The SEC has announced settlement of enforcement actions against two companies stemming from each company’s use of separation agreements that allegedly violated Dodd-Frank whistleblower protection rules. The settled enforcement actions demonstrate that whistleblower protection remains a priority for the SEC’s Enforcement Division.
Since 2015, the SEC has brought enforcement actions against companies for provisions (such as confidentiality and non-disparagement clauses) in separation agreements and other documents that, according to the SEC, discourage employees from reporting possible securities law violations. In February 2023, the SEC announced a $35 million resolution with Activision Blizzard relating, in part, to clauses in severance agreements that, according to the SEC, impeded whistleblowers protections. This trend continued in September 2023 with the announcement of two settled enforcement actions stemming from alleged violations of the whistleblower protection rule. In both cases, the SEC alleged a violation of whistleblower protections despite explicit override provisions in the relevant agreements stating that nothing in the agreement should be interpreted as limiting the employee’s ability to file a claim or charge with a government agency or engage in certain other protected activities.
Rule 21F-17 of the Securities Exchange Act of 1934 (the “Rule”) prohibits an employer from interfering with employees’ right to report possible...
The lawsuit alleges the CCRB’s online database, 50-a.org, unfairly harms officers by listing serious accusations including sexual misconduct, racial profiling and making false official statements ...