The U.S. Securities and Exchange Commission (SEC) is sanctioning a private company for violating the regulator’s whistleblower rules by using employee agreements that aimed to prevent tipsters from collecting financial rewards.

The SEC settled with Nebraska-based Monolith Resources LLC, which agreed to pay a US$225,000 penalty to cease and desist from violating the rules, and to inform former employees who had signed improper agreements that they are permitted to collect whistleblower awards.

The firm settled without admitting or denying the SEC’s allegations.

According to the SEC’s order, Monolith used agreements that required certain employees that were leaving the firm to waive their rights to monetary whistleblower awards.

“Both private and public companies must understand that they cannot take actions or use separation agreements that in any way disincentivize employees from communicating with SEC staff about potential violations of the federal securities laws,” said Jason Burt, director of the SEC’s Denver office, in a release.

“Any attempt to stifle or discourage this type of communication undermines our regulatory oversight and will be dealt with appropriately,” he said.