On June 23, 2021, the US Securities and Exchange Commission announced settled charges against broker-dealer Guggenheim Securities, LLC for violations of the whistleblower protection rule that prohibits actions impeding communications with the Commission. According to the SEC's order, the firm's compliance manual included language prohibiting employees from initiating contact with any regulator without prior approval from the firm's legal or compliance department, and the firm included similar language in its annual compliance training materials.
The message of this enforcement action is clear: the SEC does not consider the whistleblower protection rule to be limited to severance agreements or confidentiality agreements, a prior industry focus. In light of this case, companies would be well advised to conduct a prompt and thorough review of applicable documents to ensure that they do not limit, or could be read to limit or impede in any way, an individual's rights to communicate freely with the Commission about a possible securities law violation.
To learn more about the applicable SEC whistleblower provisions, the SEC's action, and key takeaways for companies to consider, read our Advisory here.
Originally published 1 July 2021
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