Whistleblowing has become a fixture of multiple US regulatory regimes, namely those of the US Commodity Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC). Both entities have deployed programs or rewards to individuals in a bid to help support or streamline investigations.
However several companies are taking no chances with potential whistleblowers, pushing deals that underpin the practice itself from every unfolding.
Regulators have no issue doling out substantial sums to individuals aiding in investigations. This has seen multiple awards in the millions following successful enforcement actions from both the SEC and CFTC in recent months. For its part, the CFTC presently relies on its Whistleblower Program to help aid in investigations.
KVB PRIME: Gateway to the World's MarketsGo to article >>
However, three companies, Wells Fargo, Advanced Micro Devices, and Fifth Third Bank, have in recent years all agreed to settlement deals that would otherwise seek to stifle former employees from speaking out to regulators such that some US lawyers noted that US whistleblower protection laws could be violated.
Such settlements appear to be trained at blocking employees from airing their concerns and contain similarities to those used by other companies that ran afoul of government rules. According to a recent Reuters report, the practice is not an isolated instance, and the three companies were just some of several ongoing corporate settlements reached over the past three years.
Big banks in particular have been slammed for record fines in recent years, due in part to violations from LIBOR and FX rate rigging, to a number of more common fines due to violations in basic functions stipulated by US law. Some companies have opted to take no chances however, and given the recent influx of outgoing or shuffling personnel in the financial services industry, many have struck deals with departing workers that limit the employees’ ability to receive money arising from any government investigations into their former employers.
This practice walks a slippery slope, with the language utilized in such settlements running counter to rules adopted by the SEC in 2011 that generally bars corporate attempts to muzzle whistleblowers. Such whistleblower gag orders could potentially disrupt the entire process of leaking valuable and necessary information, which almost certainly could handicap or delay investigations into companies that were being probed for wrongdoing.
Since 2015, the SEC has brought no less than four cases targeting specific types of so-called whistleblower gag orders, such as confidentiality agreements that bar employees from discussing internal wrongdoing, citing a recent Reuters report.