On September 9, 2024, the Securities and Exchange Commission (SEC) announced settled charges against seven public companies for violations of certain whistleblower protections provided by Rule 21F-17 under the Securities Exchange Act of 1934. The cases, which echo similar themes from past enforcement activity, highlight the SEC’s ongoing focus on enforcing its whistleblower protection rules.
The SEC adopted Rule 21F-17 in 2011, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, in order to implement Section 21F, “Whistleblower Incentives and Protection,” of the Securities Exchange Act of 1934. The congressional purpose of these provisions was to encourage whistleblowers to report possible securities law violations, by providing financial incentives, prohibiting employment-related retaliation and providing various confidentiality guarantees. Rule 21F-17 provides as follows:
(a) No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.
(b) If you are a director, officer, member, agent, or employee of an entity that has counsel, and you have initiated communication with the Commission relating to a possible securities law violation, the staff is authorized to communicate directly with you regarding the possible securities law violation without...
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