Proskauer Whistleblower Defense

Category Archives: Rule 21F-17

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SDNY: Confidentiality Agreement Impeded Investors from Whistleblowing

By Steven J. Pearlman, Pinchos Goldberg and Scott Tan on Posted in Rule 21F-17, SEC
On November 17, 2021, the U.S. District Court for the Southern District of New York held that a company and its CEO violated Rule 21F-17 of the Exchange Act by entering into confidentiality agreements with investors that prohibited communications with the SEC, and subsequently attempting to enforce those agreements.  SEC v. Collectors Coffee Inc., No. … Continue Reading

SEC Alleges Employer’s Compliance Manual Violates Rule 21F-17

By Steven J. Pearlman, Pinchos Goldberg and Scott Tan on Posted in Rule 21F-17, SEC
On June 23, 2021, the SEC announced that Guggenheim Securities, LLC (“Company”) agreed to settle charges that it violated Rule 21F-17 by including language in its compliance manual and training materials that allegedly prohibited employees from contacting regulators without prior Company approval.  Without admitting or denying the findings in the SEC’s order, the Company consented … Continue Reading

SDNY: SOX Whistleblower Protections Extend to Investors

By Steven J. Pearlman, Pinchos Goldberg and Thomas B. Fiascone on Posted in Rule 21F-17, SEC
On July 21, 2021, the U.S. District Court for the Southern District of New York held that the whistleblower protections established in SOX are not restricted to employee whistleblowers, but also extend to shareholders.  SEC v. Collector’s Coffee Inc., No. 19-cv-4355. Background As we previously reported, in 2019 the SEC sued online auction portal Collectors … Continue Reading

NLRB Permits Confidentiality Restrictions During Internal Investigations

By Lloyd B. Chinn and Pinchos Goldberg on Posted in Best Practices, Investigations, Rule 21F-17
As reported in Proskauer’s Labor Relations Update blog, the NLRB issued an important opinion on December 17, 2019 relating to employer rules requiring confidentiality from employees during workplace investigations.  Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019). The Board held, in a reversal of the Obama-era Board, that employers may require … Continue Reading

SEC Files Suit Against Company For Allegedly Impeding Investors From Blowing the Whistle

By Steven J. Pearlman and Lexie Reynolds on Posted in Rule 21F-17, SEC
On November 4, 2019, the SEC announced that it had filed an amended complaint against online auction portal Collectors Café and CEO Mykalai Kontilai, alleging Kontilai tried to prevent investors from communicating with the SEC in violation of Rule 21F-17.  The SEC previously charged Collectors Café and Kontilai with fraudulently raising $23 million by making … Continue Reading

SEC Penalizes Company For Severance Language Purportedly Impeding Complaints

By Steven J. Pearlman on Posted in Dodd Frank, Rule 21F-17, SEC
On August 10, 2016, the SEC announced that BlueLinx Holdings Inc. (Company) is settling charges that it violated Rule 21F-17 by requiring outgoing employees to waive whistleblower bounty awards in connection with severance agreements and by using an overly restrictive confidentiality clause.  The Company agreed to pay a penalty of $265,000 and revise its agreements.  … Continue Reading

SEC Announces Enforcement Action Regarding Employee Confidentiality Agreement

By Connie Bertram, Lloyd B. Chinn, Steven J. Pearlman and Harris Mufson on Posted in Rule 21F-17, SEC
On April 1, the Securities and Exchange Commission (SEC) announced its first settlement of an enforcement action under the SEC’s Rule 21F-17, which prohibits any person from taking “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 … Continue Reading

Watchdogs Petition SEC to Strengthen Prohibitions Against Impeding Complaints to SEC

By Lloyd B. Chinn, Harris Mufson and Rachel Fischer on Posted in Best Practices, Dodd Frank, Rule 21F-17, SEC
On July 18, 2014, a coalition of plaintiff-side lawyers and government watchdog groups proposed ways to strengthen the SEC whistleblower program in two petitions filed with the SEC.  The groups urged the SEC to update Rule 21F-17, which prohibits any action that would “impede” an individual from communicating with the SEC about securities law violations, … Continue Reading
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