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Can a Whistleblower Give Company Documents to the SEC?

A question that a client may ask his or her SEC whistleblower law firm is whether he or she is allowed to turn over company documents to the SEC.  This can create a dilemma for an SEC whistleblower lawyer.

One reason for this dilemma is that the traditional corporate law and employment law view has long been that corporate documents belong to the company.  Therefore, an employee can get into trouble for taking them without permission.

However, in the SEC whistleblower context, the Dodd-Frank Act and the SEC Rules allow whistleblowers to turn over company information to the SEC.  In practice, the SEC has interpreted “information” to include documents.  These are neither new nor unique concepts in the law enforcement context.

There are, however, important caveats that an SEC whistleblower and his or her SEC whistleblower lawyer should keep in mind.

The Dodd-Frank Act

Section 922(h) of the Dodd-Frank Act prohibits an employer from retaliating against an SEC whistleblower for “providing information to the [Securities and Exchange] Commission…”  (§ 922(h)(1)(A)(i).)

The Dodd-Frank Act also prohibits retaliation for “initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information…”  (§ 922(h)(1)(A)(ii).)

SEC Rules

The SEC Rules set forth the SEC’s interpretation of Dodd-Frank Act Section 922(h).  SEC Rule 21F-17(a) 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 …”  The SEC has brought its own enforcement actions against companies for retaliating against whistleblowers who provided information to it.  (See my prior post here.)

“Retaliation” includes enforcing or threatening to enforce confidentiality or other agreements that would impede or prevent someone from providing information about securities law violations to the SEC.  The SEC has brought actions against companies that attempted to chill whistleblowers through terms in confidentiality, severance, and separation agreements.  (See my earlier post here.)

U.S. Congressmen, Federal courts, and FINRA have all taken similar positions to the SEC.  (See my post here.)

In practice, the SEC interprets “information” as including documents.  By way of example, the SEC’s TCR portal for the on-line submission of tips has an automated function that can be used by whistleblowers and their counsel to upload documents directly to the SEC.

Criminal Law

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Some SEC whistleblowers and SEC whistleblower lawyers may not realize that even before the Dodd-Frank Act of 2010, it was a federal crime to retaliate against “any person … for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense”.  (18 U.S.C. § 1513(e).)   The punishment for violating this law can be a fine, up to 10 years in jail, or both.

The Defend Trade Secrets Act of 2016

Because the Defend Trade Secrets Act (DTSA) is so new, many SEC whistleblowers and SEC whistleblower lawyers are not yet aware of it.  From the DTSA’s name alone, some people may assume that it is an Act designed to help companies protect their information, not to protect whistleblowers who reveal that information.

However, Section 7 of the DTSA is titled “Immunity From Liability For Confidential Disclosure Of A Trade Secret To The Government Or In A Court Filing”.

According to the DTSA, “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in confidence” to a government official “either directly or indirectly, or to an attorney”.  (§§ 7((b)(1) - 7(b)(1)(A)(i).)

Important Caveats for an SEC Whistleblower or SEC Whistleblower Lawyer

The statutes and rules discussed above, and the SEC's practice of accepting documents, seem to allow for a whistleblower to provide information and documents to the SEC pursuant to the SEC whistleblower program.  However, those statutes and rules do not provide carte blanche authority to employees.  They all have certain caveats that are important to keep in mind:

  • The Dodd-Frank Act only protects SEC whistleblowers from retaliation for any “lawful act” done by the whistleblower in providing information to the SEC.  (Dodd-Frank Act, § 922(h)(1)(A).)  This means that the whistleblower cannot commit a crime to obtain documents or evidence.  For example, the Dodd-Frank Act’s anti-retaliation protections will not be available to an employee who illegally hacks into the company’s computer servers, even if the employee then turns that information over to the SEC.
  • SEC Rule 21F-17(a) says that no one can impede an individual from communicating “directly” with the SEC about a possible securities law violation.  This means that an employee may not be protected by this Rule for posting company information on a public website rather than giving it directly to the SEC.
  • Under federal criminal law, 18 U.S.C. § 1513(e) requires that the information turned over to law enforcement officials must be “truthful”.
  • The DTSA specifically states that the disclosure of a trade secret to the government must be “solely for the purpose of reporting or investigating a suspected violation of law”.  (DTSA § 7(b)(1)(A)(ii) (emphasis added.)  For example, if a person discloses a company’s trade secret information in the hope that a government investigation will gain that person some business advantage over the company, that person probably will not have immunity under the DTSA for the disclosure.
  • Based on everything that I have discussed above, it seems likely that a Federal court would rule that it is permissible to provide documents to the SEC pursuant to the SEC whistleblower program.  But to my knowledge, this question has not yet been addressed in a court case involving the SEC whistleblower program.

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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.

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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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