SEC Enforcement Of Whistleblower Protections

The SEC Reaffirmed Its Commitment To Whistleblower Protections In Its 2019 Annual Report

In the U.S. Securities and Exchange Commission’s (“SEC) 2019 Annual Report to Congress (“Annual Report”), the agency repeatedly emphasized its commitment to enforcing whistleblower protections. For background on the SEC’s Annual Reports, and what information they are required to contain about the SEC whistleblower program, click here.

OWB Chief Prioritized Whistleblower Protections

The 2019 Annual Report started off with an introductory Message from the Chief of the SEC’s Office of the Whistleblower (“OWB”). The OWB Chief’s 2019 Message contained a section titled “Retaliation and Agreements to Impede”. In that section, the SEC’s OWB Chief asserted that “Whistleblower protections continue to be a high priority for the Office to ensure that whistleblowers feel comfortable and safe reporting to the SEC without fear of reprisal”.  (Annual Report, p. 2.)

Anti-Retaliation, Communication, And Confidentiality

The main body of the 2019 Annual Report also informed the U.S. Congress about the SEC’s continued commitment to enforcing whistleblower protections. For example, the Annual Report explained that:

OWB continues to view anti-retaliation protections as a high priority to ensure that whistleblowers can report to the Commission without fear of reprisal.  OWB continues to work with investigative staff to identify cases where companies take reprisals for whistleblowing efforts that may be appropriate for enforcement action.  (Annual Report, p. 7.)

According to the Annual Report, the OWB monitors reports of various kinds of agreements, such as confidentiality agreements and severance agreements, and other practices that might violate whistleblower protections by interfering with individuals’ abilities to communicate with the SEC about potential securities frauds and violations.  (Annual Report, p. 7.) Elsewhere the Annual Report stated, “Protecting whistleblower confidentiality is an integral component of the whistleblower program”.  (Annual Report, p. 17.)

An Entire Section Devoted To Whistleblower Protections

The SEC’s 2019 Annual Report had a separate section devoted to whistleblower protections.  The caption of that section was “Preserving Individuals’ Rights To Report To The Commission And Shielding Employees From Retaliation”.  (Annual Report, p. 20.) That section began with a summary of SEC whistleblower protections against retaliation by employers.  As of the end of fiscal year 2019, the SEC had brought three anti-retaliation cases against employers.  (Annual Report, p. 20.) It also described SEC whistleblower rules that prohibit anyone from doing anything to prevent an individual from reporting to or communicating with the SEC about potential securities frauds or violations.  Such actions include “enforcing, or threatening to enforce, a confidentiality agreement … with respect to such communications”.  (Annual Report, p. 20) (ellipsis in original.) When employers or others violate these types of whistleblower protections, the SEC sometimes refers to it as “impeding”. According to the Annual Report, as of fiscal year end 2019, the SEC had brought 11 whistleblower cases against people or companies for “impeding” or similar violations.  (Annual Report, pp. 20-21.) The section concluded with the following declaration:

Retaliation protection remains a key tenet of the whistleblower program.  OWB continues to support enforcement investigations where retaliation occurred after the whistleblower reported securities violations to the Commission and continues to support the enforcement of the whistleblower protections of Exchange Act Rule 21F-17(a).  OWB also continues to work with investigative staff to identify and investigate practices in the use of confidentiality and other kinds of agreements, or engagement in other practices, to interfere with individuals’ abilities to report potential wrongdoing to the Commission.  (Annual Report, p. 21.)

Additional Information

For additional information about the SEC’s 2019 Annual Report and its commitment to enforcing whistleblower protections, click on the links below:

• The SEC’s 2019 Annual Report to Congress.  (External link to the SEC’s website.)
• Article about the SEC’s 2019 Annual Report to Congress.  (Note:  external link to The Pickholz Law Offices website.)
• Article about other cases brought by the SEC to enforce whistleblower protections.  (Note:  external link to The Pickholz Law Offices website.)