In re SandRidge Energy

 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79607 / December 20, 2016 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-17739 
 
 
In the Matter of 
 
SandRidge Energy, 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 SandRidge Energy, Inc. (“SandRidge” or 
“Respondent”).  
II. 
 In anticipation of the institution of these proceedings, SandRidge 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, SandRidge 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 Respondent’s Offer, the Commission finds
1
 that: 
Respondent 
1. SandRidge Energy, Inc. is a Delaware corporation headquartered in Oklahoma 
City, Oklahoma.  Effective January 7, 2016, SandRidge’s common stock was delisted by the New 
York Stock Exchange (“NYSE”) due to “abnormally low” trading price levels and began trading 
on the OTC Pink marketplace under the symbol “SDOC.”  SandRidge and 24 affiliates filed 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 

 
2 
voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on May 16, 2016.  See In re 
Sandridge Energy, Inc., et al., Case No. 16-32488 (Bankr. S. D. Tex.) (jointly administered) (the 
“Bankruptcy Case”).  On September 20, 2016, SandRidge’s Chapter 11 plan of reorganization 
(“Plan”) was confirmed by the bankruptcy court.  The Plan became effective, and the company 
emerged from bankruptcy, on October 4, 2016.  Effective October 4, 2016, the reorganized 
SandRidge’s common stock began trading on NYSE under the symbol “SD.”  SandRidge files 
periodic reports, including reports on Forms 10-K and 10-Q, with the Commission pursuant to 
Section 13(a) of the Exchange Act and related rules thereunder. 
Facts 
Statutory and Regulatory Framework Protecting Whistleblowers and Other Witnesses In 
Commission Investigations 
2. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 
21, 2010, amended the Exchange Act by adding Section 21F, “Whistleblower Incentives and 
Protection.”  The purpose of 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. 198 (Aug. 12, 2011) (the “Adopting Release”). 
3. 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.   
4. In addition, Section 21F(h)(1), in relevant part, prohibits an employer from taking 
retaliatory actions, either directly or indirectly, against a whistleblower who makes a report 
protected under, inter alia, the Sarbanes-Oxley Act of 2002.  That act protects an employee who 
reports information that the employee reasonably believes constitutes fraud or a violation of a 
Commission rule or regulation to a person with supervisory authority over the employee or to such 
other person working for the employer who has the authority to investigate, discover or terminate 
misconduct.  See 18 U.S.C. 1514A(a). 
From August 2011 to April 2015, SandRidge’s Separation Agreements Prohibited Voluntary, 
Direct Communication with the Commission 
5. Beginning before August 12, 2011, and continuing through the present, SandRidge 
enters into separation agreements with certain employees who are leaving the company.  A 
separation agreement is a contract between an employer and a separated employee documenting 
the rights and responsibilities of both parties incidental to the employee’s departure. 

 
3 
6. The form of separation agreement used by SandRidge from at least August 12, 
2011 to April 2015 included a “Future Activities” provision that stated that a former employee of 
the company may not voluntarily cooperate with any governmental agency in any complaint or 
investigation concerning the company.  In particular, the “Future Activities” provision expressly 
stated that a former employee of the company may not: 
at any time in the future voluntarily contact or participate with any governmental 
agency in connection with any complaint or investigation pertaining to the Company, 
and [may] not be employed or otherwise act as an expert witness or consultant or in any 
similar paid capacity in any litigation, arbitration, regulatory or agency hearing or other 
adversarial or investigatory proceeding involving the Company. 
7. In addition, SandRidge’s form separation agreement included a “Confidential 
Information” provision that required employees to agree “not to make any independent use of or 
disclose to any other person or organization, including any governmental agency, any of the 
Company’s confidential, proprietary information unless [the employee] obtain[ed] the Company’s 
prior written consent.”   
8. The form separation agreement also included a “Preserving Name and Reputation” 
provision that imposed requirements on employees to “not at any time in the future defame, 
disparage or make statements or disparaging remarks which could embarrass or cause harm to 
SandRidge’s name and reputation or the names and reputation of any of its officers, directors, 
representatives, agents, employees or SandRidge’s current, former or prospective vendors, 
professional colleagues, professional organizations, associates or contractors, to any governmental 
or regulatory agency or to the press or media.”   
SandRidge Modified the Violative Provisions in Some Separation Agreements, But Continued to 
Use Its Standard Language in Many Others 
9. After the rule was enacted, several employees or officers in connection with their 
execution of the separation agreement requested that the problematic language be modified.  
Although SandRidge agreed to modify the violative language when an employee explicitly 
requested it, SandRidge continued to use the same violative language in its form separation 
agreements provided to former employees who did not identify the issue. 
10. Between August 2011 and June 2015, SandRidge conducted multiple reviews and 
revised its form separation agreement.  
11. At least as early as April 2012, SandRidge revised the “Future Activities” provision 
for certain employees when the employee, or his/her counsel, commented on the language or 
requested modification of the provision at the time of the employee’s departure from the company.  
For example, during the course of negotiating the separation agreement, counsel for an employee 
expressed concern that the “Future Activities” provision might subject the employee to criminal 
sanctions, and counsel for an officer noted with respect to the “Future Activities” provision “that 
the SEC or other regulators might view this promise negatively.”  In both of these instances, 
SandRidge agreed to revise the agreements to at least partially remove or remedy the violative 
language.  Further, at the request of employees or counsel for employees, SandRidge modified the 
problematic language in an additional five separation agreements.  The company also made certain 

