Whistleblower Retaliation

June 24, 2024

Whistleblower Protections

Protections Against Retaliation
Protections Against Actions Taken to Impede Reporting
Frequently Asked Questions
SEC Enforcement Actions
Whistleblower Protection News
Internal Reporting Amicus Briefs

Protections Against Retaliation

The Dodd-Frank Wall Street Reform and Consumer Protection Act expanded the protections for whistleblowers and broadened the prohibitions against retaliation. Following the passage of Dodd-Frank, the SEC implemented rules that enabled the SEC to take legal action against employers who have retaliated against whistleblowers. This generally means that employers may not discharge, demote, suspend, harass, or in any way discriminate against an employee in the terms and conditions of employment who has reported conduct to the Commission that the employee reasonably believed violated the federal securities laws.

Recent amendments to the whistleblower program’s rules also require individuals to report information about possible securities laws violations to the Commission “in writing” before experiencing retaliation to qualify for the retaliation protection under Section 21F.

Dodd-Frank also created a private right of action that gives whistleblowers the right to file a retaliation complaint in federal court. This means that if you are a whistleblower who has reported a possible securities law violation to the Commission in writing and believe you have been retaliated against because of your report, you may be able to sue your employer in federal court and seek double back pay (with interest), reinstatement, reasonable attorneys’ fees, and reimbursement for certain costs in connection with the litigation.

You can find more information about the Dodd-Frank whistleblower protections, including the time period by which a whistleblower must file a private action in federal court, in Section 922 of the Dodd-Frank Act.

Protections Against Actions Taken to Impede Reporting

In addition to protecting whistleblowers who have reported possible securities law violations from retaliation, Commission Rule 21F-17(a) prohibits any person from taking any action to prevent you from contacting the SEC directly to report a possible securities law violation. The Rule states “[n]o person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement…with respect to such communications.”

Unlike the anti-retaliation protections, the protections against actions taken to impede reporting possible securities law violations are not limited to the employee-employer context. Only the SEC, however, may file an enforcement action for a violation of Rule 21F-17(a).

Please let us know by submitting a tip if you believe that someone has taken any action to prevent you from communicating with the SEC concerning a possible securities law violation.

Frequently Asked Questions

The answers to these frequently asked questions represent the views of the staff of the Office of the Whistleblower. They are not rules, regulations or statements of the Securities and Exchange Commission. Further, the Commission has neither approved nor disapproved them. These FAQs provide short general summaries of certain key features of the SEC Whistleblower Program and do not purport to be a complete or comprehensive discussion of all of its provisions. For detailed information about the program, including eligibility requirements and certain limitations that apply, please see Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Amended Rules implementing the program.

What if I am asked to sign an agreement, such as a severance agreement, non-disclosure agreement, or confidentiality agreement that prevents me from reporting my concerns directly to the SEC?

Such an agreement may violate the federal securities laws. With the enactment of Section 21F of the Exchange Act, Congress sought to encourage whistleblowers to report possible securities law violations by providing, among other things, financial incentives and various confidentiality protections.

To fulfill this Congressional purpose, the Commission adopted Rule 21F-17(a), which provides that “[n]o person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing or threatening to enforce a confidentiality agreement…with respect to such communications.”

If you have been asked to sign such an agreement, or have already signed such an agreement, and want to understand how the whistleblower rules apply to your situation, we encourage you to consult with an attorney. Although the Commission staff cannot provide you with legal advice, you may also send us a copy of your agreement, if you so choose, by submitting it as a tip either through the SEC’s online TCR portal, by fax (703-813-9322), or by mail at the address listed on OWB’s website.

What if there are documents other than severance agreements, non-disclosure agreements, or confidentiality agreements that may prevent me from reporting possible securities law violations to the SEC?

Rule 21F-17 violations are not limited to language contained in severance agreements, non-disclosure agreements, or confidentiality agreements. Improperly restrictive language included in a company’s internal policies, procedures, and guidance, such as codes of conduct, compliance manuals, training materials, and other such documents may also violate Rule 21F-17(a).

What if there is a provision in an agreement that allows me to report possible securities law violations to the SEC, but then another provision in the same agreement seems to limit my ability to report to the SEC? What if one company document allows me to report a possible securities law violation to the SEC, but another document seems to limit my ability to report to the SEC?

