The Securities and Exchange Commission (SEC) announced it had arrived at settlements tied to charges against both CBRE, Inc., a Dallas-based commercial real estate services and investment firm, and D.E. Shaw & Co., L.P. In these cases, the SEC focused on violations of Rule 21F-17(a) under the Securities Exchange Act of 1934. This rule is specifically concerned with communication restrictions imposed upon employees that might inappropriately prevent them from reporting potential securities law violations to the SEC.
CBRE, a prominent subsidiary of CBRE Group, Inc., listed on the NYSE as CBRE, came under fire for the language utilized in its separation agreements with employees. This wording, according to the SEC, breached Rule 21F-17(a).
This announcement by the SEC sends a strong message to both public and private companies: the Commission is vigilantly monitoring any attempt to stifle employee communications with the authorities. In particular, the Commission’s focus on employment and separation agreements implies that companies need to carefully construct these contracts to avoid any potential flouting of the SEC’s Rule 21F-17(a).
It is worth noting that the SEC’s enforcement action isn’t restricted to large corporations. Any companies, regardless of size and stature, that include language in their employment and separation agreements violating Rule 21F-17(a) are at risk of facing similar charges and penalties.
To learn more about the specifics of CBRE’s case and SEC’s enforcement actions, one can check the detailed information available here.