FINRA, the Financial Industry Regulatory Authority, issued a Regulatory Notice reminding firms that they cannot use settlement agreements to restrict the ability of individuals to communicate with the SEC and other regulatory authorities regarding potential securities law violations. According to FINRA, such confidentiality provisions violate FINRA Rule 2010, Standards of Commercial Honor and Principles of Trade. FINRA advised that “[c]onfidentiality provisions in settlement agreements should be written to expressly authorize, without restriction or condition, a customer or other person to initiate direct communications with, or respond to any inquiry from, FINRA or other regulatory authorities.”
