On May 23, 2023, the US Securities and Exchange Commission (SEC) issued an Order Instituting Proceedings (Order) reflecting a $2 million settlement with Gaia, Inc. (Gaia or the Company), an internet streaming company offering digital video subscription services focusing on yoga, transformation, and alternative healing. The Order included findings that the Company (i) made material misstatements about the number of paid subscribers, (ii) engaged in whistleblower retaliation against an employee who reported internally and to the SEC about overstating the number of its paying subscribers, and (iii) impeded whistleblowing to the SEC by including language in severance agreements that required the employees to waive their right to monetary incentives that are intended to encourage direct reporting to the SEC about possible securities law violations.1 As part of the settlement, Gaia agreed to make reasonable efforts to contact the former Gaia employees who entered into the severance agreements, provide a link to the Order, and advise them in writing that Gaia "does not prohibit former employees from accepting a whistleblower award from the Commission pursuant to Section 21F of the Exchange Act."
Internal Reporting and Company Investigation
According to the Order, an employee internally reported concerns that Gaia was overstating the number of its paying subscribers–a key metric tracked by analysts–at least twice to management. Gaia management looked into...
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