The Securities and Exchange Commission (SEC) of the United States has recently turned its attention towards employment contracts, which may undermine whistleblowing activities. Specifically, they are focusing on employee confidentiality and separation agreements, legal cornerstones in many major firms which have often been considered ‘safe’ due to their longevity and presumed legal robustness.
This focus on whistleblowing-related agreements represents a shift in SEC investigations. In fact, in just this year, there have already been no fewer than four enforcement actions brought against companies. The SEC believes these companies have designed and used their employee agreements in such a way as to deter whistleblowing activity, specifically in relation to potential securities law violations.
This new direction has had some substantial results. In one recent case, this policy led to a civil fine of $10 million. More interestingly perhaps, this investigative trend has led to the first ever enforcement against a private firm.
These moves by the SEC are sure to ripple through the legal departments of organizations across the country, as they examine their own employment contracts and policies, and assess their vulnerability to SEC investigations.