It may be a violation of Rule 21F-17 if an agreement contains provisions that allow for reporting of possible violations to the SEC while also placing limitations on that reporting. For example, the SEC charged a violation of Rule 21F-17 where a company included language in its separation agreements that stated that nothing prevented the employee from reporting to a government or regulatory agency, but also required the employee to provide notice if they received a request from an administrative agency in connection with a report or complaint. In the Matter of Activision Blizzard, Inc., File No. 3-21294 (Feb. 3, 2023).

It may also be a violation of Rule 21F-17 if internal policies on reporting possible violations conflict with other policies, procedures or agreements. For example, the SEC charged a violation of Rule 21F-17(a) where a company’s compliance manual and compliance training material specifically prohibited employees from initiating contact with any regulator without prior approval from the legal or compliance department, while the applicable code of conduct permitted employees to report to the government about possible violations of law. The company’s compliance manual also stated that in circumstances where policies or procedures may conflict, the more restrictive policy applies. In the Matter of Guggenheim Securities, LLC, File No. 3-20370 (June 23, 2021).

If you are unsure if an agreement you have signed or some other document impedes your ability to report to the SEC, we encourage you to consult with an attorney.

Does Rule 21F-17 only address actions taken to impede reporting of possible securities law violations in the context of an employer-employee relationship?

No. The rule against impeding reporting of possible securities law violations is not limited to protecting individuals in an employee-employer relationship. The rule prohibits any person or entity from taking any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation.

In addition to actions brought against employers for violations of the rule, the SEC has also brought actions charging violations of Rule 21F-17 in connection with agreements presented to customers and investors. In an action against a private company and its founder, the SEC charged violations of Rule 21F-17 where the defendants attempted to resolve investor allegations of wrongdoing against them by conditioning the return of investor money on the investors signing agreements prohibiting them from reporting potential securities law violations to law enforcement, including the SEC. The defendants even sued two investors whom they believed breached one of the illegal agreements by communicating with the SEC. SEC v. Collector's Coffee, Inc., et al., 19-cv-04355 (SDNY, Nov. 4, 2019). In SEC v. Leon Vaccarelli, et al., the Commission charged that a broker representative/investment adviser and his company violated Rule 21F-17 when they, as part of an agreement to return a customer’s money, required the customer to sign an agreement that she would not discuss the matter with FINRA or the SEC. SEC v. Leon Vaccarelli, et al., 17-cv-01471 (D. Conn., Aug. 31, 2017).

Does Rule 21F-17 only address the use of restrictive agreements, policies, and procedures?

No. While many of the actions brought by the SEC charging violations of Rule 21F-17(a) have involved the use of various types of agreements and other documents, the SEC also has charged violations of Rule 21F-17(a) where an individual’s conduct or actions impeded or attempted to impede another from reporting to the SEC. For example, the SEC charged a violation of Rule 21F-17(a) where a company president, during an ongoing Commission investigation, threatened to fire employees who spoke to the SEC. SEC v. Kenneth W. Crumbley, Jr., et al., 16-cv-00172 (N.D. Tex., Jan 21, 2016). The SEC also charged a violation of Rule 21F-17(a) against a company co-founder who, after an employee raised concerns that the company was overstating its number of paying customers, removed the employee’s access to company computer systems. The employee’s saved personal passwords were then used to access his Hotmail, Dropbox, Facebook, Glassdoor, and Google accounts on his company-issued laptop. In the Matter of David Hansen, File No. 3-20820 (Apr. 12, 2022). The SEC also amended the complaint it filed in an action against the company’s CEO in December 2022 to include both impeding and retaliation charges. The amended complaint alleges that in August 2019, the CEO limited an employee's access to the company's systems in an attempt to impede the employee from communicating directly with the SEC staff, and ultimately retaliated against the employee by firing him. SEC v. Adam Rogas, 20-cv-07628 (S.D.N.Y. Sep. 17, 2020).

Do I actually have to be impeded from reporting for there to be a violation of Rule 21F-17(a)?

No. Actions to impede an individual’s direct communications with SEC staff about a possible securities law violation, even if unsuccessful, undermine the statutory purpose of encouraging individuals to report to the SEC, and may constitute a violation of Rule 21F-17.

