Mike Delikat Discusses SEC Probe into Potential Silencing of Whistleblowers

The Wall Street Journal

Mike Delikat, head of Orrick’s Employment Law Practice, recently spoke with The Wall Street Journal regarding the Securities and Exchange Commission’s (SEC) current probe into whether certain companies force their employees to sign agreements that prevent potential whistleblowing. The companies in question must provide the SEC with copies of their nondisclosure agreements and other related contracts. 

According to Mr. Delikat, who also leads Orrick’s whistleblowing task force, these inquiries could result in the SEC requesting that these companies modify their policies and agreement templates in order to bring them in line with Dodd-Frank regulations, which prevent companies from interfering with employees reporting potential violations of securities laws to the agency. 

Mr. Delikat noted that firms are unlikely to resist requests to add clauses clarifying the fact that employees can report to the government, but they may push back against eliminating any provisions that prohibit employees who have settlement agreements with the company from collecting whistleblower bouty payments under Dodd-Frank. These clauses are not common, he said, but companies that use them believe that they are legal and consistent with the approach of some other regulators to the waiver of monetary awards after receiving payments from their employer.​