The U.S. Department of Justice and Securities and Exchange Commission have used whistleblower bounties to encourage employees to spill the beans on perceived corporate wrongdoing. At the same time, institutions have increasingly become alarmed at the vulnerability of their data to unauthorized disclosure driven by an employee’s desire to cash-in through a multimillion-dollar whistleblower award. Given these opposing forces, it was perhaps inevitable that employers, employees and government lawyers would conflict on the use of confidentiality to protect sensitive corporate information. Two recent cases illustrate how practices around confidentiality agreements and data protection are evolving.
In September 2014, the SEC announced plans to bring enforcement actions against “companies that include language in employment agreements, non-disclosure pacts and severance settlements to prevent the employee from coming to the agency with good-faith allegations of securities law violations.”1 In April 2015, the SEC announced the resolution of just such an enforcement action, fining a company $125,000 for using confidentiality agreements whose language might discourage whistleblowers.
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