Less than two weeks after it last penalized a private employer for alleged violations of whistleblower protection rules in its employee separation agreements, the Security and Exchange Commission (“SEC”) once again takes aim at the language of a separation agreement it alleges violates Rule 21F-17(a) of the Exchange Act (“Rule 21F”). Just yesterday, the SEC issued an Order settling charges with a commercial real estate services and investment firm for such violations through a fine of $375,000, among other terms. The SEC’s aggressive and continued enforcement of whistleblower protection rules is not new, but the Order is the first of its kind in one significant way: it involves an employee’s past, rather than prospective, communications with government agencies.
The separation agreement in question contained the following language:
Employee represents and acknowledges [t]hat Employee has not filed any complaint or charges . . ., with any state or federal court or local, state or federal agency, based on the events occurring prior to the date on which this Agreement is executed by Employee.
The separation agreement further stipulated that the “Employee may not execute this Agreement prior to the Date of Termination.” The SEC concluded that this combined language violated Rule 21F, which prohibits employers from imposing policies that may impede employees from communicating with the SEC. Specifically, the SEC stated that the separation agreement:
required, in effect, that...
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