Do I have to provide notice to my employer or any other company before I report to the SEC?

The Congressional purpose underlying Section 21F of the Exchange Act is to encourage whistleblowers to report possible violations of the securities laws by providing financial incentives, prohibiting employment related retaliation, and providing various confidentiality protections.

Prior Commission actions have charged companies for prohibiting individuals from providing information or documents to, or communicating with, Commission staff about possible securities law violations without first providing notice to or obtaining approval from the company. See In the Matter of The Brink's Company, File No. 3-20904 (June 22, 2022); SEC v. GPB Capital Holdings, LLC, et al., File No. 3-20904 (June 22, 2022).

Imposing limitations on an individual’s ability to receive a whistleblower award also may violate Rule 21F-17. See In the Matter of Homestreet, Inc., et al., File No. 3-17801 (Jan. 19, 2017); In the Matter of Health Net, Inc., File No. 3-17396 (Aug. 16, 2016); In the Matter of BlueLinx Holdings Inc., File No. 3-17371 (Aug. 10, 2016).

What rights do I have if my employer fires me or retaliates against me for submitting information to the SEC?

You may bring an action in federal court within a certain time period if your employer violates the anti-retaliation provisions of Dodd-Frank. If you are successful in court, you may be entitled to reinstatement, double back pay, litigation costs, expert witness fees, and attorneys’ fees.

The anti-retaliation protections generally apply to employees who report information regarding possible violations of the federal securities laws. Among other things, these protections provide that an employer may not discharge, demote, suspend, threaten, harass, or in any way discriminate against a whistleblower in the terms or conditions of employment for:

Providing information to the SEC under the whistleblower program, or
Initiating, testifying in, or assisting the SEC in any investigation or proceeding

In addition, the SEC may also bring an enforcement action against a company that violates the anti-retaliation provisions of Dodd-Frank.

You may also be able to file a retaliation complaint in federal court under Section 806 of the Sarbanes-Oxley Act of 2002 (“SOX”). You can find information about your rights and protections under SOX on the Department of Labor’s whistleblower website.

I’m considering reporting internally to my company. Will I still be eligible for the anti-retaliation protections under Dodd-Frank?

With the passage of Dodd-Frank, Congress amended the Exchange Act to add Section 21F, which established a series of new incentives and protections for individuals to report possible violations of the federal securities laws, including enhanced employment retaliation protections.

On February 21, 2018, the United States Supreme Court issued an opinion in Digital Realty Trust, Inc. v. Somers stating that the Dodd-Frank anti-retaliation provisions only extend to those persons who provide information relating to a violation of the securities laws to the SEC. In September 2020, the Commission adopted amendments to the rule governing the whistleblower program that included a new definition of “whistleblower” to conform to the Supreme Court’s holding in Digital Realty. For purposes of retaliation protection, an individual is required to have reported information about possible securities laws violations to the Commission “in writing” before experiencing the retaliation. To understand how this may affect you, we encourage you to consult with an attorney.

If you choose to report a possible securities law violation internally to your company, you also can report that information directly to the SEC either before or at the same time as reporting internally. If you have already reported to the company, you can still report to the Commission now.

Regardless of whether the anti-retaliation protections extend to you, you may remain eligible for an award under our whistleblower award program. We encourage you to provide information about potential securities law violations to the SEC by submitting a tip. To be eligible for an award, you must file a Form TCR within 30 days of submitting your information or within 30 days of learning of the TCR filing requirement. If you are represented by counsel, you are on constructive notice of the TCR filing requirement.

Do the anti-retaliation protections apply overseas?

Dodd-Frank does not specifically state whether, or to what extent, the anti-retaliation protections apply to individuals or conduct outside of the United States. To understand if the anti-retaliation protections may apply to you, we encourage you to consult with an attorney. We encourage you to submit a tip to the SEC if you believe you have been retaliated against for reporting potential securities law violations even if the retaliation occurred outside of the United States.

Regardless of whether the Dodd-Frank anti-retaliation protections extend to you, you may remain eligible for an award under our whistleblower award program. You do not need to reside or work in the United States to be eligible for an award under our whistleblower award program.