DE Shaw, a prominent financial services firm, recently settled a retaliation case with the Securities and Exchange Commission (SEC) for a staggering $10 million. It was settled via an Administrative Order. This settlement marks the largest of its kind, highlighting the severity of the violations committed by the company. The case revolved around employment agreements that prohibited employees from speaking to governmental agencies without prior authorization from the company. Such agreements have been illegal since 2011 under the Dodd Frank Act. Despite updating internal policies to encourage employees to speak to regulators, DE Shaw failed to amend these agreements until 2019.
According to the Order, this enforcement concerned violations of the whistleblower protection rule by the adviser. From at least August 12, 20111 through April 2019, the Company required new employees to sign employment agreements (“Employment Agreements”) that prohibited them from disclosing “Confidential Information” to anyone outside of the Company unless authorized by the Company or required by law or an order of a court or other regulatory or governmental body, without any exception for voluntary communications with the Commission concerning possible securities laws violations.
Additionally, from at least August 2011 through June 2023, the Company required approximately 400 of its departing employees to sign General Releases and Agreements (“Releases”) “affirming, among other things, that they...
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