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“Why the Facebook Whistleblower Turned to the SEC”

In The National Law Journal, Phillips & Cohen partner Sean McKessy contextualizes Facebook whistleblower Frances Haugen’s move to use the SEC’s whistleblower program.

Sean McKessy, a partner at Phillips & Cohen who represents whistleblowers and formerly led the SEC’s program, said Haugen’s public use of the program was “very unusual.”

“In my experience, representing people who are interested in reporting to the SEC, one of the first questions they ask is ‘how do we make sure that no one finds out that we’re doing this?’” McKessy said.

McKessy said Haugen doesn’t fit the typical profile of an SEC whistleblower, who are typically interested in staying anonymous, securing protection from retaliation and getting paid for their disclosures.

Haugen left Facebook earlier this year, meaning she won’t receive all the protections the program provides against employer retaliation. But McKessy said her use of the program could still prove helpful if Facebook decides to sue her for publicizing internal company documents. Facebook may not want to be seen as targeting an SEC whistleblower while the company is under scrutiny from the commission, he said. Nondisclosure agreements often prevent employees from sharing documents with the press or the public at-large, but disclosures to regulators are typically more protected.

McKessy said the attention Haugen has received may further increase the profile of the SEC whistleblower program, which has already proved to be a major enforcement asset for the SEC over the past decade.

He said the program wasn’t designed “to market to people whose game plan was to report it and then be very public about it.” But McKessy said Haugen’s use of the program was consistent with Congress’ intent to create a mechanism for corporate insiders to report wrongdoing.

“This is a clever way to avail herself of U.S. regulators to take interest in what’s going on behind the black box” at Facebook,” he said.

Read the entire article, “Why the Facebook Whistleblower Turned to the SEC,” on The National Law Journal’s website.

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