The U.S. Securities and Exchange Commission (SEC) recently settled charges against seven companies for violating SEC Rule 21F-17(a), which prohibits conduct that hinders whistleblowing to the SEC. The settlements focus on consulting and employment agreement provisions that the SEC alleged impeded individuals from voluntarily providing information to the Commission. The SEC’s announcement comes on the heels of the Commodity Futures Trading Commission (CFTC) stepping up enforcement of its whistleblower protections and the U.S. Department of Justice (DOJ) unveiling its new Corporate Whistleblower Pilot Program. As federal agencies continue to focus on whistleblowing and whistleblower protections, public and private companies should review their programs, agreements, and policies to ensure they are not inadvertently running afoul of regulators’ very broad view of what it means to impede whistleblowing activity.

Consulting Agreements

Two of the seven SEC settlements challenged mandatory notification provisions in agreements with the Respondents’ contractors that required notification before the contractor could cooperate with a government investigation. Specifically, the agreements included language in confidentiality and non-disclosure provisions requiring written notice to the company before the contractor could disclose confidential or proprietary information to investigators or in response to a subpoena – standard language that appears in many commercial agreements. The SEC...

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