Muzzling the Corporate Whistle-Blower?

A recent Wall Street Journal article (subscription required) describes a growing concern that companies are crafting documentation language that could impede employees from telling the government about wrongdoing at the company. In some cases, firms reportedly require employees to agree to forgo any benefit from government probes, effectively removing financial incentive for whistle-blowers.

The U.S. Securities and Exchange Commission (SEC) has heard this concern and is asking firms to turn over documents since the Dodd-Frank Act went into effect in 2010. The SEC is requesting:

  • Lists of terminated employees
  • All nondisclosure agreements & confidentiality agreements
  • Every severance agreement & settlement agreement companies entered into with employees
  • All documents related to corporate confidentiality training
  • All documents referring to or related to whistle-blowing

The SEC doesn’t appear to be taking these concerns lightly. To what extent will firms voluntarily comply and release these documents to the SEC? I’ll be interested to hear how it goes.

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A member of BKD’s Forensics & Valuation Services division, Julia provides forensic accounting, fraud investigation and litigation support services. Her 14 years of public accounting experience include audit, tax, due diligence, business valuation and Sarbanes-Oxley internal controls documentation.

Julia’s forensic investigative experience includes fraud investigations for clients ranging from small private companies to large health care systems. Her reports are tailored to the end user, including law enforcement, senior management, opposing counsel and insurance agencies.

Julia Mast – who has written posts on BKD Forensics.


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