The Securities and Exchange Commission (SEC) is targeting employment agreements that could impede whistleblowers from reporting potential securities law violations. The SEC's focus on employment agreements is part of a broader effort to protect whistleblowers and encourage them to come forward with information about wrongdoing.

The SEC's whistleblower program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program allows whistleblowers to report potential securities law violations directly to the SEC and to receive financial awards if their information leads to successful enforcement actions.

The SEC's whistleblower rules prohibit employers from retaliating against whistleblowers for reporting potential securities law violations. The rules also prohibit employers from entering into agreements with employees that could impede them from reporting potential violations to the SEC.

The SEC has been targeting employment agreements that contain confidentiality provisions, non-disparagement clauses, and other provisions that could discourage whistleblowers from coming forward with information about wrongdoing. In a recent enforcement action, the SEC charged a company with violating the whistleblower rules by requiring employees to sign confidentiality agreements that prohibited them from disclosing confidential information to the SEC without the company's prior approval.

The SEC's focus on employment agreements is a positive step for whistleblowers. Whistleblowers play a critical role in protecting investors and exposing wrongdoing in the securities industry. The SEC's efforts to protect whistleblowers and encourage them to come forward with information about wrongdoing will help to ensure that the securities markets are fair and efficient.

Here are some tips for employers to ensure that their employment agreements comply with the SEC's whistleblower rules:

  • Do not include any provisions in your employment agreements that could discourage employees from reporting potential securities law violations to the SEC.
  • Make sure that your employees are aware of their rights under the SEC's whistleblower program.
  • Establish a clear and confidential process for employees to report potential securities law violations.
  • Do not retaliate against employees for reporting potential securities law violations.

If you are an employer, it is important to review your employment agreements to make sure that they comply with the SEC's whistleblower rules. If you have any questions about the SEC's whistleblower rules, you should consult with an attorney.