Yes. The SEC firmly rejects any employer’s attempt to impede an employee’s communication with the SEC about a possible securities-law violation by using instruments such as:
- overly broad confidentiality provisions in severance or employee agreements;
- waivers of the right to receive a whistleblower reward; or
- agreements to notify the company’s legal counsel before disclosing information to government agencies.
In August 2016, the SEC issued a cease-and-desist order against BlueLinx Holdings Inc. for using overly broad confidentiality provisions in severance agreements that would likely deter employees from blowing the whistle. In particular, to receive severance BlueLinx employees had to waive the right to recover a whistleblower award and agree to notify the company’s legal counsel before disclosing information to government agencies pursuant to legal process. The SEC’s order imposed a $265,000 penalty on BlueLinx because these requirements violated Dodd-Frank Act Rule 21F-17.
In December 2016, the SEC fined SandRidge Energy Inc. $1.4 million for for failing to include a “carve out” in severance agreements that allows employees to report claims to the SEC.
Click below to hear SEC whistleblower lawyer Matt Stock’s tips for SEC whistleblowers:
To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award:
- See our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
- See our column in Going Concern: Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
- See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
Yes, as a matter of fact, the SEC has taken a very strong stance against employers who attempt to impede employees from going to the SEC with information. This includes things such as: employers can not include overly broad confidentiality provisions in severance agreements or employment agreements; they cannot require that an employee report first internally to legal counsel, for example, before going to the SEC; and also, they cannot require an employee to wave their right to an award if they do go to the SEC.