January 23, 2024

Munger, Tolles & Olson Partner John Berry Discusses Largest-of-Its-Kind SEC Settlement and Increased SEC Enforcement of Whistleblower Protection Laws

Munger, Tolles & Olson partner John Berry was quoted in an article titled “SEC Biggest Whistleblower Penalty Signals Broad Protection Focus,” published by Bloomberg Law.

The article focuses on a recent $18 million settlement between J.P. Morgan and the Securities and Exchange Commission (SEC) for an alleged violation of the SEC’s whistleblower protection laws. The settlement represents the highest paid penalty to resolve standalone cases alleging violations of the SEC’s Rule 21F-17, which prohibits companies from using confidentiality agreements, or any other means, to impede people from communicating with agencies about potential securities law violations.

As Mr. Berry explained, the rule has “historically been used to protect employees’ rights to go to the SEC. Now the SEC is signaling it’s not just employees we care about; it’s anybody who is impeded from going to us, we’re going to enforce this provision.” He also said, “I’m sure there are firms across the country now that are going to see this and look back at all the contracts that they have, with any party, and try to make sure they don’t trip up this regulation.”

In the J.P. Morgan case, the SEC alleged that the firm had clients sign a confidential release agreement that expressly allowed clients to respond to “any inquiry … by the SEC,” it also required them to promise not to sue, or “solicit others to institute” any action against the firm. The SEC alleged that this violated Rule 21F-17.

Before joining MTO, Mr. Berry served in a senior-level position in the Enforcement Division of the SEC.

Read the full Bloomberg Law article.