Key Points

• The SEC brought a settled enforcement action against Foot Locker Inc. for using separation agreements that required employees to waive their right to receive SEC whistleblower awards, in violation of Exchange Act Rule 21F-17(a).
• The SEC found that conditioning severance on an “award waiver provision” raised impediments to participation in the SEC whistleblower program, even if Foot Locker never enforced the clause or actually deterred any whistleblowers.
• Foot Locker phased out and then removed the award-waiver language before SEC staff contact, and agreed to a cease-and-desist order and a $148,000 civil penalty without admitting or denying the SEC’s findings.
• The Foot Locker order under Chair Paul Atkins reflects continuity with prior rule enforcement under former Chair Gary Gensler and underscores that whistleblower protections remain an SEC priority across administrations.
• All SEC whistleblower-protection enforcement actions to date have been resolved through settlements, so there are still no court decisions on whether the challenged contractual language in fact impedes whistleblowers from coming forward.

On May 22, the Securities and Exchange Commission (SEC) announced a settled enforcement action against Foot Locker, Inc. for using separation agreements that required departing employees to waive their right to receive SEC whistleblower awards, in violation of Exchange Act Rule 21F-17(a). The case is noteworthy not only for its specific facts, but...

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