Compliance requires lots of mid-course corrections. Those corrections are based on constant feedback that’s honest and accurate. That’s why attempts to impede feedback and complaints are always bad for compliance. And yet, confidentiality agreements (in their many different forms) are everywhere.

The SEC has exposed how companies misuse confidentiality agreements. In a startling string of enforcement actions, the agency sued companies for violating 2010’s Dodd-Frank Act. Rule 21F-17 of Dodd-Frank makes it unlawful for anyone to take “any action to impede an individual from communicating directly with the [SEC] staff about a possible securities law violation.”

According to the SEC . . .

• BlackRock Inc. forced more than a thousand exiting employees to waive their ability to obtain whistleblower awards.
• SandRidge Energy Inc. put language in a whistleblower’s separation agreement that prohibited the whistleblower from participating in any government investigation or disclosing information potentially harmful or embarrassing to the company.
• NeuStar Inc. used severance agreements that impeded 246 departing employees from communicating information to the SEC.
• Anheuser-Busch InBev used a separation agreement to stop an employee from continuing to voluntarily communicate with the SEC about potential FCPA violations.
• Health Net Inc. and Blue Linx Holdings required departing employees to waive their right to recover money from any whistleblower claims they filed with the SEC.
• ...

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