In re LSB Industries

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 100973 / September 9, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22082 
 
In the Matter of 
 
 
LSB Industries, Inc.,  
 
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
  
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against LSB Industries, Inc. (“LSB” or “Respondent”).   
 
II. 
 
 In anticipation of the institution of these proceedings, LSB has submitted an Offer of 
Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of 
these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 
admitted, LSB consents to the entry of this Order Instituting Cease-and-Desist Proceedings 
Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a 
Cease-and-Desist Order (“Order”), as set forth below.  
 
III. 
 
 On the basis of this Order and LSB’s Offer, the Commission finds that:  
 
Respondent 
 
1. LSB, a Delaware corporation based in Oklahoma City, Oklahoma, manufactures 
and markets chemical products with applications in agricultural, industrial, and mining industries. 

 2 
LSB’s common stock is registered with the Commission pursuant to Section 12(b) of the Exchange 
Act and is listed on the New York Stock Exchange under the ticker “LXU.”  
 
Facts 
 
A.  Statutory and Regulatory Framework Protecting Whistleblowers 
 
2. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 
Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F, 
“Whistleblower Incentives and Protection.” The congressional purpose underlying these provisions 
was “to encourage whistleblowers to report possible violations of the securities laws by providing 
financial incentives, prohibiting employment-related retaliation, and providing various 
confidentiality guarantees.” See Implementation of the Whistleblower Provisions of Section 21F of 
the Securities Exchange Act of 1934, Release No. 34-64545, at p. 197 (Aug. 12, 2011) (the 
“Adopting Release”). 
 
3. Congress explicitly noted the importance of providing financial incentives to 
promote whistleblowing to the Commission as it determined that “a critical component of the 
Whistleblower Program is the minimum payout that any individual could look towards in 
determining whether to take the enormous risk of blowing the whistle in calling attention to fraud.” 
See The Restoring American Financial Stability Act of 2010, Committee on Banking, Housing, and 
Urban Affairs (Apr. 30, 2010). 
 
4. To fulfill this congressional purpose, the Commission adopted Rule 21F-17, which 
provides in relevant part:  
 
(a)  No  person  may  take  any  action  to  impede  an  individual  from  communicating 
directly  with  the  Commission  staff  about  a  possible  securities  law  violation, 
including enforcing, or threatening to enforce, a confidentiality agreement . . . with 
respect to such communications. 
 
Rule 21F-17 became effective on August 12, 2011. 
 
B.  LSB’s Employment, General Release, and Severance and Change in Control 
Agreements 
 
5. As a regular part of its business, LSB enters into employment agreements with 
certain new employees and general release agreements with certain departing employees. These 
agreements define the rights and responsibilities of the company and the employee during the 
employment relationship and after the employee’s departure.  
 
6. From time to time, LSB enters into severance and change in control agreements 
with certain employees. These agreements provide conditional financial incentives to the employee 
if there is a significant change in the controlling ownership of LSB during the term of the 
agreement. 

 3 
 
7. Between December 2019 and November 2023, LSB entered into sixteen 
agreements that required employees to waive their right to recover a monetary award for 
participating in an investigation by a government agency. Although these agreements expressly 
permitted participation in government whistleblower programs, they also required employees to 
waive their right to a potential award. These included general release agreements that contained 
award-waiver provisions, as well as an employment agreement and several severance and change-
in-control agreements that required employees to execute a separate agreement containing an 
award-waiver provision following the end of their employment with LSB. Specifically, these 
agreements stated:  
 
I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive 
relief  from  any  or  all  Released  Parties  of  any  kind  whatsoever  with  respect  to 
claims  released  by  me  herein,  including,  without  limitation,  reinstatement,  back 
pay,  front  pay,  and  any  form  of  injunctive  relief.  Notwithstanding  the  foregoing,  I 
acknowledge  that  I  am  not  waiving  and  am  not being  required  to  waive  any  right 
that cannot be waived under law, including the right to file an administrative charge 
or participate in an administrative investigation or proceeding; provided, however, 
that  I  disclaim  and  waive  any  right  to  share  or  participate  in  any  monetary 
award  resulting  from  the  prosecution  of  such charge  or  investigation  or 
proceeding. 
 
(Emphasis added.) 
 
