These firms were charged under Rule 21F-17(a), which prohibits any actions that obstruct an individual's ability to report potential securities law violations directly to the SEC.
The Securities and Exchange Commission (SEC) has reached settlements with seven public companies for breaching regulations designed to protect whistleblowers. The companies were found to have implemented employment, separation, and other agreements that hindered employees from reporting potential misconduct to the SEC.
In total, the companies have agreed to pay over $3 million in civil penalties to resolve these charges. The penalties are as follows:
⦁ Acadia Healthcare Company, Inc., agreed to pay a $1,386,000 civil penalty;
⦁ a.k.a. Brands Holding Corp. agreed to pay a $399,750 civil penalty;
⦁ AppFolio, Inc., agreed to pay a $692,250 civil penalty;
⦁ IDEX Corporation agreed to pay a $75,000 civil penalty;
⦁ LSB Industries agreed to pay a $156,000 civil penalty;
⦁ Smart for Life, Inc. agreed to pay a $19,500 civil penalty; and
⦁ TransUnion agreed to pay a $312,000 civil penalty.
“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,” said Jason J. Burt, Director of the SEC’s Denver Regional Office. “According to the SEC’s orders, among other things, these companies required employees to waive their right to possible whistleblower monetary awards. This severely impedes would-be whistleblowers from reporting potential securities law violations to the SEC.”
“Ensuring that potential whistleblowers can communicate directly with the Commission is a critical part of the SEC’s oversight mandate,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower.
These firms were charged under Rule 21F-17(a), which prohibits any actions that obstruct an individual's ability to report potential securities law violations directly to the SEC. As part of the settlement, each company has committed to compliance with this rule going forward and has already undertaken measures to amend their agreements to prevent future violations.
The SEC’s ongoing investigation is being led by Eric Day of the Denver Regional Office, with support from Helena Engelhart Bean and the SEC’s Office of the Whistleblower, including Kelly Breakey and Elizabeth McMurray. Oversight of the investigation is provided by Danielle R. Voorhees, Nicholas P. Heinke, and Mr. Burt, also from the Denver Regional Office.
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