S T A T E O F N E W Y O R K
________________________________________________________________________
4362
2013-2014 Regular Sessions
I N S E N A T E
March 22, 2013
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Introduced by Sens. SEWARD, GRIFFO -- (at request of the Department of
Financial Services) -- read twice and ordered printed, and when print-
ed to be committed to the Committee on Finance
AN ACT to amend the financial services law, in relation to protecting
and compensating whistleblowers who provide original information to
the department of financial services as to violations of the banking
law, the insurance law, the financial services law and any other
applicable law
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subsection (a) of section 104 of the financial services law
is amended by adding seven new paragraphs 6, 7, 8, 9, 10, 11 and 12 to
read as follows:
(6) "COVERED JUDICIAL OR ADMINISTRATIVE ACTION" SHALL MEAN ANY JUDI-
CIAL OR ADMINISTRATIVE ACTION BROUGHT, WITHIN THE SOLE DISCRETION OF THE
SUPERINTENDENT, BY THE DEPARTMENT UNDER THE INSURANCE LAW, THE BANKING
LAW OR THIS CHAPTER THAT RESULTS IN FINES, PENALTIES, SETTLEMENT MONIES
OR OTHER MONETARY RESOLUTION ON BEHALF OF THE DEPARTMENT EXCEEDING ONE
MILLION DOLLARS.
(7) "EMPLOYER" SHALL MEAN ANY INDIVIDUAL OR ENTITY WHO OR THAT
RETAINED THE SERVICES OF THE WHISTLEBLOWER EITHER BY EMPLOYMENT AGREE-
MENT OR ANY OTHER CONTRACTUAL OR SUB-CONTRACTUAL ARRANGEMENT.
(8) "MONETARY SANCTIONS" SHALL MEAN:
(A) ANY MONIES, INCLUDING PENALTIES, DISGORGEMENT AND INTEREST ORDERED
TO BE PAID; AND
(B) ANY MONIES DEPOSITED INTO A DISGORGEMENT FUND OR OTHER FUND PURSU-
ANT TO THE BANKING LAW, THE INSURANCE LAW OR THIS CHAPTER OR RULES OR
REGULATIONS PROMULGATED THEREUNDER, AS A RESULT OF A COVERED JUDICIAL OR
ADMINISTRATIVE ACTION OR ANY SETTLEMENT OF SUCH ACTION.
(9) "ORIGINAL INFORMATION" SHALL MEAN INFORMATION THAT:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08859-02-3
S. 4362 2
(A) IS DERIVED FROM THE INDEPENDENT KNOWLEDGE OR ANALYSIS OF A WHIST-
LEBLOWER;
(B) IS NOT KNOWN TO THE DEPARTMENT FROM ANY OTHER SOURCE, UNLESS THE
WHISTLEBLOWER IS THE ORIGINAL SOURCE OF THE INFORMATION; AND
(C) IS NOT EXCLUSIVELY DERIVED FROM AN ALLEGATION MADE IN A JUDICIAL
OR ADMINISTRATIVE HEARING, IN A GOVERNMENTAL REPORT, HEARING, AUDIT OR
INVESTIGATION OR FROM THE NEWS MEDIA, UNLESS THE WHISTLEBLOWER IS A
SOURCE OF THE INFORMATION.
(10) "RELATED ACTION" WHEN USED WITH RESPECT TO ANY COVERED JUDICIAL
OR ADMINISTRATIVE ACTION BROUGHT BY THE DEPARTMENT UNDER THE BANKING
LAW, THE INSURANCE LAW OR THIS CHAPTER OR RULES AND REGULATIONS PROMUL-
GATED THEREUNDER SHALL MEAN ANY JUDICIAL OR ADMINISTRATIVE ACTION
BROUGHT BY ANOTHER STATE AGENCY AND/OR FEDERAL REGULATOR OR LAW ENFORCE-
MENT AGENCY WITH WHOM THE DEPARTMENT SHARES JURISDICTION THAT IS BASED
UPON THE ORIGINAL INFORMATION PROVIDED BY A WHISTLEBLOWER AND THAT WAS
THE BASIS OF THE DEPARTMENT'S SUCCESSFUL ENFORCEMENT OF THE RELATED
COVERED JUDICIAL OR ADMINISTRATIVE ACTION.
