Criminal Defense Lawyers

That’s the answer nobody wants to hear when they search this question. You’re looking for reassurance – maybe some rule that requires notification, some process that keeps you in the loop, some protection that ensures you know what’s happening inside your own company. But here’s the reality: the SEC can contact your employees directly, interview them without your knowledge, and build a case against you using information from the very people you sign paychecks for. They don’t need your permission. They don’t need to tell you. And every conversation that’s already happened? You might never find out about it until the enforcement action drops.

But that’s not even the part that should worry you most. The part that should worry you is that your employees might have a financial incentive to cooperate. The SEC’s whistleblower program pays 10-30% of sanctions over $1 million. The largest single award in the program’s history was $279 million – to one person. That assistant you passed over for promotion, that analyst whose concerns you dismissed, that compliance officer who flagged problems you ignored – any of them could be building a case right now. And if it works, they become millionaires. Off your downfall.

Your Employees Might Be Building Cases Against You Right Now

Heres the thing that changes how you should think about SEC investigations. Your employees arent just potential witnesses. There potential beneficiaries of your destruction.

The SEC Whistleblower Program has paid out nearly $600 million in a single fiscal year. Sixty-eight individual whistleblowers collected awards in 2023 alone. These arent abstract numbers – these are employees and former employees who provided information leading to enforcement actions and walked away with life-changing money.

Think about what that means for you. Every person in your organization who knows something about potentially problematic conduct has a financial incentive to report it. Not to you. Not to your compliance department. To the SEC directly. And the amount they could collect – 10-30% of whatever the SEC recovers – might be more then they’d make in a decade of working for you.

The SEC dosent require these people to tell you theyre cooperating. They dont require any notice. Your CFO could be having regular conversations with SEC enforcement staff, and you might never know until you see your name in an SEC press release.

Why Your NDA Is Completely Worthless

OK so maybe your thinking you have protections. Confidentiality agreements. NDAs. Employment contracts with non-disclosure provisions. Surely those mean something?

They mean nothing.

SEC Rule 21F-17 makes it illegal – not just unenforceable, but actually illegal – to “take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation.” That includes enforcing confidentiality agreements. That includes threatening to enforce them. That includes having language in your agreements that might discourage someone from reporting.

Read that last part again. Having language that MIGHT discourage reporting is itself a violation.

KBR Inc. learned this the hard way. In 2015, the SEC charged them for confidentiality agreements they had employees sign during internal investigations. The language warned employees they could face discipline if they discussed investigation matters with outside parties without prior approval. The SEC found this violated Rule 21F-17 – even though there was no evidence anyone was actually prevented from reporting anything. The theoretical chilling effect was enough.

KBR paid $130,000 in penalties. They also had to contact every employee who signed those agreements and explicitly tell them they had the right to communicate with the SEC without company permission.

In September 2024, the SEC charged seven more companies for similar violations. Penalties ranged from $19,500 to $1.38 million. The message is clear: any language that could possibly discourage SEC communication exposes you to enforcement action.

So when your employees signed those NDAs? Worthless for stopping SEC communication. When you included confidentiality provisions in severance agreements? Potentially illegal. The agreements you thought protected you might themselves become evidence of obstruction.

The Upjohn Trap: When Your Companys Lawyers Arent Your Lawyers

Heres something genuinly disturbing that most executives dont understand until its to late.

When your company conducts an internal investigation – the kind that happens whenever theres a hint of securities issues – company lawyers interview employees. You might think those interviews are protected. Attorney-client privilege, right?

Wrong. The privilege belongs to the company, not to the employees being interviewed. And the company can waive that privilege and hand every statement directly to the SEC.

This is called the Upjohn warning, and its supposed to be given before every interview. Company counsel is supposed to tell employees: “I represent the company, not you. The company holds the privilege on this conversation. The company can choose to disclose what you tell me to regulators or prosecutors.”

But heres the wierd part. Many employees dont really understand what that means. They hear “attorney” and assume protection. They speak freely. They admit things. And then the company – seeking cooperation credit with the SEC – waives privilege and hands over interview transcripts.

Your own statements from your companys own internal investigation become evidence against you. The lawyers you thought were on your side were never on your side. They were building a file that the company would trade for leniency.

Your Company Needs to Sacrifice Someone – Probably You

This isnt paranoia. Its literally DOJ policy.

In 2015, then-Deputy Attorney General Sally Yates issued a memo that fundamentaly changed how corporate investigations work. The Yates Memo stated that to receive ANY cooperation credit – any reduction in penalties, any consideration for helpful behavior – companies must provide the government with “all relevant facts about the individuals involved in corporate misconduct.”

Think about what that means. Your company is under investigation. The board wants to limit liability. Management wants to preserve the business. Everyone wants cooperation credit from the SEC and DOJ. And the price of that credit is identifying individual wrongdoers.

