House Dems: SEC Should Monitor Confidentiality Agreements

By Rob Tricchinelli

Oct. 27 — A group of House Democrats asked the SEC Oct. 27 to ensure that its whistle-blower office is carefully monitoring whether private employers' confidentiality agreements violate federal laws.

“[W]e are concerned about reports that some corporate practices may deter whistleblowers from reporting violations of the securities laws,” a letter from lawmakers to Securities and Exchange Commission Chairman Mary Jo White said.

The letter was signed by eight House Democrats from the Financial Services and Oversight committees, including ranking Reps. Maxine Waters (Calif.) and Elijah Cummings (Md.).

“[P]reemptive legal maneuvering to silence prospective whistleblowers and retaliation against known whistleblowers undermine the continued success of the SEC's Whistleblower Program and its crucial role in protecting investors,” they said.

In March, the SEC's whistle-blower chief Sean McKessy said the agency is “actively looking out” for employer confidentiality agreements that violate federal laws. Kara Brockmeyer, head of the SEC Enforcement Division's Foreign Corrupt Practices Act section, also said at the time that the SEC would take a “hard line” toward those agreements.

SEC Rule 21F-17, cited in the letter, provides that no agreement between an employer and employee may “impede an individual from communicating directly with the commission staff about a possible securities law violation.”

The other signers of the letter were Reps. Gwen Moore (D-Wis.), Jackie Speier (D-Calif.), Keith Ellison (D-Minn.), Tammy Duckworth (D-Ill.), Stephen Lynch (D-Mass.) and Matt Cartwright (D-Pa.).

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

The full letter is available at http://democrats.financialservices.house.gov/FinancialSvcsDemMedia/file/001%20Maxine%20Waters%20letters/2014_10_27%20Whistleblower%20Protection%20Letter.pdf.