SEC Whistleblower ProtectionsBack in 2010, the U.S. Congress created the first ever comprehensive whistleblower program for the Securities and Exchange Commission (“SEC”).  In doing so, Congress clearly understood that there are two equally important parts to a whistleblower program:  (1) significant SEC whistleblower awards, and (2) vigorous SEC whistleblower protections.

The SEC Whistleblower Program Has “Protection” In Its Name

Congress recognized “that whistleblowers often face the difficult choice between” blowing the whistle to the SEC and remaining silent to protect themselves, their jobs, and their families.  (See the Report of the U.S. Senate Committee on Banking, Housing, and Urban Affairs entitled “The Restoring American Financial Stability Act of 2010” (April 30, 2010), in the section titled “Section 922. Whistleblower protection”.)

As explained by Congress, the SEC whistleblower program “provides for various protections for whistleblowers, specifically barring employers to discharge, demote, suspend, threaten, harass directly or indirectly, or in any other manner discriminate.”  (See the Report in the section titled “Section 922. Whistleblower protection”.)

To emphasize the importance of these SEC whistleblower protections, Congress named the program “Securities Whistleblower Incentives and Protection”.  (15 U.S.C. § 78u-6) (italics added.)

SEC Whistleblower Protections: Anonymity and Confidentiality

To protect SEC whistleblowers, Congress gave them certain rights.  One is the right to file their information with the SEC anonymously.  However, to file anonymously, the rules require a whistleblower to be represented by an SEC whistleblower lawyer.  (SEC Rule 21F-7(b)(1).)

Every SEC whistleblower also has a right to confidentiality.  Confidentiality is different from anonymity.  When proceeding confidentially, the SEC knows the whistleblower’s identity, but it cannot reveal the whistleblower’s identity to anyone outside of the SEC, with certain exceptions.

SEC Actions To Protect Whistleblowers

The SEC has brought several cases against public companies or financial institutions that harassed, intimidated, or retaliated against whistleblowers.  The SEC has brought its own cases against companies that tried to prevent whistleblowers from providing information to the SEC.  It has also brought enforcement actions against companies that tried to force whistleblowers to give up their rights to receive SEC whistleblower awards.

In some of these cases, the SEC fined the companies millions of dollars.  In many of those cases, the SEC forced the companies to affirmatively inform their employees that they have a right to provide information to the SEC without telling the company that they are doing so.  In most if not all of those cases, the SEC made the companies change their whistleblower practices.

Whether the SEC brings its own action to enforce SEC whistleblower protections in any particular case is in the SEC’s discretion.  But this is not the only recourse that SEC whistleblowers have.

SEC Whistleblowers Who Have Been Retaliated Against Can Bring Their Own Lawsuits

The SEC whistleblower statute has a section called “Protection of whistleblowers”.  The first part of that section is called “Prohibition against retaliation”.  (15 U.S.C. § 78u-6(h).)

The statute says that “No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act” that the SEC whistleblower does in connection with certain things.  One of those things is providing information to the SEC in accordance with the SEC whistleblower statute.

If an employee reports his or her information to the SEC in accordance with the SEC whistleblower rules, and is then retaliated against by his or her employer, the Dodd-Frank Act gives that employee the right to bring his or her own lawsuit against the employer in a U.S. district court.

Additional Information About SEC Whistleblower Protections

For more information about some of the available SEC whistleblower protections, click on any of the links below: