Despite sweeping reform efforts and headline-making consequences of corporate misconduct, the findings make clear that attitudes toward corruption within the industry have not changed for the better. Indeed, nearly half those polled find it likely that their competitors have engaged in misconduct in order to gain an edge in the market. On an individual level, 32 percent of professionals with less than a decade in the business would engage in insider trading if they could get away with it. That’s twice the figure (14 percent) for employees with more than two decades in the industry. What does this mean for the future of the industry and how will it impact the fragile confidence of investors?
We are most concerned by findings relating to the widespread use of secrecy policies and agreements—a full 25 percent of individuals earning $500,000+ per annum have been asking to sign a confidentiality agreement that would prohibit reporting illegal or unethical activities to the authorities. As federal agencies and Congress has made clear, corporate entities cannot obstruct an individual’s fundamental right to freely engage with his or her government.
For more information on our findings, please see the full report here or see select highlights in this infographic.
Yesterday, the SEC announced a landmark enforcement action against engineering giant KBR for its use of confidentiality agreements that required individuals to obtain prior approval from the company’s legal department before discussing matters with outside parties…or face discipline and possible termination. This action sends a powerful message to companies that have sought to silence whistleblowers. Indeed, the proliferation of gag orders is a scourge on corporate culture, a threat to financial reform, if not democracy itself.
We have been at the forefront of advocacy efforts to protect truth tellers and, by extension, encourage open and transparent cultures at organizations across the United States and abroad. Last summer, I addressed the dangers of these gag orders in an article I drafted together with the Government Accountability project for the New York Times Dealbook. The op-ed followed on the heels of our work to assemble a coalition of organizations, which represented millions of citizens, petitioning the SEC to address the issue of silencing and retaliating against employees who speak out against wrongdoing.
In addition to these grassroots efforts, we have also addressed the more substantive issues at play in such employment agreements. In a recent article in the ABA Journal of Labor & Employment Law, the authoritative publication for workplace issues, together with Professor Richard Moberly and fellow attorney Jason Zuckerman, I examine the legality and enforceability of employment agreements that effectively undermine the crucial investor protection efforts established by the Dodd-Frank Act.
We remain steadfast in our belief that in this country, individuals have an unwaivable right to report wrongdoing to the government. And we will continue our work to protect this right and those courageous individuals who stand up to corruption.
The letter echoes concerns that we, along with the Government Accountability Project, first raised in a July Op-Ed in the New York Times DealBook. Along with GAP and 250 other organizations, we have submitted a petition, urging the SEC to hold a series of hearings around the country to discuss the problem of workplace retaliation and explore new ways to increase reporting, internally and externally. It also asks the agency to create an advisory committee on whistleblower reporting and protection; to recommend program improvements and best practices; and engage in appropriate rule-making to clarify and strengthen whistleblower protections. This is a serious issue and we are glad Congress has taken notice of our efforts.
Please feel free to view the petition here - and, as always, don’t hesitate to reach out with any questions or concerns.
In FY 2014, the SEC awarded some $35 million to 9 whistleblowers, including the largest award to date, more than $30 million paid to a whistleblower living in a foreign country. Notably, that award represented less than the 30% maximum allowed under the program—because the whistleblower delayed coming forward to the SEC.
So while we share the agency’s enthusiasm, and salute a record-setting year, we are mindful that our work to educate whistleblowers continues. For more information on who can be a whistleblower and why timing matters in reports to the SEC, please feel free to see this video or to reach out to us directly.
By Jordan A. Thomas and Jennifer D. Larson
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Jordan A. Thomas
SEC Whistleblower Advocate
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