SEC Cracks Down on Whistleblower Suppressors
The U.S. Securities and Exchange Commission (SEC) has hit seven major firms with stiff fines for using sneaky agreements to block whistleblowers. These contracts – from employment to separation deals – stopped staff from reporting dodgy securities violations straight to the SEC.
Seven Companies Hit With $3 Million Penalties
The culprits include heavyweights like Acadia Healthcare Company, Brands Holding Corp., AppFolio Inc., IDEX Corporation, LSB Industries, Smart for Life Inc., and TransUnion. Together, they’ve coughed up over $3 million in civil penalties to settle the charges.
Rule-Breakers Violated SEC’s Whistleblower Protection
The SEC slammed the firms for breaching Rule 21F-17(a), which bans practices that scare employees off from reporting misconduct. By forcing workers to waive their right to whistleblower rewards, these companies slammed the door shut on exposing financial wrongdoings.
Jason J. Burt, Director of the SEC’s Denver Regional Office, said:
“The SEC’s whistleblower program strengthens market integrity by providing protection and incentives for those who come forward and report potential violations of the securities laws.”
Firms Agree to Drop Dodgy Deals and Fix Practices
In response, the companies have promised to scrap these gag orders and have already revamped the offending agreements. The SEC’s Chief of the Office of the Whistleblower, Creola Kelly, made it clear:
“We will continue to take action against companies that try to impede this process.”
The SEC’s investigation is still rolling, with the threat of more charges looming if further violations pop up.
