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SEC Charges 2 Companies with Whistleblower Retaliation

The U.S. Securities and Exchange Commission (SEC) recently charged two different companies with whistleblower retaliation, leading to a pair of high-price settlements within a day of each other.

The first of these two enforcement actions was against Neustar, a technology company, which agreed to pay $180,000 to settle charges that it had severance agreements that prevented employees from communicating important information to the SEC. According to the agency, Neustar was in violation of Rule 21F-17 by routinely developing severance agreements that contained broad language that forbids employees from engaging in any sort of communication with the SEC or other regulators in a way that would disparage the company. Former employers would be compelled to eliminate almost all their severance pay if they breached this clause.

The SEC issued a cease-and-desist order regarding the contracts, and Neustar then voluntarily revised its severance agreements after the agency began an investigation. The company then made what the SEC referred to as “reasonable efforts” to inform people who entered into those agreements that they could communicate with the SEC and other regulators about potential violations of securities laws.

SandRidge Energy case 

The next day, the SEC reached a settlement with SandRidge Energy for the oil and gas company to pay out $1.4 million. The charges in this case included illegal whistleblower retaliation and similar issues with illegal separation agreements.

Particularly unique about this case was that it was the first time ever that the SEC charged a company for retaliating against a whistleblower who only reported the incident internally. The previous two SEC sanctions again for whistleblower retaliation involved employees who had reported the issues both internally and externally to the SEC.

Clearly, the SEC is working to ensure all employees with relevant, useful information about securities laws violations feel comfortable coming forward and making their reports. For more information about how you can report corporate wrongdoing, meet with an experienced Dallas attorney at Whistleblower Law for Managers.

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