SEC Brings First Action on Whistleblower ‘Pre-taliation’

Today, the SEC announced that it that it has filed its “first enforcement action against a company for using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process.” The SEC filed today’s settled administrative proceeding against KBR, a technology and engineering firm.

The SEC has warned for some time now that it views companies’ attempts to potentially intimidate employees from coming forward as whistleblowers through confidentiality agreements as a form of retaliation – or “pre-taliation,” as the SEC’s Sean McKessy has dubbed it. McKessy, Chief of the SEC’s Office of the Whistleblower, stated last year that the SEC viewed such conduct as unlawful under the Dodd-Frank’s whistleblower rules, and that his office was “actively looking for examples of confidentiality agreements, separation agreements, [and] employee agreements” that condition benefits on not reporting activities to regulators such as the SEC.