Corporate nondisclosure agreements, long used to protect proprietary information are the target of SEC scrutiny in order to assure that they aren’t used to deter potential whistleblowers from filing claims revealing corporate violations of law.
The SEC has recently taken actions against companies that have employment contracts with language that might restrict employees from reporting misconduct to regulators. In one case, hedge fund D.R. Shaw was fined $10 million to settle allegations the hedge fund’s employment agreements and separation releases with employees contained language preventing whistleblowers from reporting wrongdoing to the government.
The SEC also fined CBRE Group over employment agreements and separation releases with language that could dissuade whistleblower from coming forward.
Besides D.E. Shaw, the SEC also fined two other companies in September over employment agreements and separation releases freighted with language that might dissuade whistleblowers from coming forward.
CBRE Group was fined $375,000 and Monolith Resources, $225,000. In February, the SEC fined Activision Blizzard $35 million over various allegations, including violations it violated the whistleblower protection rule.
JEFFREY NEWMAN IS THE SENIOR PARTNER OF LITIGATION FIRM JEFF NEWMAN LAW. JEFF@JEFFNEWMANLAW.COM 617-823-3217