May 19, 2022

Volume XII, Number 139

Advertisement
Advertisement

May 19, 2022

Subscribe to Latest Legal News and Analysis

May 18, 2022

Subscribe to Latest Legal News and Analysis

May 17, 2022

Subscribe to Latest Legal News and Analysis

May 16, 2022

Subscribe to Latest Legal News and Analysis
Advertisement

SEC Scrutinizes Severance Agreements for Compliance With Dodd-Frank

On Aug. 16, 2016, the U.S. Securities and Exchange Commission (SEC) announced that it had issued its second fine in as many weeks concerning a company’s use of severance agreements that contain confidentiality and/or covenant-not-to-sue or release provisions that allegedly violate SEC whistleblower Rules.

These recent SEC charges arise from SEC Rules, passed in August 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which enable whistleblowers to collect 10 percent to 30 percent of the total award when giving information that leads to an action recovering at least $1 million. Rule 21F-17 provides that “[n]o person may take any action to impede an individual from communicating directly with the [SEC] staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement.”

According to the most recent SEC order, Health Net Inc. agreed to a monetary penalty without admitting or denying the SEC’s allegations that it illegally used severance agreements requiring outgoing employees to waive their ability to obtain monetary awards from the SEC’s whistleblower program. According to the cease-and-desist order from the SEC, from August 2011 to October 2015, Health Net had language in its severance agreements that stopped employees from “filing an application for, or accepting, a whistle-blower award” from the SEC.  In addition to the fine, the settlement agreement also required Health Net to notify former employees who signed the severance agreements to let them know they are not prohibited from accepting SEC whistle-blower rewards.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume VI, Number 238
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Jack Gearan, Greenberg Traurig Law Firm, Boston, Education, Labor and Employment Litigation Attorney
Associate

Jack S. Gearan is a lawyer in the Boston office of Greenberg Traurig, LLP. He concentrates his practice in the areas of business litigation and employment law. Jack has experience in all phases of civil litigation including discovery, mediation, arbitration and trial.

Jack’s business litigation practice covers a variety of business torts, including misrepresentation, fraud, contract disputes, and claims under Massachusetts General Laws Chapter 93A – the Massachusetts unfair trade practices statute.

Jack also regularly...

617-310-5225
Todd Wozniak, Greenberg Traurig Law Firm, Atlanta, Labor and Employment Litigation Attorney
Shareholder

Todd D. Wozniak is Co-Chair of the firm’s Labor & Employment Practice’s ERISA & Employee Benefits Litigation group. He is a trial lawyer who defends companies and public institutions throughout the United States in labor and employment, ERISA, and business disputes. He is also experienced in wage and hour litigation, state and federal whistleblower statutes, non-discrimination laws, plant closing and mass layoff laws, collective bargaining and traditional labor relations, executive contracts and compensation, non-compete and trade secrets litigation, and...

678-553-7326
Advertisement
Advertisement
Advertisement