Constantine Cannon whistleblower partner Gordon Schnell was published in the American Banker on the Consumer Financial Protection Bureau (CFPB) becoming the latest agency to take affirmative steps to clear the path for whistleblowers. This comes from the agency’s July 24 press release and circular warning companies away from using broad nondisclosure agreements to prevent employees from becoming whistleblowers.

As Schnell explains, “the CFPB joins the many other government agencies concerned with protecting employees’ ability to blow the whistle.” He points to the Securities and Exchange Commission (SEC) as the most aggressive on this front with numerous actions to enforce the agency’s Whistleblower Protection Rule, which prohibits companies from impeding whistleblowers through confidentiality agreements or otherwise. This includes actions against JP Morgan Securities, Monolith Resources, D.E. Shaw & Co., and CBRE, Inc. in the last year alone.

Schnell also points to the recent action by the Commodity Futures Trading Commission (CFTC) against Trafigura Trading for violating the CFTC’s analogous whistleblower protection rule through employment agreements with broad nondisclosure provisions.  He further points to the guidance the Federal Trade Commission’s (FTC) Bureau of Competition issued last year cautioning against confidentiality agreements that get in the way of whistleblowers.

Schnell stresses that “[w]ith rapid advances in technology allowing for ever-more sophisticated methods of committing fraud and other wrongdoing, whistleblowers are becoming more important than ever.” He looks to artificial intelligence as a prime example, noting the critical role whistleblowers will play in protecting us from “a rash of potential misuse and corruption of this groundbreaking tool.”

Schnell concludes that with this ever-expanding agency recognition of the critical role of whistleblowers, companies should be extra cautious in how they treat whistleblowers going forward. “Otherwise, they may find themselves in the crosshairs of this newly charged campaign to go after companies that try to silence whistleblowers.”

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