BlackRock Charged With Removing Whistleblower Incentives in Separation Agreements
BlackRock Inc. agreed to pay a $340,000 penalty to settle SEC charges that it illegally required over 1,000 departing employees to waive their rights to whistleblower awards in separation agreements from October 2011 to March 2016, directly undermining the SEC’s whistleblower program.
BlackRock Inc. paid a $340,000 penalty to resolve SEC charges that it violated Rule 21F-17 by embedding unlawful waiver clauses in over 1,000 separation agreements between October 2011 and March 2016, forcing exiting employees to forfeit rights to SEC whistleblower awards in exchange for severance pay. The SEC condemned the practice as a deliberate attempt to stifle reporting of misconduct, emphasizing that companies cannot restrict financial incentives for whistleblowers. BlackRock consented to the order without admitting or denying the allegations but implemented remedial measures, including revising its agreements and instituting mandatory annual whistleblower rights training.
BlackRock Inc. agreed to pay a $340,000 penalty to settle SEC charges that it violated Rule 21F-17 by including unlawful waiver provisions in over 1,000 separation agreements with departing employees between October 2011 and March 2016. These provisions required employees to relinquish their right to receive financial awards from the SEC’s whistleblower program as a condition of receiving severance payments, directly undermining the program’s intent to incentivize reporting of misconduct. The SEC’s Enforcement Division described the practice as an intentional effort to deter whistleblowing, with officials stressing that asset managers cannot impose restrictions on employees’ ability to report violations or accept rewards for doing so. BlackRock did not admit or deny the findings but took voluntary remedial actions, including revising its separation agreements to remove the prohibited language and implementing mandatory yearly training to educate employees about their whistleblower rights. The SEC’s investigation, led by Alfred Tierney and Luke Pazicky and supervised by Adam Aderton, highlighted the agency’s ongoing commitment to preserving unimpeded communication channels between whistleblowers and regulators. This case serves as a clear warning to financial firms that any contractual language designed to chill whistleblower activity will face swift enforcement. The action reinforces that protecting whistleblowers is central to the SEC’s mission of maintaining market integrity and accountability.
Exhibits & Attached Documents (1)
Extracted insights
- $340K $340,000 $100K–$1M
- person anthony s. kelly
- company blackrock inc.
- person its separation agreement
- person jane norberg
- agency sec’s order without admitting or denying findings
- BlackRock Inc. Agreed To Pay $340,000 Penalty
- BlackRock Added Waiver Provision In October 2011
- BlackRock Continued Using Waiver Provision Until March 2016
- Anthony S. Kelly Said BlackRock Took Direct Aim At Whistleblower Program By Using Separation Agreements
- Jane Norberg Added This Enforcement Action Against BlackRock Underscores Ongoing Commitment To Keep Whistleblower Communications Unimpeded
- BlackRock Consented To SEC’s Order Without Admitting Or Denying Findings
- BlackRock Revised Its Separation Agreement
- BlackRock Implemented Mandatory Yearly Training To Summarize Employee Rights Under SEC Whistleblower Program
The Securities and Exchange Commission today announced that New York-based asset manager BlackRock Inc. has agreed to pay a $340,000 penalty to settle charges that it improperly used separation agreements in which exiting employees were forced to waive their ability to obtain whistleblower awards. According to the SEC’s order, more than 1,000 departing BlackRock employees signed separation agreements containing violative language stating that they “waive any right to recovery of incentives for reporting of misconduct” in order to receive their monetary separation payments from the firm. BlackRock added the waiver provision in October 2011 after the SEC adopted its whistleblower program rules, and the firm continued using it in separation agreements until March 2016. “BlackRock took direct aim at our whistleblower program by using separation agreements that removed the financial incentives for reporting problems to the SEC,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Asset managers simply cannot place restrictions on the ability of whistleblowers to accept financial awards for providing valuable information to the SEC.” Jane Norberg, Chief of the Office of the Whistleblower, added, “This enforcement action against BlackRock underscores our ongoing commitment to ensure the lines of communication between whistleblowers and the SEC remain unimpeded. Companies should review and revise their agreements that stifle whistleblowers from reporting to the SEC.” BlackRock consented to the SEC’s order without admitting or denying the findings that it violated Rule 21F-17. The order notes that BlackRock voluntarily revised its separation agreement and took a number of remedial actions, including the implementation of mandatory yearly training to summarize employee rights under the SEC’s whistleblower program. The SEC’s investigation was conducted by Alfred Tierney and Luke Pazicky and supervised by Adam Aderton of the Asset Management Unit.
The Securities and Exchange Commission today announced that New York-based asset manager BlackRock Inc. has agreed to pay a $340,000 penalty to settle charges that it improperly used separation agreements in which exiting employees were forced to waive their ability to obtain whistleblower awards. According to the SEC’s order, more than 1,000 departing BlackRock employees signed separation agreements containing violative language stating that they “waive any right to recovery of incentives for reporting of misconduct” in order to receive their monetary separation payments from the firm. BlackRock added the waiver provision in October 2011 after the SEC adopted its whistleblower program rules, and the firm continued using it in separation agreements until March 2016. “BlackRock took direct aim at our whistleblower program by using separation agreements that removed the financial incentives for reporting problems to the SEC,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Asset managers simply cannot place restrictions on the ability of whistleblowers to accept financial awards for providing valuable information to the SEC.” Jane Norberg, Chief of the Office of the Whistleblower, added, “This enforcement action against BlackRock underscores our ongoing commitment to ensure the lines of communication between whistleblowers and the SEC remain unimpeded. Companies should review and revise their agreements that stifle whistleblowers from reporting to the SEC.” BlackRock consented to the SEC’s order without admitting or denying the findings that it violated Rule 21F-17. The order notes that BlackRock voluntarily revised its separation agreement and took a number of remedial actions, including the implementation of mandatory yearly training to summarize employee rights under the SEC’s whistleblower program. The SEC’s investigation was conducted by Alfred Tierney and Luke Pazicky and supervised by Adam Aderton of the Asset Management Unit.