SEC Announces First Whistleblower Protection Enforcement Action Involving Restrictive Language in a Confidentiality Agreement

On April 1, the SEC announced its first whistleblower protection enforcement action against a company involving the use of restrictive language in a confidentiality agreement. The SEC charged Houston-based technology and engineering firm KBR, Inc. with violating Rule 21F-17 under the Securities Exchange Act of 1934, which prohibits any person or company from taking any action to impede an individual from communicating directly with the SEC staff about a possible securities-law violation, including enforcing, or threatening to enforce, a confidentiality agreement with respect to such communications. Rule 21F, which became effective on August 12, 2011, was adopted by the SEC to implement the whistleblower provisions of Exchange Act Section 21F, which was added to the Exchange Act in 2010 by the Dodd-Frank Act.

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