(11) "WHISTLEBLOWER" SHALL MEAN ANY INDIVIDUAL WHO PROVIDES, OR TWO OR
MORE INDIVIDUALS ACTING JOINTLY WHO PROVIDE, INFORMATION RELATING TO A
VIOLATION OF THE BANKING LAW, THE INSURANCE LAW, THIS CHAPTER OR RULES
AND REGULATIONS PROMULGATED THEREUNDER TO THE DEPARTMENT, IN A MANNER
ESTABLISHED, BY RULE OR REGULATION, BY THE DEPARTMENT.
(12) "AWARD" SHALL MEAN A SHARE IN ANY MONEY SANCTIONS RECEIVED BY
THE DEPARTMENT PURSUANT TO A COVERED JUDICIAL OR ADMINISTRATIVE ACTION
AND PAID TO A WHISTLEBLOWER.
S 2. The financial services law is amended by adding a new section 410
to read as follows:
S 410. WHISTLEBLOWER AWARDS AND PROTECTIONS. (A) THE SUPERINTENDENT
SHALL GRANT AWARDS TO WHISTLEBLOWERS IN THE AMOUNTS SET FORTH BELOW:
(1) IN GENERAL, IN ANY COVERED JUDICIAL OR ADMINISTRATIVE ACTION OR
RELATED ACTION, THE DEPARTMENT, UNDER RULES AND REGULATIONS PRESCRIBED
BY THE SUPERINTENDENT AND SUBJECT TO THIS SECTION, SHALL PAY AN AWARD OR
AWARDS TO ONE OR MORE WHISTLEBLOWERS WHO VOLUNTARILY PROVIDED ORIGINAL
INFORMATION TO THE DEPARTMENT THAT WAS THE BASIS FOR THE SUCCESSFUL
ENFORCEMENT OF A COVERED JUDICIAL OR ADMINISTRATIVE ACTION, OR RELATED
ACTION, IN AN AGGREGATE AMOUNT EQUAL TO:
(A) NOT LESS THAN TEN PERCENT, IN TOTAL, OF WHAT HAS BEEN COLLECTED OF
THE MONETARY SANCTIONS IMPOSED IN THE ACTION OR RELATED ACTIONS; AND
(B) NOT MORE THAN THIRTY PERCENT, IN TOTAL, OF WHAT HAS BEEN COLLECTED
OF THE MONETARY SANCTIONS IMPOSED IN THE ACTION OR RELATED ACTIONS.
(2) ANY AMOUNT PAID UNDER PARAGRAPH ONE OF THIS SUBSECTION SHALL BE
FIRST APPLIED IN ACCORDANCE WITH THE PROVISIONS OF SUCH PARAGRAPH BEFORE
BEING APPLIED, IF APPLICABLE, IN ACCORDANCE WITH SUBPARAGRAPH (B) OF
PARAGRAPH ONE OF SUBSECTION (A) OF SECTION FOUR HUNDRED EIGHT OF THIS
ARTICLE.
(3) IF A RELATED ACTION RESULTS IN A MONETARY RECOVERY BY ANOTHER
STATE AGENCY, A FEDERAL REGULATOR OR A LAW ENFORCEMENT AGENCY OR ANY
COMBINATION OF ANY SUCH ENTITIES, BUT THE DEPARTMENT DOES NOT SHARE ANY
PORTION OF THE RECOVERY, OR ITS SHARE AMOUNTS TO LESS THAN ONE MILLION
DOLLARS, THE DEPARTMENT IS NOT REQUIRED TO PROVIDE ANY REWARD TO THE
WHISTLEBLOWER.