Someone has to be the sacrifice. Someone has to be named. If the conduct happened on your watch, if you were in a position of authority, if decisions trace back to you – your companys path to leniency runs directly through your destruction.

The internal investigation isnt designed to protect you. Its designed to identify you. The lawyers interviewing everyone arent looking for exculpatory evidence. There building a roadmap that leads to specific people, and if your one of those people, the company will hand that roadmap to prosecutors with your name circled.

Thats the reality of corporate investigations now. The company and the individuals inside it have directly opposing interests. What helps the company survive might require throwing you to the wolves.

The SEC Cold Call

SEC enforcement staff dont always send formal subpoenas or schedule interviews through counsel. Sometimes they just call.

The SEC Enforcement Manual explicitly allows staff to “cold call” witnesses, including company employees, “particularly if they want to catch witnesses by surprise.” No warning. No notice to you or company counsel. Just a phone call to someone who works for you, asking questions about conduct that might involve you.

Your employee picks up the phone. They dont know theyre allowed to ask for time to consult a lawyer. They dont know they can decline to answer. They want to seem cooperative because thats what good employees do. And in twenty minutes, theyve given the SEC information you didnt know they had, about matters you didnt know were being investigated.

And it gets worse with former employees. Once someone leaves your company, the rules restricting attorney contact no longer apply. Ex-employees become freely accessible witnesses with no procedural barriers. That person you fired last year? The SEC can call them anytime, interview them anywhere, ask them anything – and you have zero ability to know its happening.

Former employees often have both information AND motivation. They know things. And they might not feel particularly loyal to the company that terminated them.

Three Warning Signs Employees Are Already Talking

If your already worried about SEC employee interviews, heres what to watch for.

Unusual attorney engagement patterns. If employees are suddenly asking about personal liability, asking if they need their own lawyers, or actually hiring individual counsel – something is happening. People dont retain securities defense lawyers for fun.

Changes in employee behavior. People who know theyre cooperating with an investigation often act differently. They might be unusually careful about what they put in writing. They might avoid certain conversations. They might seem nervous around executives. These behavioral shifts often precede formal enforcement action by months or years.

SEC requests for company non-disclosure. Heres something most people dont know: SEC staff can ask companies not to disclose the investigation to certain people. If you notice that some people seem to know about an inquiry that you dont – or if youve been conspicuously excluded from internal discussions about regulatory matters – there might be a reason. You might be the target theyre keeping in the dark.

The uncomfortable truth is that by the time you see clear signs, employee cooperation has probably been ongoing for a while. The SEC builds cases carefully. They dont tip there hand until there ready to act.

What You Actually Can and Cannot Do

Lets be clear about the legal boundaries.

You CANNOT:

• Tell employees not to talk to the SEC. This violates Rule 21F-17 and potentially constitutes obstruction.
• Enforce or threaten to enforce confidentiality agreements regarding SEC communications. This is explicitly prohibited.
• Fire, demote, or retaliate against employees who cooperate with the SEC. Whistleblower retaliation is a separate violation with its own penalties.
• Contact witnesses to “align stories” or coordinate testimony. This is witness tampering.

You CAN:

• Retain your own counsel immediately. You need a lawyer who represents YOU, not the company, because your interests may diverge from the companys interests.
• Exercise your Fifth Amendment rights in interviews. You personally can decline to answer questions.
• Assert attorney-client privilege over your own communications with your personal counsel.
• Request to have your personal attorney present for any interviews.

The trap youre in:

You cant stop employees from talking without committing a crime. You cant fire whistleblowers without creating additional liability. You cant control what former employees say. Your company might be required to identify individual wrongdoers to get cooperation credit. And everything you said in internal interviews might already be in the SECs hands.

The question “can SEC interview my employees without me” assumes you have some power here. The reality is you have almost none. The SEC has broad authority to contact whoever they want, your employees have federally protected rights to cooperate, and the whistleblower program gives them financial incentives to do exactly that.

The Calculation Youre Actually Facing

Heres the decision matrix nobody wants to acknowledge.

If you try to prevent employee cooperation: You violate federal whistleblower protection rules. You potentially obstruct justice. You create additional exposure on top of whatever the original investigation involves. And the employees cooperate anyway because you cant actually stop them.

If you let employees cooperate freely: They might provide information that damages you. The SEC might build a case you didnt know existed. Your internal investigation might identify you as the problem. But at least your not committing new crimes in a failed attempt to prevent investigation of old ones.

If employees are already cooperating: It dosent matter what you do now. The information is already with the SEC. The statements have been made. The case is being built. Your only option is to prepare your defense, retain experienced counsel, and understand that your companys interests and your personal interests might be directly opposed.

The answer to “can SEC interview my employees without me” is yes. The more important question is what youre going to do about the fact that they probably already have – and some of those employees might be looking at million-dollar paydays for their cooperation.

Your employees work for you. Until they work for the SEC. And once they see those whistleblower award numbers, the calculation changes for everyone.