Whistleblower Employment Agreement

- December 21, 2020

In each of these comparisons, the SEC unsurprisingly asked target companies to review their agreements and guidelines (if the company has not already done so). Indeed, the SEC explicitly stated that the review of all working documents was its main corrective step in its enforcement action. See the SEC Risk and Risk Notice (SEC) (October 24, 2016). While the SEC has focused most of its audit on severance agreements, it has also highlighted the following documents that it will regularly analyze as part of its audits: compliance manuals, codes of ethics and employment contracts. In addition to protecting informants who have reported possible violations of securities law in the event of retaliation, the Commission prohibits anyone from taking steps to prevent you from going directly to the SEC to report any violation of securities law. As a general rule, it says: “[n] o The person may take steps to prevent a person from communicating directly with Commission staff about a possible violation of securities law, including the application or threat of a confidentiality agreement… these communications. The fact that large corporations continue to try to retaliate against whistleblowers at this time is alarming and retaliation should never be tolerated. Fortunately, the SEC has made it clear that it intends to continue to take a hard line against any retaliatory tactics, including those involving severance agreements. Nevertheless, it is important that whistleblowers protect themselves by working with an experienced whistleblower who can guide them through the whistleblowing process. At Kreindler Associates, we work with collaborators and insiders to help them report wrongdoing and receive whistleblower rewards. For more information on how to help Kreindler and Associates for SEC whistleblowers, click here.

The Securities and Exchange Commission has adopted a rule prohibiting agreements prohibiting the disclosure of data by a staff member to the Agency. SEC Rule 21F-17 prohibits taking steps to enforce or participate in the application of a confidentiality agreement to prevent a person from discussing with the Commission a possible violation of securities law. The only exception is an agreement to protect the information covered by the privilege of the client lawyer. In return for signing a transaction contract and waiving part of his legal rights, the worker receives a compensation package generally greater than he would get if he appeared in court. There is nothing illegal or, by nature, unreasonable to include confidentiality clauses (commonly referred to as “gag clauses”) in such agreements, particularly in cases where both the employer and the worker wish to keep things between them. On the face of it, a confidentiality clause would prevent the worker from talking about employer misconduct – such as discrimination or harassment – and, more generally, anything to do with the circumstances in which his or her work ended.

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