The SEC’s Office of the Whistleblower’s top priority going into 2016 will be to assess company confidentiality agreements for compliance with Rule 21-F-17(a). Rule 21F-17(a) provides that no person may take any action to impede an individual from reporting information about wrongdoing to the SEC. The OWB’s primary focus in enforcing Rule 21-F-17(a) has been to discourage companies from enforcing or threatening to enforce confidentiality agreements that prohibit employees from discussing the substance of interviews they gave in internal investigations without the approval of the company's legal department.
We previously reported on the Securities and Exchange Commission’s efforts to crack down on anti-whistleblower agreements earlier this year. At that time, the SEC brought charges and accepted payment of a penalty related to a company’s anti-whistleblower confidentiality agreements. It is clear from the OWB’s 2015 Annual Report that the SEC will be prioritizing this issue again next year.
Thus, corporate counsel must walk a fine line to avoid including language that could be interpreted as impeding potential whistleblowers. We previously recommended adding disclaimer language to any confidentiality agreements that makes it clear that employees are free to report possible violations to the SEC and other federal agencies without company approval or fear of retaliation. While such a disclaimer would not necessarily be a safe harbor for companies, it would help in any action brought by the SEC. Counsel should also consider adding cautionary language or revisions to their employment agreements to avoid broad restrictions that could discourage potential whistleblowers from reporting violations to the SEC.
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