SEC Risk Alert: OCIE Examines Registrants’ Compliance with Whistleblower Rule

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On October 24, 2016, citing a recent increase in SEC enforcement actions pertaining to Rule 21F-17 of the Securities Exchange Act of 1934 (“Exchange Act”), the SEC issued a National Exam Program Risk Alert regarding examinations of investment advisers’ and broker-dealers’ compliance with the Whistleblower Rule.

Commission examiners have discovered that confidentiality provisions and other agreements contain language that prohibited or chilled current and former employees from communicating with the SEC regarding possible securities law violations.  Under the Exchange Act, Rule 21F-17 states that “no person may take 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 agreement … with respect to such communications.”

In light of this new Risk Alert, firms should review their company manuals and agreements to ensure there are no provisions that could contribute to violations of Rule 21F-17.  Company documents that may be examined by OCIE staff include not only confidentiality agreements, but also compliance manuals, codes of ethics, employment agreements and severance agreements.

To learn how Jacko Law Group can help you review your employee agreements and policies and procedures manuals and their compliance with Whistleblower Rules, please contact us at (619) 298-2880, or email info@jackolg.com. Thank you.

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Filed under Investment Advisers, SEC, Securities and Exchange Commission

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