8. Although the Commission is unaware of any instances in which LSB took action to 
enforce the award-waiver provisions or in which the affected employees declined to speak with the 
Commission staff about potential violations of securities laws, these provisions created 
impediments to participation in the Commission’s whistleblower program by having the 
employees forego the critically important financial incentives that are intended to encourage 
persons to communicate directly with the Commission staff about possible securities law 
violations. Such restrictions on accepting financial awards for providing information regarding 
possible securities law violations to the Commission undermine the purpose of Section 21F and 
Rule 21F-17(a), which is to “encourag[e] individuals to report to the Commission,” Adopting 
Release at p. 201, and violate Rule 21F-17(a) by impeding individuals from communicating 
directly with the Commission staff about possible securities law violations. 
 
9. Through the conduct described above, LSB violated Exchange Act Rule 21F-17(a), 
which prohibits any person from taking any action to impede an individual from communicating 
directly with the Commission staff about a possible securities law violation. 
 
Remedial Actions and Cooperation 
 
10. After being contacted by the Commission staff in connection with this matter, LSB 
revised its internal agreement templates, adding language affirmatively advising employees that 
they are not prohibited from disclosing information to any government agency or collecting any 

 4 
related incentive awards. LSB also used reasonable efforts to notify the affected employees that 
their agreements do not in any way limit their ability to contact the Commission staff or to obtain 
an award in connection with information they provide. 
 
11. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by LSB and cooperation afforded to the Commission staff. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in LSB’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, LSB cease and desist from 
committing or causing any violations and any future violations of Exchange Act Rule 21F-17(a). 
 
B. LSB shall, within ten days of the entry of this Order, pay a civil money penalty in 
the amount of $156,000 to the Securities and Exchange Commission for transfer to the general 
fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment 
is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 
 
Payment must be made in one of the following ways:  
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying LSB 
as a respondent in these proceedings, and the file number of these proceedings; a copy of the cover 
letter and check or money order must be sent to Nicholas P. Heinke, Associate Regional Director, 
Division of Enforcement, United States Securities and Exchange Commission, 1961 Stout Street, 
Suite 1700, Denver, CO 80294. 

 5 
 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 
the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it 
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in 
this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty 
Offset, Respondent agrees that it shall, within thirty days after entry of a final order granting the 
Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 
Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an 
additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 
in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private 
damages action brought against Respondent by or on behalf of one or more investors based on 
substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 100973 / September 9, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22082 

 

In the Matter of 

 

 

LSB Industries, Inc.,  

 

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER  

  

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against LSB Industries, Inc. (“LSB” or “Respondent”).   

 

II. 

 

 In anticipation of the institution of these proceedings, LSB has submitted an Offer of 

Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of 

these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 

admitted, LSB consents to the entry of this Order Instituting Cease-and-Desist Proceedings 

Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a 

Cease-and-Desist Order (“Order”), as set forth below.  

 

III. 

 

 On the basis of this Order and LSB’s Offer, the Commission finds that:  

 

Respondent 

 

1. LSB, a Delaware corporation based in Oklahoma City, Oklahoma, manufactures 

and markets chemical products with applications in agricultural, industrial, and mining industries. 



 2 

LSB’s common stock is registered with the Commission pursuant to Section 12(b) of the Exchange 

Act and is listed on the New York Stock Exchange under the ticker “LXU.”  

 

Facts 

 

A.  Statutory and Regulatory Framework Protecting Whistleblowers 

 

2. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 

Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F, 

“Whistleblower Incentives and Protection.” The congressional purpose underlying these provisions 

was “to encourage whistleblowers to report possible violations of the securities laws by providing 

financial incentives, prohibiting employment-related retaliation, and providing various 

confidentiality guarantees.” See Implementation of the Whistleblower Provisions of Section 21F of 

the Securities Exchange Act of 1934, Release No. 34-64545, at p. 197 (Aug. 12, 2011) (the 

“Adopting Release”). 

 

3. Congress explicitly noted the importance of providing financial incentives to 

promote whistleblowing to the Commission as it determined that “a critical component of the 

Whistleblower Program is the minimum payout that any individual could look towards in 

determining whether to take the enormous risk of blowing the whistle in calling attention to fraud.” 

See The Restoring American Financial Stability Act of 2010, Committee on Banking, Housing, and 

Urban Affairs (Apr. 30, 2010). 

