Tag: Rule 21F-17(a)

What does it mean to impede a whistleblower’s ability to communicate with the SEC?

Most likely, what comes to mind when you think about companies’ impeding the ability of a whistleblower to communicate with the SEC are allegations of overly ambitious confidentiality provisions in employment agreements or company policies.  Not so in this case. In April, the SEC issued an Order in connection with a settled action charging David Hansen, a co-founder and officer of NS8, Inc., a privately held fraud-detection technology company, with violating the whistleblower protections of the  Exchange Act. The SEC alleged that, after an NS8 employee raised concerns to Hansen about a possible securities law violation, Hansen took action to limit the employee’s access to the company’s IT systems.  The SEC charged that these actions impeded the employee’s ability to communicate with the SEC in violation of Rule 21F-17(a) and imposed a $97,000 civil penalty.  SEC Commissioner Hester Peirce dissented, contending that the SEC’s Order “does not explain what, precisely, Mr. Hansen did to hinder or obstruct direct communication between the NS8 Employee and the Commission.”