(B)(1) THE DETERMINATION OF THE AMOUNT OF AN AWARD MADE UNDER THIS
SECTION SHALL BE SOLELY IN THE DISCRETION OF THE SUPERINTENDENT.
(2) IN DETERMINING THE AMOUNT OF AN AWARD MADE UNDER THIS SECTION, THE
SUPERINTENDENT SHALL TAKE INTO CONSIDERATION THE FOLLOWING FACTORS:
S. 4362 3
(A) THE SIGNIFICANCE OF THE INFORMATION PROVIDED BY THE WHISTLEBLOWER
TO THE SUCCESS OF THE COVERED JUDICIAL OR ADMINISTRATIVE ACTION;
(B) THE DEGREE OF ASSISTANCE PROVIDED BY THE WHISTLEBLOWER AND ANY
LEGAL REPRESENTATIVE OF THE WHISTLEBLOWER IN A COVERED JUDICIAL OR
ADMINISTRATIVE ACTION;
(C) THE INTEREST OF THE DEPARTMENT IN DETERRING VIOLATIONS OF THE
BANKING LAW, THE INSURANCE LAW OR THIS CHAPTER; AND
(D) SUCH ADDITIONAL RELEVANT FACTORS AS THE SUPERINTENDENT MAY ESTAB-
LISH BY RULE OR REGULATION.
(C) NO AWARD SHALL BE MADE TO ANY WHISTLEBLOWER IF THE SUPERINTENDENT
SHALL DETERMINE THAT:
(1) THE WHISTLEBLOWER IS, OR WAS AT THE TIME THE WHISTLEBLOWER
ACQUIRED THE ORIGINAL INFORMATION SUBMITTED TO THE DEPARTMENT, A MEMBER,
OFFICER OR EMPLOYEE OF THE DEPARTMENT, ANY AGENCY THAT REGULATES BANK-
ING, INSURANCE OR FINANCIAL SERVICES PRODUCTS, A STATE OR LOCAL LAW
ENFORCEMENT ORGANIZATION, ANY FEDERAL LAW ENFORCEMENT ORGANIZATION, OR A
SELF-REGULATORY AGENCY REGULATING BANKING, INSURANCE OR FINANCIAL
SERVICES PRODUCTS;
(2) THE WHISTLEBLOWER WAS CONVICTED OF A CRIMINAL VIOLATION RELATED TO
THE COVERED JUDICIAL OR ADMINISTRATIVE ACTION FOR WHICH THE WHISTLEBLOW-
ER OTHERWISE COULD RECEIVE AN AWARD UNDER THIS SECTION;
(3) THE WHISTLEBLOWER FAILED TO SUBMIT INFORMATION TO THE DEPARTMENT
IN SUCH FORM AS THE DEPARTMENT MAY REQUIRE; OR
(4) THE WHISTLEBLOWER KNOWINGLY AND WILLFULLY MADE FALSE, FICTITIOUS
OR FRAUDULENT STATEMENTS OR REPRESENTATIONS, OR USED ANY FALSE WRITING
OR DOCUMENT KNOWING THE WRITING OR DOCUMENT CONTAINED FALSE, FICTITIOUS
OR FRAUDULENT STATEMENTS OR ENTRIES, UNLESS SUCH FALSE, FICTITIOUS OR
FRAUDULENT STATEMENTS OR ENTRIES WERE NOT MADE BY THE WHISTLEBLOWER AND
REFLECT THE CONDUCT AND VIOLATIONS OF LAW THE WHISTLEBLOWER IS DISCLOS-
ING OR HAS DISCLOSED TO THE DEPARTMENT.
(D) (1) ANY WHISTLEBLOWER WHO MAKES A CLAIM FOR AN AWARD UNDER THIS
SECTION MAY BE REPRESENTED BY COUNSEL.
