The U.S. Securities and Exchange Commission (SEC) announced that New York-based asset-management giant BlackRock Inc. has agreed to pay US$340,000 to settle charges that it improperly used separation agreements that required former employees to waive their ability to obtain whistleblower awards.
The agreements required departing employees to “waive any right to recovery of incentives for reporting of misconduct” in order to receive severance from the firm, according to the SEC.
The firm consented to the SEC’s order without admitting or denying the SEC’s findings. In addition, the U.S. regulator notes that BlackRock voluntarily revised its separation agreements and took a number of other remedial actions, including mandatory annual training, to summarize employee rights under the SEC’s whistleblower program.
BlackRock added the waiver provision in October 2011 after the SEC adopted its whistleblower program rules, and the firm continued using it in separation agreements until March 2016, the SEC says.
“BlackRock took direct aim at our whistleblower program by using separation agreements that removed the financial incentives for reporting problems to the SEC,” says Anthony Kelly, co-chief of the SEC’s enforcement division’s asset-management unit, in a statement. “Asset managers simply cannot place restrictions on the ability of whistleblowers to accept financial awards for providing valuable information to the SEC.”