 
4 
modifications to separation agreements and form separation agreements provided to select other 
employees, but the company did not remove all of the violative provisions from any agreement and 
continued to use the provisions in agreements with or relating to a vast majority of its employees.   
12. From August 2011 through April 2015, approximately 546 former employees of 
SandRidge signed separation agreements that contained all or some of the above-referenced 
“Future Activities” provision, “Confidential Information” provision, and “Preserving Name and 
Reputation” provision.  In addition, approximately 240 additional employees of SandRidge 
received a form of the separation agreement attached to their employment agreement that included 
all or some of these provisions.  As part of a planned reduction in force, SandRidge entered into 
approximately 113 separation agreements on or after April 1, 2015, the day the Commission 
announced its first enforcement action charging violations of Rule 21F-17 (See In the Matter of 
KBR, Inc., No. 3-16466 (SEC Apr. 1, 2015)).  On that same day, and in the days that followed, 
SandRidge’s in-house counsel received multiple client alerts and other information about the 
enforcement matter.  After receiving the client alerts, SandRidge asked its outside employment 
counsel to revise its standard form of separation agreement but did not change the language in the 
separation agreements used for the ongoing reduction in force.       
SandRidge Employed the Overly Prohibitive Provisions While under Active Commission 
Investigation 
13. The potential for its officers and employees to communicate with the Commission 
was not merely a hypothetical concern for SandRidge.  Many of the violative separation 
agreements were in place, and a large number of agreements were executed, at times when 
SandRidge was subject to investigation by the Commission.  While, as a general matter, the 
Commission is unable to determine if former officers or employees did not report to or 
communicate with the Commission because of the violative provisions, these provisions expressly 
limited an employee’s ability to communicate possible securities law violations with any 
governmental agency. 
14. Such restrictions on providing information regarding possible securities law 
violations to the Commission undermine the purpose of Section 21F, which is to “encourage[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. 
15. On May 11, 2015, the Commission staff contacted SandRidge to identify potential 
violations of Rule 21F-17(a) contained in agreements that SandRidge had attached to certain 
filings with the Commission, and to request that SandRidge remediate any violations.  In response 
to the Commission staff’s May 11, 2015 request, from June 2015 through July 2015, SandRidge 
took steps to remediate its ongoing violations of Rule 21F-17 by revising its form separation 
agreement and communicating such amendments to its current and former employees and advising 
them that the problematic provisions were no longer in effect.  In particular, the revised form 
separation agreement removed the language in the “Future Activities” provision prohibiting an 
employee from contacting or participating with any governmental agency in connection with any 
complaint or investigation pertaining to the company and amended the “Confidential Information” 
and “Preserving Name and Reputation” provisions to remove the specific reference to 
governmental agencies.  The company also added a new “Exceptions to Restrictions on 

