Did you know that your employer cannot stop you from whistleblowing to the SEC? A recent order by the SEC makes this quite clear. Rule 21F-17 of the Dodd-Frank Act, which established the SEC Whistleblower Program in 2010, prohibits companies from enforcing confidentiality agreements that would prevent employees from blowing the whistle on wrongdoing. This means that if your employer tries to make you sign a contract that forbids you from whistleblowing, or threatens to sue you if you do, then they are breaking the law.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a law that was passed in 2010 in response to the financial crisis of 2007-2008. The law established the SEC Whistleblower Program, which allows whistleblowers to report securities fraud and other wrongdoing directly to the SEC, without going through their employer. In order to encourage people to come forward with information, the SEC offers whistleblowers rewards of up to 30% of the money it collects from enforcement actions based on their tips.
Rule 21F-17 is a rule that was passed as part of the Dodd-Frank Act. The rule prohibits companies from impeding employees from blowing the whistle to the SEC, including by enforcing or threatening to enforce confidentiality agreements. This means that if your employer has a policy or contract that requires you to keep information about wrongdoing confidential, they are breaking the law.
The SEC’s order against KBR Inc. makes it clear that companies cannot require employees to notify them of their intention to blow the whistle, or else face liquidated damages and legal fees. KBR Inc. is a global engineering, construction, and services company that has been accused of securities fraud, among other things. KBR Inc.'s blanket prohibition on employees sharing financial or business information with third parties is clearly aimed at preventing them from doing so, but it does not comport with Section 21F's goal of safeguarding client proprietary information.
The rule was introduced as part of the Dodd-Frank Act in order to protect whistleblowers and encourage them to come forward with information about securities fraud and other wrongdoing. The SEC believes that by prohibiting companies from impeding employees from whistleblowing, it will create a culture of compliance and help to root out fraud and corruption.
What does this mean for you?
If you are thinking about blowing the whistle on your company, or have already done so, this rule offers you protection from retaliation. Your employer cannot stop you from whistleblowing to the SEC, and if they try to, they are breaking the law.