Holland & Knight's SECond Opinions Blog is excited to debut a Summer Series featuring posts written and researched by the associates in the Securities Enforcement Defense Team. The first blog in this series comes from Houston Associate Maddie Tansey, who focuses her practice on a variety of complex litigation matters, including internal and regulatory investigations and enforcement actions. Maddie assists companies on a wide range of legal and compliance issues involving financial and lending institutions, real estate disputes, healthcare and more.

Public companies should be mindful not to interfere with or retaliate against whistleblowers, and stretching is best reserved for the yoga mat, not the numbers in a company's public disclosures. So says the U.S. Securities and Exchange Commission (SEC) in a recent settlement involving yoga-streaming company, Gaia Inc. (Gaia), for allegedly:

1. overstating the amount of paying subscribers it had
2. retaliating against a whistleblower who brought the issue to management's – and ultimately the SEC's Division of Enforcement's – attention
3. attempting, through severance agreements, to prevent whistleblowers from collecting a reward from the SEC in violation of Exchange Act Rule 21F-17

As discussed below, this settlement reinforces that a company's words and actions, both publicly and internally, are of paramount importance to the SEC, and it makes clear that the agency will take action where a company does not comply with federal...

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