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Knowing if, when and how to report misconduct can be a confusing proposition. Many prospective whistleblowers worry that employment or secrecy agreements prohibit reporting to the government. In this video, Jordan Thomas explains how to navigate the reporting minefield and why whistleblowers should never fear that agreements with employers bar communications with the government.
When it comes to if and when an employee should report possible securities violations, there are common myths and misunderstandings to clear up. As a preliminary matter, SEC whistleblowers are not required to report internally. In developing the SEC whistleblower program, I believe that we struck the right balance by not requiring internal reporting but incentivizing it with larger monetary awards and other procedural benefits. After all, not all corporate internal reporting systems are created equally and whistleblowers are in the best position to determine if they can safely report potential problems within their organization.
Another common misperception is that employees are not permitted to report possible securities violations to the SEC because of their companies’ confidentiality policies or secrecy agreements that they entered into with their employers. This is simply not true. It is illegal for employers to prevent or discourage their employees from reporting potential wrongdoing to law enforcement or regulatory authorities. I am proud to have served as the co-leader of a coalition of over 250 organizations and more than 2 million citizens that lobbied the SEC to stop these troubling corporate practices. As a result of our collective efforts, in the last two years, the SEC has been aggressively prosecuting employers that have attempted to silence corporate whistleblowers.
And know this: Employers who retaliate against whistleblowers who report possible securities violations internally or externally, will also pay a heavy price. The law is clear. An employer may not directly or indirectly discharge demote suspend threaten harass or in any way discriminate against SEC whistleblowers. If they do, SEC whistleblowers are eligible for reinstatement with equivalent pay, two times back pay with interest, and attorney’s fees. In fact, the SEC has brought several high profile enforcement actions against companies that have retaliated against their employees. The first such case was reported by one of our clients.
At the end of the day, whistleblowers should know that they have a legally protected right to report possible securities violations to the SEC and the SEC will have their back if they do.