Company Settles Charges in Whistleblower Retaliation Case
SandRidge Energy Inc. settled SEC charges by paying a $1.4 million penalty for illegally using restrictive separation agreements that barred employees from reporting to regulators and retaliating against an internal whistleblower who raised concerns about inaccurate oil-and-gas reserve calculations, marking the first such enforcement action against retaliation toward an internal whistleblower.
SandRidge Energy Inc., an Oklahoma City-based oil-and-gas company, agreed to pay a $1.4 million penalty to settle SEC charges that it violated whistleblower protections by including prohibited language in separation agreements that barred employees from communicating with regulators. The SEC found that the company retaliated against an internal whistleblower who persistently questioned the methodology used to calculate publicly reported oil-and-gas reserves, firing him after management labeled him as 'disruptive' and initiated no meaningful investigation into his concerns. This marked the first time the SEC charged a company for retaliating against an internal whistleblower and the second action this week targeting impediments to SEC communications.
SandRidge Energy Inc., an Oklahoma City-based oil-and-gas company, agreed to pay a $1.4 million penalty to settle SEC charges without admitting or denying the allegations, with the payment subject to its bankruptcy plan. The SEC found that SandRidge continued to use restrictive language in separation agreements even after a August 2011 rule explicitly protected employees’ rights to communicate with regulators, prohibiting them from participating in government investigations or disclosing information harmful to the company. The company retaliated against an internal whistleblower who raised concerns about the accuracy of its oil-and-gas reserve calculations; despite being offered a promotion, he was fired months later after management deemed him 'disruptive' and sought to replace him with someone who would not cause 'internal strife,' without conducting any substantial investigation into his claims. The SEC emphasized this was the first enforcement action ever brought against a company for retaliating against an internal whistleblower and the second such case this week targeting obstruction of SEC communications. The investigation was led by SEC staff from the Fort Worth Regional Office, highlighting the agency’s heightened focus on protecting whistleblowers who raise concerns internally, regardless of whether they file formal complaints with the SEC.
Exhibits & Attached Documents (1)
Extracted insights
- $1.40M $1.4 million $1M–$10M
- agency contact between outgoing employees and the sec in separation agreements
- company sandridge energy inc.
- agency Securities and Exchange Commission
- person senior management
- Securities And Exchange Commission announced oil-and-gas company agreed to settle charges
- SandRidge Energy Inc. conducted multiple reviews of its separation agreements after new whistleblower protection rule became effective in August 2011
- SandRidge Energy Inc. used restrictive language prohibiting outgoing employees from participating in government investigations or disclosing harmful information
- SandRidge Energy Inc. fired internal whistleblower who raised concerns about reserve calculations
- Senior Management concluded employee was disruptive and could be replaced
- SandRidge Energy Inc. prohibited contact between outgoing employees and the SEC in separation agreements
- SandRidge Energy Inc. agreed to pay penalty of $1.4 million subject to the company’s bankruptcy plan
The Securities and Exchange Commission today announced that an oil-and-gas company has agreed to settle charges that it used illegal separation agreements and retaliated against a whistleblower who expressed concerns internally about how its reserves were being calculated. The SEC’s order finds that Oklahoma City-based SandRidge Energy Inc. conducted multiple reviews of its separation agreements after a new whistleblower protection rule became effective in August 2011, yet continued to regularly use restrictive language that prohibited outgoing employees from participating in any government investigation or disclosing information potentially harmful or embarrassing to the company. The SEC’s order further finds that SandRidge fired an internal whistleblower who kept raising concerns about the process used by SandRidge to calculate its publicly reported oil-and-gas reserves. The employee had been offered a promotion, which was turned down. Just months later, senior management concluded the employee was disruptive and could be replaced with someone “who could do the work without creating all the internal strife.” The company had conducted no substantial investigation of the whistleblower’s concerns and only initiated an internal audit that was never completed. The employee’s separation agreement also contained the company’s prohibitive language that violated the whistleblower protection rule. “Ignoring a rule that protects communications between outgoing employees and the SEC, SandRidge flatly prohibited such contact in their separation agreements and at the same time retaliated against an employee who raised concerns about the company to its management,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “Whistleblowers who step forward and raise concerns internally to their companies about potential securities law violations should be protected from retaliation regardless of whether they have filed a complaint with the SEC. This is the first time a company is being charged for retaliating against an internal whistleblower, and the second enforcement action this week against a company for impeding employees from communicating with the SEC.” Without admitting or denying the SEC’s findings, SandRidge agreed to pay a penalty of $1.4 million, subject to the company’s bankruptcy plan. The SEC’s investigation was conducted by Tamara F. McCreary, Timothy L. Evans, and David R. King and supervised by Jonathan P. Scott and David L. Peavler of the Fort Worth office.
The Securities and Exchange Commission today announced that an oil-and-gas company has agreed to settle charges that it used illegal separation agreements and retaliated against a whistleblower who expressed concerns internally about how its reserves were being calculated. The SEC’s order finds that Oklahoma City-based SandRidge Energy Inc. conducted multiple reviews of its separation agreements after a new whistleblower protection rule became effective in August 2011, yet continued to regularly use restrictive language that prohibited outgoing employees from participating in any government investigation or disclosing information potentially harmful or embarrassing to the company. The SEC’s order further finds that SandRidge fired an internal whistleblower who kept raising concerns about the process used by SandRidge to calculate its publicly reported oil-and-gas reserves. The employee had been offered a promotion, which was turned down. Just months later, senior management concluded the employee was disruptive and could be replaced with someone “who could do the work without creating all the internal strife.” The company had conducted no substantial investigation of the whistleblower’s concerns and only initiated an internal audit that was never completed. The employee’s separation agreement also contained the company’s prohibitive language that violated the whistleblower protection rule. “Ignoring a rule that protects communications between outgoing employees and the SEC, SandRidge flatly prohibited such contact in their separation agreements and at the same time retaliated against an employee who raised concerns about the company to its management,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “Whistleblowers who step forward and raise concerns internally to their companies about potential securities law violations should be protected from retaliation regardless of whether they have filed a complaint with the SEC. This is the first time a company is being charged for retaliating against an internal whistleblower, and the second enforcement action this week against a company for impeding employees from communicating with the SEC.” Without admitting or denying the SEC’s findings, SandRidge agreed to pay a penalty of $1.4 million, subject to the company’s bankruptcy plan. The SEC’s investigation was conducted by Tamara F. McCreary, Timothy L. Evans, and David R. King and supervised by Jonathan P. Scott and David L. Peavler of the Fort Worth office.