The U.S. Securities and Exchange Commission’s whistleblower program was established under the Dodd-Frank Act in 2010. Since then, the program has resulted in several thousand tips called into the agency and 14 awards to individuals who pointed to wrongdoing at their companies, including a record payment of at least $30 million to one whistleblower in September. Clearly, significant headway has been made by the SEC in putting its program into action. But at the same time, there’s still room for growth.
One way that the world of whistleblowing enforcement appears to be evolving is in the area of agreements between employers and employees. The SEC looks to be ready to take to task companies that violate the regulations by putting language in contracts that prevents employees from reporting wrongdoing to the commission. The SEC explicitly addressed one issue in Rule 21 F-17 of its program regulations. This rule warns companies not to “impede an individual from communicating directly with the commission staff about a possible securities law violation.” This includes “enforcing or threatening to enforce a confidentiality agreement.”
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