What You Need to Know About the New SEC and Dodd Frank Whistleblower Protection-Part 3

Posted on November 22nd, 2017 at 9:58 AM
What You Need to Know About the New SEC and Dodd Frank Whistleblower Protection-Part 3

From the Desk of Jim Eccleston at Eccleston Law LLC:

This is the third in a series of posts discussing whistleblower protection. This post will cover the issue of whether a company can enforce a confidentiality agreement executed by an employee even after that employee has filed a whistleblower claim under Dodd-Frank.

SEC Rule, 17 C.F.R. § 240.217(a) prohibits employers from doing anything to impede an individual from whistleblowing to the SEC. However, many employers require that their employees sign boilerplate confidentiality agreements with strict requirements before they can join the company. Those companies likely will take legal action if an employee violates its confidentiality agreement. Other companies require their employees to sign confidentiality provisions that limit the ability to file a successful whistblower claim, either by requiring the employee to report to the company before filing anything with the SEC, or by requiring the employee to sign a waiver restraining his or her ability to collect any SEC award.

However, the SEC recently has taken action against several companies that imposed fines against their employees for filing whistleblower claims, as described in SEC Press Release No. 2017-14, “BlackRock Charged with Removing Whistleblower Incentives in Separation Agreements” (Jan. 17, 2017), as well as SEC Press Release No. 2017-24, “Financial Company Charged With Improper Accounting and Impeding Whistleblowers” (Jan. 19, 2017).

Nevertheless, it is still important for whistleblowers to seek legal counsel. Even though a confidentiality agreement violates certain SEC Rules, the contract is not invalidated and an employee still may be sued for breach of contract. (See JDS Uniphase Corp. v. Jennings, 473 F. Supp. 2d 697 (E.D. Va. 2007).

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial advisors including Broker Litigation & ArbitrationStrategic Consulting ServicesRegulatory  MattersTransition Contract Review, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston Law, Eccleston, James Eccleston, Eccleston Law LLC

Return to Archive

TESTIMONIALS

Previous
Next

Thank you for your professional assistance with this matter. You are very good at what you do.

John T.

LATEST NEWS AND ARTICLES

August 16, 2022
SEC Warns Financial Advisory Firms Regarding Conflicts of Interest Tied to Compensation

The Securities and Exchange Commission (SEC) has sent a warning to financial advisory firms that they must go above and beyond solely disclosing conflicts of interest related to employee pay programs in order to avoid regulatory scrutiny. 

August 15, 2022
FINRA Proposal Would Permit Private Homes to Serve as Non-Branch Offices

The Financial Industry Regulatory Authority (FINRA) has filed proposed changes to FINRA Rule 3110 with the Securities and Exchange Commission (SEC).

August 12, 2022
SEC Charges J.P. Morgan, UBS, and TradeStation for Deficiencies Pertaining to the Prevention of Customer Identify Theft

The Securities and Exchange Commission (SEC) has charged J.P. Morgan Securities, UBS Financial Services, and TradeStation Securities over deficiencies in their programs designed to prevent client identify theft, which violates the SEC’s Identity Theft Red Flags Rule, or Regulation S-ID.