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Tuesday, August 20, 2019

Chief of SEC whistleblower program departs after 'pro-employee' tenure

By Dawn Geske | Jul 21, 2016

WASHINGTON (Legal Newsline) – The U.S. Securities and Exchange Commission (SEC) has announced the departure of its chief of the Whistleblower Program.

Sean X. McKessy will be leave the organization later this month. Current deputy chief Jane Norberg has been appointed acting chief following McKessy’s departure.

Since its inception in 2011, the Whistleblower Program has garnered more than 14,000 tips from all over the United States as well as other countries around the world. McKessy took the office in February 2011. With a background in corporate America, McKessy was responsible for making recommendations to the SEC to determine if whistleblowers were eligible to receive monetary awards under its bounty program.

The SEC touts its success by the number of awards it has handed out through the lifetime of the office with its most recent totaling $17 million. In another suit, it challenged engineering firm KBR Inc., regarding language in its confidentiality agreement that the SEC said stalled whistleblowing. KBR paid $130,000 in a settlement and changed its confidentiality agreement to remove the violating language.

Known to be tough on employers, McKessy had a reputation for making forceful threats against companies.

“I think that anyone would agree that he’s been pretty aggressively pro-employee in this role,” Lloyd Chinn, a partner at Proskauer told the Legal News Line.

That may have been a surprise for some based on his background. There’s been a pretty aggressive sweep of the scope of the SEC’s analysis of confidential agreements. I think that people feel like they have gone too far.”

With a new chief to be appointed by the SEC, employers may not have too much reason to expect a different perspective from the position, as it has typically come down hard on employees. Chinn thinks it will be more of the same.

“The person who has been in that office has been pretty aggressive pro-employee. I would say employers would probably expect more of the same,” he said.

With Norberg serving as the acting chief, there is speculation that she may be named to the position.

“It’s certainly possible that she’ll be appointed to the position,” Chinn said. “She’s got the job. She’ll be the interim head of the whistleblower office and I would assume that would mean she’s in the running for that position but there’s no way to know.”

With this relatively young office, a new niche within the legal industry has cropped up paying service to whistleblower programs and defending the companies that have these lawsuits filed against them, the SEC says.

“Who benefits here the most?” Chinn said. “Its lawyers who represent whistleblowers. Plaintiff lawyers are benefiting directly from this. A whole new cottage industry has grown up around the Whistleblower Program.”

As for what McKessy's plans after the whistleblower position, his options could be numerous, especially with background with the SEC.

“I don’t think there’s any rumors yet on what he’s going to do,” Chinn said. “Given his background with this program, I think there would be a lot of options open to him.”

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U.S. Securities and Exchange Commission