 
5 
Communications, Confidentiality and Future Activities” provision which explicitly states that 
nothing in the agreement is intended to prohibit employees from reporting possible violations of 
federal law or regulation to any governmental agency or entity.   
16. In addition, from June 2015 through December 2015, SandRidge amended several 
of its corporate codes and policies, including its Code of Business Conduct and Ethics, Anti-
Retaliation Policy, Conflicts of Interest Policy, Legal Matters Policy, and Securities Trading 
Policy, that included general prohibitions of communications with third parties and required 
employees to notify the company when they were contacted by the government.  The amendments 
were intended to make clear to employees that those policies do not restrict employees from 
reporting to or communicating with the Commission or other government agencies. 
17. In February 2016, the Commission staff contacted counsel to a former employee of 
SandRidge requesting certain information concerning the circumstances of the employee’s 
departure from the company.  Through counsel, the former employee refused to speak with the 
staff referring to the language contained in the “Future Activities” provision of the separation 
agreement the employee signed with the company as the reason for the employee’s refusal.  The 
Commission staff informed the employee’s counsel of SandRidge’s remediation letter advising 
former employees that the violative provisions in the separation agreements were no longer in 
effect, but the employee still would not speak to the Commission staff voluntarily again referring 
to the original language in the separation agreement as the basis for the employee’s refusal. 
Whistleblower Retaliation 
18. In the fall of 2012, SandRidge hired a new employee (“Whistleblower”) to oversee 
reservoir engineers responsible for a portion of the company’s drilling program.   
19. Beginning within the first months of the Whistleblower’s employment, and 
continuing over the course of the next two and a half years, the Whistleblower raised with senior 
management at the company certain concerns the Whistleblower had regarding the company’s 
process in calculating oil and gas reserves that are reported by the company in its periodic reports 
filed with the Commission.  Prompted by the Whistleblower’s concerns, in the spring of 2014, 
SandRidge’s internal audit department started an audit of the reserves process.       
20. In December 2014, the Whistleblower was provided for review and comment, a 
draft report describing the internal audit.  The Whistleblower expressed strong disagreement with 
the draft report, reiterating the Whistleblower’s concerns about the “SEC reserves” and stating that 
the report “ha[d] missed the primary risks and problems associated with the entire reserves 
process.” 
21. Earlier in the same month, SandRidge had decided to offer promotions to vice 
president positions to three employees, including the Whistleblower.  In offering the promotions, 
the company sought assurances from each of the employees that they would support management 
and were committed to the company.  The Whistleblower was offered the promotion later on the 
same day the Whistleblower had raised concerns about the draft internal audit report.  The 
Whistleblower declined the promotion, or to provide the assurances sought by management, 
because of the Whistleblower’s ongoing concerns about the reserves process. 

 
6 
22. The draft internal audit report was subsequently revised to address certain of the 
Whistleblower’s concerns.  This revised draft was provided to the Whistleblower, and on or about 
January 16, 2015, the Whistleblower wrote: “Everything looks good to me.  I like the changes that 
were made.”  But the internal audit was never completed and a final version of the report was 
never disseminated to the company’s Board of Directors or Audit Committee.   
23. On February 9, 2015, the Whistleblower was asked to attend a meeting to discuss 
updating or revising the map of oil and gas well locations that had previously been used by the 
company in its public disclosures.  The Whistleblower asked to be recused from this project 
because, consistent with the concerns the Whistleblower had been raising, the Whistleblower did 
not support the methodology that the Whistleblower and others had used to prepare the prior map 
of locations.  The Whistleblower stated that this had become an “ethical issue” and the 
Whistleblower therefore could not participate in the project.  The Whistleblower later met with a 
member of senior management to discuss the ethical concerns the Whistleblower had regarding 
this project.    
24. In early to mid-March 2015, the Whistleblower again informed the company’s 
senior management of the Whistleblower’s concerns regarding the company’s process in 
calculating oil and gas reserves.  In the same period, senior management was discussing a number 
of structural changes at the company, including a restructuring of reservoir engineering, that would 
have the effect of changing the Whistleblower’s reporting structure and level of responsibility.  In 
the course of these discussions, senior management considered the Whistleblower’s possible 
termination.  The company also conducted a search of the Whistleblower’s past year of emails, 
seeking to determine if there were any external emails where the Whistleblower had made 
disparaging remarks regarding the company or the reserves process, or had used terms such as 
“type curve,” “corporate reserves,” “overstated” or “SEC.”     
25. On or about March 31, 2015, SandRidge senior management decided to terminate 
the Whistleblower.  In discussing the Whistleblower’s termination, members of SandRidge senior 
management expressed among themselves their belief that the manner in which the Whistleblower 
was raising concerns regarding the reserve process was disruptive, and that the company could 
replace the Whistleblower with someone “who could do the work without creating all of the 
internal strife.”    At that time, SandRidge had not investigated the Whistleblower’s concerns 
regarding the reserves process, other than conducting its incomplete internal audit. 
26. The company terminated the Whistleblower on April 1, 2015, the same day it made 
its large scale reduction in force.  As it did with the employees subject to the reduction in force, 
SandRidge provided the Whistleblower with its standard form of separation agreement, which 
contained the violative provisions that would have precluded the Whistleblower from 
communicating with the Commission staff.  Through counsel, the Whistleblower negotiated with 
the company over the severance amount and other terms of the separation.  Included in those 
negotiations was a request on May 28, 2015, by the Whistleblower’s counsel that the company 
“remov[e] the provisions that violate federal law,” referring to the violative provisions contained in 
the separation agreement.  At that time, nearly two months had elapsed since the Commission had 
issued its KBR order and SandRidge had already provided the name of the Whistleblower and a 
description of the Whistleblower’s allegations to the Commission staff in response to a subpoena.  
Nevertheless, the company stated in its response to the Whistleblower’s counsel that it would not 
be in a position to respond to any of the Whistleblower’s demands, including the Whistleblower’s 

