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SEC fines company for anti-whistleblower severance deals

Joe Mont | August 10, 2016

The Securities and Exchange Commission has reached a consent agreement with BlueLinx Holdings, an Atlanta-based building products distributor, over allegations it violated securities laws when using severance agreements that required outgoing employees to waive their right to monetary recovery if they filed a complaint with the Commission or other federal agencies.

The company agreed to pay a $265,000 penalty.

According to the SEC’s order, BlueLinx added the monetary recovery prohibition to all of its severance agreements in mid-2013, nearly two years after the SEC’s adoption of Rule 21F-17, which prohibits such activity. The restrictive language forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits.

“Companies simply cannot undercut a key tenet of our whistleblower program by requiring employees to...

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