The U.S. Securities and Exchange Commission (SEC) continues to assertively enforce its Whistleblower Program under the Biden Administration. Previously, the SEC has taken actions against agreements and procedures employed by companies that it argues limit employees’ access to the SEC. More recently, on September 8, 2023, the SEC announced an Order to impose a fine amounting to $225,000 on a private energy and technology company called Monolith Resources LLC.
The Order accuses Monolith of violating the whistleblower rules set by the SEC. The agency’s rules aim to protect employees’ rights to report potential violations to the SEC without fear of retribution. Any language in company policies, procedures, or agreements that may discourage communication with the SEC could lead to penalties as we’ve seen with the recent case.
This is not an isolated case but part of a broader trend where the SEC is increasingly focusing on employers who attempt to interfere with employees’ access to the SEC. Legal professionals working in corporations and law firms need to be aware of these potential pitfalls. Employers should regularly review and revise their agreements and procedures to ensure that they do not infringe upon employees’ ability to communicate with the SEC or other regulatory bodies.
As the SEC continues to prioritize this issue, we can expect further enforcement actions and penalties in the future. It is imperative for companies to have a robust compliance program in place and to cultivate a culture that encourages rather than discourages whistleblowing.