 
7 
request to remove the violative provisions, until it had completed a review of the matter, including 
interviewing the Whistleblower.  SandRidge agreed to remove the violative provisions from the 
proposed separation agreement, which has never been signed, on June 9, 2015.   
Violations 
 
27. Through its conduct described above, SandRidge violated Section 21F(h) of the 
Exchange Act and Rule 21F-17 under the Exchange Act.  
IV. 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent SandRidge’s Offer. 
 Accordingly, it is hereby ORDERED that: 
A. Pursuant to Section 21C of the Exchange Act, Respondent SandRidge, including 
Reorganized SandRidge as defined in the Plan, cease and desist from committing or causing any 
violations and any future violations of Section 21F(h) of the Exchange Act and Rule 21F-17 under 
the Exchange Act; 
 
B. Subject to the payment provisions set forth in the remainder of this Paragraph IV.B., 
Respondent is ordered to pay a civil money penalty in the amount of $1,400,000.00 to the 
Securities and Exchange Commission for transfer to the general fund of the United States 
Treasury in accordance with Exchange Act Section 21F(g)(3).  Respondent’s payment of such 
$1,400,000.00 civil money penalty shall be accomplished as follows: (i) the Respondent shall 
allow and not contest the Commission’s general unsecured claim in the amount of $1,400,000.00 
in the Bankruptcy Case; and (ii) because the Commission generally cannot accept securities, and 
the Plan provides for the payment of allowed general unsecured claims in both securities and cash, 
Respondent shall pay, and the Commission shall accept (a) the cash amount that the Commission is 
entitled to receive as the holder of an allowed general unsecured claim in the amount of 
$1,400,000.00 under the Plan, plus (b) an additional cash amount equal to 50% of the monetary 
value of the securities it would otherwise be entitled to receive as the holder of an allowed general 
unsecured claim in the amount of $1,400,000.00  under the Plan (together, the “Post-Bankruptcy 
Penalty Amount”).  Upon, or as soon as reasonably practicable after, bankruptcy court approval of 
the settlement contemplated by this Order, (a) the Respondent shall notify the Commission in 
writing of the Post-Bankruptcy Penalty Amount, along with supporting documentation as to how 
such amount was calculated, and (b) the Respondent shall pay the Post-Bankruptcy Penalty 
Amount.  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 
 

 
8 
(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 
SandRidge 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 David L. Peavler, Associate 
Regional Director, Fort Worth Regional Office, Division of Enforcement, Securities and 
Exchange Commission, 801 Cherry Street, Suite 1900, Fort Worth, Texas, 76102.     
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 Action, it 
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of relief 
by the amount of any part of Respondent’s payment of a civil penalty in this action (“Penalty 
Offset”).  If the court or agency in any Related Action grants such a Penalty Offset, Respondent 
agrees that it shall, within 30 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 Action” means an administrative claim filed with respect 
to, or a private damages action brought against Respondent, based on substantially the same facts 
as alleged in the Order instituted by the Commission in this proceeding. 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 79607 / December 20, 2016 

 

ADMINISTRATIVE PROCEEDING 

File No.  3-17739 

 

 

In the Matter of 

 

SandRidge Energy, 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 SandRidge Energy, Inc. (“SandRidge” or 

“Respondent”).  