(2) REPRESENTATION SHALL BE REQUIRED WHEN:
(A) ANY WHISTLEBLOWER WHO ANONYMOUSLY MAKES A CLAIM FOR AN AWARD UNDER
THIS SECTION AND SUBMITS THE INFORMATION UPON WHICH THE CLAIM IS BASED;
AND
(B) BEFORE THE PAYMENT OF AN AWARD, COUNSEL FOR THE WHISTLEBLOWER
DISCLOSES THE IDENTITY OF THE WHISTLEBLOWER AND PROVIDES SUCH OTHER
INFORMATION AS THE DEPARTMENT MAY REQUIRE, DIRECTLY OR THROUGH COUNSEL
FOR THE WHISTLEBLOWER, INCLUDING SUCH EVIDENCE AS MAY BE NECESSARY TO
DEMONSTRATE THAT THE WHISTLEBLOWER WAS REPRESENTED BY COUNSEL AS
REQUIRED BY THIS SECTION.
(E) NO CONTRACT WITH THE DEPARTMENT SHALL BE NECESSARY FOR ANY WHIST-
LEBLOWER TO RECEIVE AN AWARD UNDER THIS SECTION, UNLESS OTHERWISE
REQUIRED BY THE DEPARTMENT BY RULE OR REGULATION.
(F) ANY DETERMINATION MADE UNDER THIS SECTION, INCLUDING WHETHER, TO
WHOM, OR IN WHAT AMOUNT TO MAKE AWARDS, SHALL BE SOLELY IN THE
DISCRETION OF THE SUPERINTENDENT. ANY SUCH DETERMINATION MAY BE CHAL-
LENGED IN ACCORDANCE WITH ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE
LAW AND RULES, PROVIDED THAT ANY SUCH CHALLENGE SHALL BE BROUGHT WITHIN
FORTY-FIVE DAYS OF THE DATE OF ANY SUCH DETERMINATION UNDER CHALLENGE.
(G) (1) NO EMPLOYER MAY DISCHARGE, DEMOTE, SUSPEND, THREATEN OR
HARASS, DIRECTLY OR INDIRECTLY, OR IN ANY OTHER MANNER DISCRIMINATE
AGAINST A WHISTLEBLOWER IN THE TERMS AND CONDITIONS OF EMPLOYMENT
BECAUSE OF ANY LAWFUL ACT DONE BY THE WHISTLEBLOWER:
S. 4362 4
(A) IN PROVIDING INFORMATION TO THE DEPARTMENT IN ACCORDANCE WITH THIS
SECTION; AND
(B) IN INITIATING, TESTIFYING IN OR ASSISTING IN ANY INVESTIGATION OR
JUDICIAL OR ADMINISTRATIVE ACTION OF THE DEPARTMENT.
(2) ANY CURRENT OR FORMER EMPLOYEE, CONTRACTOR OR AGENT OF ANY PRIVATE
OR PUBLIC EMPLOYER WHO IS DISCHARGED, DEMOTED, SUSPENDED, THREATENED OR
HARASSED OR IN ANY OTHER MANNER DISCRIMINATED AGAINST IN THE TERMS AND
CONDITIONS OF EMPLOYMENT, OR OTHERWISE HARMED OR PENALIZED BY AN EMPLOY-
ER, OR A PROSPECTIVE EMPLOYER, BECAUSE OF LAWFUL ACTS DONE BY THE
EMPLOYEE, CONTRACTOR, AGENT OR ASSOCIATED WITH ACTS OF OTHERS IN FURTH-
ERANCE OF ANY COVERED JUDICIAL OR ADMINISTRATIVE ACTION OR OTHER EFFORTS
TO STOP ONE OR MORE VIOLATIONS OF THE INSURANCE LAW, BANKING LAW OR THIS
CHAPTER SHALL BE ENTITLED TO ALL RELIEF NECESSARY TO MAKE THE EMPLOYEE,
CONTRACTOR OR AGENT WHOLE. SUCH RELIEF SHALL INCLUDE BUT NOT BE LIMITED
TO:
(A) AN INJUNCTION TO RESTRAIN CONTINUED DISCRIMINATION;
(B) HIRING, CONTRACTING OR REINSTATEMENT TO THE POSITION SUCH PERSON
WOULD HAVE HAD BUT FOR THE DISCRIMINATION OR TO AN EQUIVALENT POSITION;
(C) REINSTATEMENT OF FULL FRINGE BENEFITS AND SENIORITY RIGHTS;
(D) PAYMENT OF TWO TIMES BACK PAY, PLUS INTEREST; AND
(E) COMPENSATION FOR ANY SPECIAL DAMAGES SUSTAINED AS A RESULT OF THE
DISCRIMINATION, INCLUDING LITIGATION COSTS AND REASONABLE ATTORNEYS'
FEES.
