Deputy Chief of SEC Whistleblower Office Discusses Contractual Limitations on Reporting

Jane Norberg, the Deputy Chief of the Securities and Exchange Commission (“SEC”) Office of the Whistleblower, made comments at a panel at the 2013 Compliance Week conference that echoed sentiments expressed by Katz Banks Kumin partners David J. Marshall and Debra S. Katz in a letter they wrote to the SEC in early May.  Specifically, Norberg stated that the SEC is currently focused on anti-retaliation and “interference with communications.”

According to Compliance Week, Norberg explained that the SEC was aware of companies that had employee agreements in place with language that would arguably prohibit or discourage employees from providing confidential information to federal regulators.  As Marshall and Katz explain in their letter to the SEC, many employers have sought to include clauses in employment or severance contracts which either: (a) force the employee to renounce the right to any award the SEC might provide as a result of the employee’s information; or (b) require the employee to disclose any communications she might have with a government agency and to cooperate with the company in the event of an investigation.

In their letter to the SEC, Marshall and Katz called on the SEC to enact regulations to put an end to efforts by corporations to impose contractual limitations on the ability of whistleblowers to submit information to the SEC.  They and other whistleblower advocates were buoyed by Norberg’s comments that under Rule 21F-17 of Dodd-Frank, interference with a whistleblower's communications is prohibited and that the agency has the right under Dodd-Frank to bring an enforcement action against a company for violations of the Rule.  Norberg further stated that the SEC is actively trying to obtain examples of employee agreements that violate the rule and is “looking hard” at the issue.