By Dean Seal
The U.S. Securities and Exchange Commission has fined D.E. Shaw & Co. for allegedly violating whistleblower protection rules with employee disclosure agreements that didn’t have carveouts for whistleblowing.
Without admitting or denying the findings, D.E. Shaw has agreed to pay a $10 million penalty to resolve the action.
The SEC said Friday that from 2011 to 2019, the investment adviser required new employees to sign agreements prohibiting them from disclosing confidential business information to anyone outside the company unless authorized by D.E. Shaw or a court order.
The agreements weren’t changed to include SEC whistleblower protections until 2019, even after the company sent around an email in 2017 stating that employees weren’t prohibited from communicating with regulators about potential violations of law, and that notice to D.E. Shaw of those communications isn’t required, the agency alleged.
The investment adviser also, from 2011 until this year, made about 400 departing employees sign releases affirming that they hadn’t filed any complaints with any government agency in order for them to receive deferred compensation and other benefits that were sometimes worth millions of dollars, the SEC said. That language wasn’t changed until the regulator launched its investigation, according to the agency.
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