The SEC’s Fine Against CBRE
CBRE real estate group got in trouble with the SEC following allegations that their separation agreements prevented whistleblowers from reporting to the regulator. The SEC has been delving into this issue with various companies over which they regulate. These agreements from CBRE and similar companies include non-disclosure agreements which may contain language stifling reports from company whistleblowers.
Whistleblower Protections
The whistleblowing protection rules, Rule 21F-17, prohibit actions that would impede employee’s from communicating directly with SEC staff about possible security law violations. Examples of these actions include enforcing or threatening to enforce a confidentiality agreement over communication with the SEC.
SEC vs. CBRE
The SEC alleged that for 11 years, CBRE required its employees to sign a release acknowledging they did not report to the SEC. This requirement was predicated as a condition of the employee receiving their separation pay from the firm. Nearly 900 CBRE employees signed these agreements in the 11 years the SEC alleges the actions of the CBRE. The SEC’s stance is that by requiring employee signatures, the CBRE was preventing whistleblowing during their employment. All employees at the time were aware of the necessary release to receive severance pay and were therefore precluded from reporting violations.
CBRE Response
The real estate group holds firm that they did no wrong with the institution of these agreements. In fact, they say their separation agreements included language that was the standard in release agreements for many companies. CBRE states that when alerted by the SEC, they immediately clarified their relevant language in the agreement and cooperated thusly. Indeed, the SEC acknowledges that CBRE revised all versions of its separation agreement to be compliant with SEC standards.
SEC Fines
Ultimately, the CBRE agreed to pay a settlement of $375,000 to the SEC to put these allegations to bed. This settlement is the SEC’s latest enforcement action against firms over violations of whistleblower protection rules in recent times. The regulator previously charged privately owned Monolith Resources for using employee separation agreements for 3 years. These agreements required departing employees to waive their rights to monetary whistleblower awards if they filed claims or participated in investigations by federal agencies. Monolith ultimately agreed to pay a civil penalty of $225,000 as part of the settlement with the SEC.
