The SEC is really getting into this whistleblowing thing: After a slow start, the agency is handing out awards left and right, to the tune of more than $100 million. And while sifting through 14,000 tips—and counting!—may sound dreary, it’s the kind of wild-goose chase that SEC enforcement staffers love. So it’s doesn’t take kindly to companies that, gently or otherwise, seek to discourage their employees from putting the SEC on speed-dial. And it’s not just going to wait for that kind of thing to just come to its attention anymore. Nope: It’s gonna go out and find restrictive employee agreements and severance deals itself, while it’s looking for all of the other bad things you’re doing.
Staff in the Office of Compliance Inspections and Examinations (the “Staff”) is examining registrants’ compliance with key whistleblower provisions arising out of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The Commission has brought several enforcement actions recently charging violations of Rule 21F-17 of the Commission’s whistleblower regulations. The Staff is examining registered investment advisers and registered broker-dealers, reviewing, among other things, compliance manuals, codes of ethics, employment agreements, and severance agreements to determine whether provisions in those documents pertaining to confidentiality of information and reporting of possible securities law violations may raise concerns under Rule 21F-17.
Examining Whistleblower Rule Compliance [SEC National Exam Program Risk Alert]