Thomas P. Gies

As recently reported in the Wall Street Journal (subscription required), the SEC has sent information requests to several publicly-traded companies.  The letters demand production of the firms’ non-disclosure agreements, employment agreements, severance and release agreements, and other related documents.  The requests allegedly also seek copies of any other documents that attempt to restrict the ability of employees or former employees to participate in any recovery or settlement they would otherwise be entitled to under the Dodd-Frank Act.  The SEC is also reportedly seeking lists of all employees who have been terminated over the last five years.

The SEC’s letters follow on the 2014 edition of its annual report on its whistleblower program in which the agency stated that it was “working to identify employee confidentiality, severance, and other kinds of agreements that may interfere with an employee’s ability to report potential wrongdoing to the SEC.”

The SEC’s specific intentions are not yet public.  The SEC takes the position that employees cannot waive a financial recovery associated with a Dodd Frank investigation.  The requests may signal a decision by the SEC to become more aggressive in addressing circumstances in which some allege that companies try to muzzle whistleblowers.   Such an initiative could well involve an SEC decision to police standard confidentiality restrictions imposed by employers for a variety of business purposes, including protection of trade secrets and insuring the severance payments are kept confidential.  Additional insight on this issue is available here.