to the Commissioner, a member, officer, or employee of the Department of Financial Regulation, the Securities and Exchange Commission, any other state securities regulatory authority, a self-regulatory organization, the Public Company Accounting Oversight Board, or any law enforcement organization;

  (8) is, or was at the time the whistleblower acquired the original information submitted to the Commissioner, a member, officer, or employee of a foreign government, any political subdivision, department, agency, or instrumentality of a foreign government, or any other foreign financial regulatory authority as that term is defined in 15 U.S.C. § 78c(a)(52);

  (9) is the spouse, parent, child, or sibling of, or resides in the same household as, the Commissioner or an employee of the Department of Financial Regulation; or

  (10) directly or indirectly acquires the original information provided to the Commissioner from a person:

  (A) who is subject to subdivision (i)(2) of this section, unless the information is not excluded from that person’s use, or provides the Commissioner with information about possible violations involving that person;

  (B) who is a person described in subdivision (i)(7), (8), or (9) of this section; or

  (C) with the intent to evade any provision of this section.

  (j) Protection of whistleblowers and internal reporters.

  (1) No employer may terminate, discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner retaliate against, an individual because of any lawful act done by the individual:

  (A) in providing information to the State or other law enforcement agency concerning a possible violation of state or federal securities laws, including any rules or regulations adopted or promulgated under such laws, that has occurred, is ongoing, or is about to occur;

  (B) in initiating, testifying in, or assisting in any investigation or administrative or judicial action of the Commissioner or other law enforcement agency based upon or related to such information;

  (C) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7201 et seq.), the Securities Act of 1933 (15 U.S.C. § 77a et seq.), the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), 18 U.S.C. § 1513(e), any other law, rule, or regulation subject to the jurisdiction of the Securities and Exchange Commission, or chapter 150 of this title or a rule adopted under chapter 150 of this title; or

  (D) in making disclosures to a person with supervisory authority over the employee or to such other person working for the employer who has the authority to investigate, discover, or terminate misconduct regarding matters subject to the jurisdiction of the Commissioner or the Securities and Exchange Commission.

  (2) Notwithstanding subdivision (j)(1) of this section, an individual is not protected under this section if:

  (A) the individual knowingly or recklessly makes a false, fictitious, or fraudulent statement or representation as part of, or in connection with, the original information provided or the administrative or judicial proceeding for which the original information was provided; or

  (B) the individual, in its dealings with its supervisor, the State, law enforcement, or any other authority in connection with a possible violation or related action, knowingly or recklessly makes any false, fictitious, or fraudulent statement or representation or uses or provides any false writing or document knowing that or having a reckless disregard as to whether it contains any false, fictitious, or fraudulent statement or entry.

  (3) An individual who alleges any act of retaliation in violation of subdivision (j)(1) of this section may bring an action for the relief provided in subdivision (j)(6) of this section in the court of original jurisdiction for the county or state where the alleged violation occurs, the individual resides, or the person against whom the action is filed resides or has a principal place of business.

  (4) A subpoena requiring the attendance of a witness at a trial or hearing conducted under subdivision (j)(3) of this section may be served at any place in the United States.

  (5) An action under subdivision (j)(3) of this section may not be brought more than the latest of:

  (A) six years after the date on which the violation of subdivision (j)(1) of this section occurred;

  (B) three years after the date when facts material to the right of action are known or reasonably should have been known by the employee alleging a violation of subdivision (j)(1) of this section;

  (C) but in no event more than 10 years after the date on which the violation occurs.

  (6) A court may award as relief for an individual prevailing in an action brought under this subsection:

  (A) reinstatement with the same compensation, fringe benefits, and seniority status that the individual would have had, but for the retaliation;

  (B) two times the amount of back pay otherwise owed to the individual, with interest;

  (C) compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees;

  (D) actual damages;

  (E) an injunction to restrain a violation; or

  (F) any combination of these remedies.

  (7) Information that could reasonably be expected to reveal the identity of a whistleblower is exempt from public disclosure under 1 V.S.A. § 316. This subsection does not limit the ability of any person to present evidence to a grand jury or to share evidence with potential witnesses or defendants in the course of an ongoing criminal investigation.

  (8) No person may take any action to impede an individual from communicating directly with the Commissioner or the Commissioner’s staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement with respect to such communications, except with respect to:

  (A) agreements concerning communications covered by the attorney-client privilege, unless disclosure of that information would otherwise be permitted by an attorney under applicable state attorney conduct rules or otherwise; and

  (B) information obtained in connection with legal representation of a client on whose behalf an individual or the individual’s employer or firm are providing services, and the individual is seeking to use the information to make a whistleblower submission for the individual’s own benefit, unless disclosure would otherwise be permitted by an attorney pursuant to applicable state attorney conduct rules or otherwise.

  (9) The rights and remedies provided for in this section may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement.

  (10) Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any individual under any federal or state law, or under any collective bargaining agreement.

  (k) The Commissioner may adopt such rules as may be necessary or appropriate to implement the provisions of this section consistent with its purpose. (Added 2021, No. 139 (Adj. Sess.), § 22, eff. May 27, 2022.)