FINRA Arbitration Agreements Cannot Prevent SEC Whistleblowers
from Communicating with the SEC
FINRA has issued a Regulatory Notice stating that settlement
agreements, discovery stipulations, and other confidentiality
agreements made during a FINRA arbitration proceeding cannot
“prohibit or restrict a customer or any other person
from communicating with the Securities and Exchange Commission
(SEC) … regarding a possible securities law
violation.” This statement is set forth in
FINRA Regulatory Notice 14-40
(October 2014).
Notice 14-40 means that companies cannot use confidentiality
agreements in FINRA arbitrations to prevent potential SEC
whistleblowers from participating in the SEC whistleblower
award program.
Notice 14-40 states that “For example, notwithstanding a
confidentiality provision in a settlement agreement, the
customer or any other person may, at any time …
communicate directly with SEC staff regarding a possible
securities law violation.”
Furthermore, the Notice requires that confidentiality
agreements inform customers or others that they are
specifically allowed to communicate with the SEC:
“Confidentiality provisions in settlement agreements
should be written to expressly authorize, without restriction
or condition, a customer or other person to initiate direct
communications with, or respond to any inquiry from, FINRA or
other regulatory authorities.”
Notice 14-40 explicitly reminds firms that using
confidentiality provisions in arbitration discovery
stipulations or settlement agreements that prohibit or
restrict someone’s ability to report a fraud to the SEC
or another regulatory authority may result in FINRA bringing
disciplinary proceedings against them.
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About the Pickholz Law Offices LLC
The Pickholz Law Offices LLC is a law firm that focuses on
representing clients involved with investigations conducted by
the U.S. Securities and Exchange Commission, FINRA, and other
securities regulators.
The Pickholz Law Offices has represented employees, officers,
and others in SEC whistleblower cases involving financial
institutions and public companies listed in the Fortune Top
10, Top 20, Top 50, Top 100, Top 500, and the Forbes Global
2000. We were the first law firm ever to win an SEC
whistleblower award for a client on appeal to the full
Commission in Washington. Inside Counsel magazine named this
achievement one of the five key events of the SEC
whistleblower program. Examples of the
Firm’s SEC whistleblower cases are available here.
In addition to representing SEC whistleblowers, since 1995 the
Firm’s founder, Jason R. Pickholz, has also represented many
clients in securities enforcement investigations conducted by
the SEC, FINRA, the U.S. Department of Justice and US
Attorney’s Offices, State authorities, and more. Examples of
some of the many
securities enforcement cases that Mr. Pickholz has been
involved with are available here.
You can see what actual clients have had to say about The
Pickholz Law Offices by going to the
Client Reviews page on our website or by clicking here.
How to Contact the Pickholz Law Offices LLC
If you would like to speak with a securities lawyer or SEC
whistleblower attorney, please feel free to call Jason R.
Pickholz at 347-746-1222.
The Pickholz Law Offices remains open and will be fully
operational through teleworking while we all grapple with this
terrible pandemic. We hope that all of our clients,
colleagues, friends, and their families remain safe and
healthy. Our thoughts and prayers go out to everyone who has
been affected by COVID-19.
The Pickholz Law Offices represents U.S. and international clients in securities and white collar cases. The Firm has helped whistleblowers report frauds to the SEC, CFTC, and IRS, and has defended clients in investigations by the SEC, CFTC, DOJ, FINRA, and other financial and securities enforcement regulators.
The Firm’s founder, Jason Pickholz, is the author of the two-volume book Securities Crimes, has appeared on tv and radio, and has taught continuing legal education courses. A former BigLaw partner, he has been representing clients in financial and securities fraud cases since 1995. In recognition of his many achievements, Mr. Pickholz was elected by his legal peers to be a Fellow of The New York Bar Foundation, an honor limited to just 1% of all attorneys in the New York State Bar Association.
Mr. Pickholz has been counsel in many high-profile cases. He was the first attorney ever to win an SEC whistleblower award on appeal to the Commission, which Inside Counsel magazine called one of the five key events in the history of the SEC whistleblower program. On the defense side, Mr. Pickholz has defended clients in the SEC’s COVID-19 investigations, the CFTC’s cryptocurrency cases, and a former US Senator, among others.
If you want to speak with a CFTC, IRS, or SEC whistleblower lawyer, or with a white collar defense lawyer, you can call the Firm at 347-746-1222.
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