 

4. To fulfill this congressional purpose, the Commission adopted Rule 21F-17, which 

provides in relevant part:  

 

(a) No person may take any action to impede an individual from communicating 

directly with the Commission staff about a possible securities law violation, 

including enforcing, or threatening to enforce, a confidentiality agreement . . . with 

respect to such communications. 

 

Rule 21F-17 became effective on August 12, 2011. 

 

B.  LSB’s Employment, General Release, and Severance and Change in Control 

Agreements 

 

5. As a regular part of its business, LSB enters into employment agreements with 

certain new employees and general release agreements with certain departing employees. These 

agreements define the rights and responsibilities of the company and the employee during the 

employment relationship and after the employee’s departure.  

 

6. From time to time, LSB enters into severance and change in control agreements 

with certain employees. These agreements provide conditional financial incentives to the employee 

if there is a significant change in the controlling ownership of LSB during the term of the 

agreement. 



 3 

 

7. Between December 2019 and November 2023, LSB entered into sixteen 

agreements that required employees to waive their right to recover a monetary award for 

participating in an investigation by a government agency. Although these agreements expressly 

permitted participation in government whistleblower programs, they also required employees to 

waive their right to a potential award. These included general release agreements that contained 

award-waiver provisions, as well as an employment agreement and several severance and change-

in-control agreements that required employees to execute a separate agreement containing an 

award-waiver provision following the end of their employment with LSB. Specifically, these 

agreements stated:  

 

I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive 

relief from any or all Released Parties of any kind whatsoever with respect to 

claims released by me herein, including, without limitation, reinstatement, back 

pay, front pay, and any form of injunctive relief. Notwithstanding the foregoing, I 

acknowledge that I am not waiving and am not being required to waive any right 

that cannot be waived under law, including the right to file an administrative charge 

or participate in an administrative investigation or proceeding; provided, however, 

that I disclaim and waive any right to share or participate in any monetary 

award resulting from the prosecution of such charge or investigation or 

proceeding. 

 

(Emphasis added.) 

 

8. Although the Commission is unaware of any instances in which LSB took action to 

enforce the award-waiver provisions or in which the affected employees declined to speak with the 

Commission staff about potential violations of securities laws, these provisions created 

impediments to participation in the Commission’s whistleblower program by having the 

employees forego the critically important financial incentives that are intended to encourage 

persons to communicate directly with the Commission staff about possible securities law 

violations. Such restrictions on accepting financial awards for providing information regarding 

possible securities law violations to the Commission undermine the purpose of Section 21F and 

Rule 21F-17(a), which is to “encourag[e] individuals to report to the Commission,” Adopting 

Release at p. 201, and violate Rule 21F-17(a) by impeding individuals from communicating 

directly with the Commission staff about possible securities law violations. 

 

9. Through the conduct described above, LSB violated Exchange Act Rule 21F-17(a), 

which prohibits any person from taking any action to impede an individual from communicating 

directly with the Commission staff about a possible securities law violation. 

 

Remedial Actions and Cooperation 

 

10. After being contacted by the Commission staff in connection with this matter, LSB 

revised its internal agreement templates, adding language affirmatively advising employees that 

they are not prohibited from disclosing information to any government agency or collecting any 



 4 

related incentive awards. LSB also used reasonable efforts to notify the affected employees that 

their agreements do not in any way limit their ability to contact the Commission staff or to obtain 

an award in connection with information they provide. 

 

11. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by LSB and cooperation afforded to the Commission staff. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in LSB’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, LSB cease and desist from 

committing or causing any violations and any future violations of Exchange Act Rule 21F-17(a). 

 

B. LSB shall, within ten days of the entry of this Order, pay a civil money penalty in 

the amount of $156,000 to the Securities and Exchange Commission for transfer to the general 

fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment 

is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

 

Payment must be made in one of the following ways:  

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying LSB 

as a respondent in these proceedings, and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Nicholas P. Heinke, Associate Regional Director, 

Division of Enforcement, United States Securities and Exchange Commission, 1961 Stout Street, 

Suite 1700, Denver, CO 80294. 

http://www.sec.gov/about/offices/ofm.htm


 5 

 

 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To preserve 

the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it 

shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in 

this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty 

Offset, Respondent agrees that it shall, within thirty days after entry of a final order granting the 

Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 

Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an 

additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 

in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private 

damages action brought against Respondent by or on behalf of one or more investors based on 

substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary 

 


	UNITED STATES OF AMERICA
	IV.