SEC Imposes $1.4 Million Fine for Whistleblower Rule Violations
The SEC fined a public company $1.4 Million because its severance agreements violated the Dodd-Frank’s whistleblower rules and because it retaliated against an internal whistleblower. The SEC maintains that the firm’s severance agreements, which included non-disparagement and confidentiality provisions, violated the whistleblower rules because they impeded severed employees from communicating with the SEC. Also, the SEC asserts that the respondent terminated an internal whistleblower for raising concerns about how the firm calculated oil and gas reserves. The SEC’s Whistleblower Chief noted, “This is the first time a company is being charged for retaliating against an internal whistleblower.”
OUR TAKE: In addition to the retaliation action, the SEC, for the first time this year, imposes a 7+ figure fine for violating the whistleblower rules. As we predicted, the SEC continues to bring more cases assessing punitive fines for violations of the whistleblower rules. Compliance officers should review severance agreements and internal complaint processes.