Radical Compliance – The SEC has fined real-estate firm CBRE for including clauses in severance agreements that could prevent employees from reporting securities law violations.
Matt Kelly explains that pre-taliation can include forbidding employees to report misconduct to regulators, requiring them to get permission first, to forfeit any whistleblower awards, and similar threats of retaliation which violate the Dodd-Frank Act’s whistleblower protection provisions. Following a similar enforcement action against Monolith Resources a few weeks ago, Kelly undertakes to explain the issue, and how straightforward the effort is to avoid violation.
In this case, CBRE had not actually retaliated against any whistleblower under these terms (which resulted in a $1.4 million fine when another company did so), but it had included language in its severance agreements that the SEC found to be in violation… notwithstanding disclaimers to the contrary. It required departing employees to certify that they had not filed a complaint with any government entity. In levying a $375,000 settlement, the SEC praised the company for promptly correcting the problem… correctly this time. Monolith had been cited for similar verbal gymnastics in its agreements: stating that they would not retaliate for reports to the government, but nonetheless prohibiting employees from taking whistleblower awards.
Sources:
- Radical Compliance: CBRE Busted on Pre-taliation Clauses
- Wall Street Journal: SEC Fines Real-Estate Firm CBRE Over Violations of Whistleblower Protections