II. 

 In anticipation of the institution of these proceedings, SandRidge 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, SandRidge 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 Respondent’s Offer, the Commission finds1 that: 

Respondent 

1. SandRidge Energy, Inc. is a Delaware corporation headquartered in Oklahoma 

City, Oklahoma.  Effective January 7, 2016, SandRidge’s common stock was delisted by the New 

York Stock Exchange (“NYSE”) due to “abnormally low” trading price levels and began trading 

on the OTC Pink marketplace under the symbol “SDOC.”  SandRidge and 24 affiliates filed 

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding. 



 2 

voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on May 16, 2016.  See In re 

Sandridge Energy, Inc., et al., Case No. 16-32488 (Bankr. S. D. Tex.) (jointly administered) (the 

“Bankruptcy Case”).  On September 20, 2016, SandRidge’s Chapter 11 plan of reorganization 

(“Plan”) was confirmed by the bankruptcy court.  The Plan became effective, and the company 

emerged from bankruptcy, on October 4, 2016.  Effective October 4, 2016, the reorganized 

SandRidge’s common stock began trading on NYSE under the symbol “SD.”  SandRidge files 

periodic reports, including reports on Forms 10-K and 10-Q, with the Commission pursuant to 

Section 13(a) of the Exchange Act and related rules thereunder. 

Facts 

Statutory and Regulatory Framework Protecting Whistleblowers and Other Witnesses In 

Commission Investigations 

2. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 

21, 2010, amended the Exchange Act by adding Section 21F, “Whistleblower Incentives and 

Protection.”  The purpose of 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. 198 (Aug. 12, 2011) (the “Adopting Release”). 

3. 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.   

4. In addition, Section 21F(h)(1), in relevant part, prohibits an employer from taking 

retaliatory actions, either directly or indirectly, against a whistleblower who makes a report 

protected under, inter alia, the Sarbanes-Oxley Act of 2002.  That act protects an employee who 

reports information that the employee reasonably believes constitutes fraud or a violation of a 

Commission rule or regulation to a person with supervisory authority over the employee or to such 

other person working for the employer who has the authority to investigate, discover or terminate 

misconduct.  See 18 U.S.C. 1514A(a). 

From August 2011 to April 2015, SandRidge’s Separation Agreements Prohibited Voluntary, 

Direct Communication with the Commission 

5. Beginning before August 12, 2011, and continuing through the present, SandRidge 

enters into separation agreements with certain employees who are leaving the company.  A 

separation agreement is a contract between an employer and a separated employee documenting 

the rights and responsibilities of both parties incidental to the employee’s departure. 



 3 

6. The form of separation agreement used by SandRidge from at least August 12, 

2011 to April 2015 included a “Future Activities” provision that stated that a former employee of 

the company may not voluntarily cooperate with any governmental agency in any complaint or 

investigation concerning the company.  In particular, the “Future Activities” provision expressly 

stated that a former employee of the company may not: 

at any time in the future voluntarily contact or participate with any governmental 

agency in connection with any complaint or investigation pertaining to the Company, 

and [may] not be employed or otherwise act as an expert witness or consultant or in any 

similar paid capacity in any litigation, arbitration, regulatory or agency hearing or other 

adversarial or investigatory proceeding involving the Company. 

7. In addition, SandRidge’s form separation agreement included a “Confidential 

Information” provision that required employees to agree “not to make any independent use of or 

disclose to any other person or organization, including any governmental agency, any of the 

Company’s confidential, proprietary information unless [the employee] obtain[ed] the Company’s 

prior written consent.”   

8. The form separation agreement also included a “Preserving Name and Reputation” 

provision that imposed requirements on employees to “not at any time in the future defame, 

disparage or make statements or disparaging remarks which could embarrass or cause harm to 

SandRidge’s name and reputation or the names and reputation of any of its officers, directors, 

representatives, agents, employees or SandRidge’s current, former or prospective vendors, 

professional colleagues, professional organizations, associates or contractors, to any governmental 

or regulatory agency or to the press or media.”   

