Recent Whistleblower Enforcement Actions Highlight SEC Focus On Employee Agreements

In September, the U.S. Securities and Exchange Commission (the "SEC") announced the settlement of three enforcement actions for violations of SEC whistleblower protection laws. In the actions, the SEC asserted that the companies – both public and private – had violated the SEC whistleblower protection laws in various types of separation, confidentiality, employment and other agreements, and imposed penalties of up to $10 million. The recent actions are particularly notable because certain of the companies had taken some action to comply with the rule by updating agreements and/or notifying employees of their rights under the rule, but the SEC found the actions to be incomplete or inconsistent. The actions also emphasize the importance of company remedial actions as a potential means to minimize penalties. Companies are advised to review their existing agreements to confirm whether action is needed to comply with the SEC rules.