Workforce Bulletin

On November 14, 2023, the Securities and Exchange Commission (“SEC”) announced its enforcement results for fiscal year 2023, boasting increases in enforcement and financial remedies across all of its programs. The SEC filed a staggering 784 enforcement actions, obtained orders for nearly $5 billion in financial remedies, and distributed nearly $1 billion to harmed investors.

The SEC’s most notable results, however, came from its Whistleblower Program: In fiscal year 2023, the SEC issued whistleblower awards totaling nearly $600 million, the most ever awarded in one ...

Under the Biden Administration, the Securities and Exchange Commission has aggressively enforced its Whistleblower Program.  As we previously reported here and here, the SEC has increased its focus on employers’ agreements or procedures that it contends interfere with employee access to the SEC.  More recently, the SEC has for the first time turned its attention toward employer compliance programs with draconian results for employers whose internal compliance efforts do not pass muster.  Specifically, on February 3, 2023, the SEC announced a dizzying $35 million fine against Activision Blizzard, Inc. (“Activision”), a video game developer, largely for failing to implement an effective compliance system to process and track workplace misconduct complaints.  Activision’s fine also included a violation for including a “Notice Clause” in the separation agreement template that it used between 2016 and 2021.  We discuss each violation below and what this means for SEC-regulated employers going forward.

On January 26, 2022, legislation (“Amendments”) amending and significantly expanding the scope of New York’s whistleblower laws will take effect.

As our previous Insight explained in more detail, the Amendments make it much easier for individuals to bring a retaliation claim under New York Labor Law § 740 (“Section 740”) and increase coverage for workers who allege that they have been retaliated against for reporting suspected employer wrongdoing to include former employees and independent contractors.

The Securities and Exchange Commission’s Whistleblower Program under the Biden administration has picked up where it left off under President Obama, aggressively enforcing Rule 21F-17(a) against employers whose policies may impede employees from communicating with the SEC.  On June 23, 2021, the SEC fined Guggenheim Securities, LLC (“Guggenheim”) for maintaining a policy that it contended impeded potential whistleblowers from communicating with the SEC by requiring employees to obtain permission before reporting securities violations. Even though the SEC was unaware of any instances in which a Guggenheim employee was prevented from reporting a potential securities law violation or in which Guggenheim acted to enforce the policy, the SEC nevertheless found that the company had violated Rule 21F-17(a).

By Jason Kaufman

The Dodd-Frank Act created a comprehensive whistleblowing program by amending the Securities Exchange Act of 1934 to include Section 21F, entitled “Securities Whistleblower Incentives and Protection,” and establishing the “Office of the Whistleblower” to enforce its provisions.  Individuals who voluntarily provide the SEC with original information that leads to a successful SEC enforcement action resulting in monetary sanctions greater than $1 million are entitled to an award of between 10 and 30 percent of the total sanctions collected.  According ...