Recent SEC Enforcement Action Against KBR Warns Against Restrictive Confidentiality Agreements

April 02, 2015

A recent enforcement action by the U.S. Securities and Exchange Commission aims to protect employees from signing confidentiality agreements that would prevent them from acting as whistleblowers. On April 1, 2015, the SEC announced a settlement with KBR, Inc. (“KBR”) in which KBR will pay a $130,000 civil penalty and agreed to cease and desist from any future violations of SEC Rules, while not admitting or denying the SEC’s charges. As the first enforcement action of its kind, the SEC has taken an aggressive stance against KBR, one of the country’s largest government contractors. The announcement serves as a warning to companies that efforts to silence potential whistleblowers through restrictive confidentiality agreements will not be tolerated by the SEC. The ruling underscores the need to protect whistleblowers, and therefore, the SEC’s ruling is likely to have a significant effect on employers’ historical use of restrictive confidentiality agreements. This OnPoint by our Securities Enforcement practice details the enforcement action, what companies can do, and how we can help.

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