On April 1, 2015, the Securities and Exchange Commission (“SEC”) announced its first enforcement action against a company for using language in a confidentiality agreement that could prevent or deter whistleblowing activity. Rule 21F-17 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) provides that “no 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.” To date, the SEC has not issued formal guidance as to how to avoid violating Rule 21F-17.
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