(3) FOR PURPOSES OF THIS SECTION, A "LAWFUL ACT" SHALL INCLUDE, BUT
NOT BE LIMITED TO, OBTAINING OR TRANSMITTING TO THE DEPARTMENT OR
PRIVATE COUNSEL SOLELY EMPLOYED TO INVESTIGATE OR POTENTIALLY FILE WITH
THE DEPARTMENT INFORMATION RELATING TO VIOLATIONS OF THE BANKING LAW,
THE INSURANCE LAW, OR THIS CHAPTER EVEN THOUGH SUCH ACT MAY VIOLATE A
CONTRACT, SEVERANCE AGREEMENT, EMPLOYMENT TERM, OR DUTY OWED TO THE
EMPLOYER OR CONTRACTOR.
(H) THE DEPARTMENT AND ANY OFFICER OR EMPLOYEE OF THE DEPARTMENT SHALL
NOT DISCLOSE ANY INFORMATION, INCLUDING INFORMATION PROVIDED BY A WHIST-
LEBLOWER TO THE DEPARTMENT, WHICH COULD REASONABLY BE EXPECTED TO REVEAL
THE IDENTITY OF A WHISTLEBLOWER, UNLESS IN THE JUDGMENT OF THE SUPER-
INTENDENT THE ENDS OF JUSTICE AND THE PUBLIC ADVANTAGE WILL BE SERVED BY
RELEASE OF SUCH INFORMATION.
(I) NOTHING IN THIS SECTION IS INTENDED TO LIMIT, OR SHALL BE
CONSTRUED TO LIMIT THE SUPERINTENDENT'S AUTHORITY UNDER SECTIONS TWO
HUNDRED TWO AND THREE HUNDRED ONE OF THIS CHAPTER, OR THAT OF OTHER LAW
ENFORCEMENT AUTHORITY PROVIDED UNDER SECTION FOUR HUNDRED SIX OF THIS
ARTICLE.
(J) 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 PRE-DISPUTE ARBITRATION AGREEMENT, WHICH SHALL NOT BE
VALID OR ENFORCEABLE IF IT REQUIRES ARBITRATION OF A DISPUTE ARISING
UNDER THIS SECTION. NO SALARY OR WAGES EARNED BY THE WHISTLEBLOWER
DURING HIS OR HER EMPLOYMENT, NOR ANY CONSIDERATION PROVIDED THE WHIST-
LEBLOWER IN CONNECTION WITH HIS OR HER SEVERANCE FROM SUCH EMPLOYMENT,
RELATED TO ORIGINAL INFORMATION OR THE COVERED JUDICIAL OR ADMINISTRA-
TIVE ACTION MAY BE RECOUPED BY ANY RIGHT OF ACTION BROUGHT BY THE
EMPLOYER.
(K) THE SUPERINTENDENT IS HEREBY AUTHORIZED AND EMPOWERED TO PROMUL-
GATE SUCH RULES AND REGULATIONS AS THE SUPERINTENDENT SHALL DEEM APPRO-
PRIATE FOR THE ENFORCEMENT OF THIS ACTION.
S 3. This act shall take effect on the ninetieth day after it shall
have become a law.
