Katz, Marshall and Banks partner David Marshall authored an article for the FCPA blog on August 15, 2016, entitled, “SEC breaks new ground, bans employer-imposed waiver of right to whistleblower award.” The article discussed how the SEC's recent action imposing a $265,000 penalty on BlueLinx Holdings Inc. for requiring departing employees to sign severance agreements waiving their rights to receive whistleblower awards fits into a broader trend of increasing SEC whistleblower protections. Although the company did not admit any wrongdoing, the company settled with the Commission, agreeing to pay the penalty and amend its severance agreements. Alhough the SEC undertook similar enforcement actions in 2015 and again earlier this year, the BlueLinx case "represents the first time that the SEC has taken aim specifically at a provision designed to impede whistleblowers by requiring them to waive their right to an SEC whistleblower award." Read the full article here.
The SEC followed up today on last week’s action against BlueLinx by bringing a very similar case against Health Net Inc., which agreed to pay a $340,000 penalty for using severance agreements which, like Blue Linx’s agreements, required departing employees to waive their rights to SEC whistleblower awards.