Image of SEC Whistleblower Program: Can I submit a tip to the SEC if I agreed to a confidentiality provision in an employment or severance agreement?

SEC Whistleblower Program: Can I submit a tip to the SEC if I agreed to a confidentiality provision in an employment or severance agreement?

 

 

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:

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-262-8959.

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:

SEC Whistleblower Program Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award

 

 

 

 

 

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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.

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Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.