SandRidge Modified the Violative Provisions in Some Separation Agreements, But Continued to 

Use Its Standard Language in Many Others 

9. After the rule was enacted, several employees or officers in connection with their 

execution of the separation agreement requested that the problematic language be modified.  

Although SandRidge agreed to modify the violative language when an employee explicitly 

requested it, SandRidge continued to use the same violative language in its form separation 

agreements provided to former employees who did not identify the issue. 

10. Between August 2011 and June 2015, SandRidge conducted multiple reviews and 

revised its form separation agreement.  

11. At least as early as April 2012, SandRidge revised the “Future Activities” provision 

for certain employees when the employee, or his/her counsel, commented on the language or 

requested modification of the provision at the time of the employee’s departure from the company.  

For example, during the course of negotiating the separation agreement, counsel for an employee 

expressed concern that the “Future Activities” provision might subject the employee to criminal 

sanctions, and counsel for an officer noted with respect to the “Future Activities” provision “that 

the SEC or other regulators might view this promise negatively.”  In both of these instances, 

SandRidge agreed to revise the agreements to at least partially remove or remedy the violative 

language.  Further, at the request of employees or counsel for employees, SandRidge modified the 

problematic language in an additional five separation agreements.  The company also made certain 



 4 

modifications to separation agreements and form separation agreements provided to select other 

employees, but the company did not remove all of the violative provisions from any agreement and 

continued to use the provisions in agreements with or relating to a vast majority of its employees.   

12. From August 2011 through April 2015, approximately 546 former employees of 

SandRidge signed separation agreements that contained all or some of the above-referenced 

“Future Activities” provision, “Confidential Information” provision, and “Preserving Name and 

Reputation” provision.  In addition, approximately 240 additional employees of SandRidge 

received a form of the separation agreement attached to their employment agreement that included 

all or some of these provisions.  As part of a planned reduction in force, SandRidge entered into 

approximately 113 separation agreements on or after April 1, 2015, the day the Commission 

announced its first enforcement action charging violations of Rule 21F-17 (See In the Matter of 

KBR, Inc., No. 3-16466 (SEC Apr. 1, 2015)).  On that same day, and in the days that followed, 

SandRidge’s in-house counsel received multiple client alerts and other information about the 

enforcement matter.  After receiving the client alerts, SandRidge asked its outside employment 

counsel to revise its standard form of separation agreement but did not change the language in the 

separation agreements used for the ongoing reduction in force.       

SandRidge Employed the Overly Prohibitive Provisions While under Active Commission 

Investigation 

13. The potential for its officers and employees to communicate with the Commission 

was not merely a hypothetical concern for SandRidge.  Many of the violative separation 

agreements were in place, and a large number of agreements were executed, at times when 

SandRidge was subject to investigation by the Commission.  While, as a general matter, the 

Commission is unable to determine if former officers or employees did not report to or 

communicate with the Commission because of the violative provisions, these provisions expressly 

limited an employee’s ability to communicate possible securities law violations with any 

governmental agency. 

14. Such restrictions on providing information regarding possible securities law 

violations to the Commission undermine the purpose of Section 21F, which is to “encourage[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. 

15. On May 11, 2015, the Commission staff contacted SandRidge to identify potential 

violations of Rule 21F-17(a) contained in agreements that SandRidge had attached to certain 

filings with the Commission, and to request that SandRidge remediate any violations.  In response 

to the Commission staff’s May 11, 2015 request, from June 2015 through July 2015, SandRidge 

took steps to remediate its ongoing violations of Rule 21F-17 by revising its form separation 

agreement and communicating such amendments to its current and former employees and advising 

them that the problematic provisions were no longer in effect.  In particular, the revised form 

separation agreement removed the language in the “Future Activities” provision prohibiting an 

employee from contacting or participating with any governmental agency in connection with any 

complaint or investigation pertaining to the company and amended the “Confidential Information” 

and “Preserving Name and Reputation” provisions to remove the specific reference to 

governmental agencies.  The company also added a new “Exceptions to Restrictions on 



 5 

Communications, Confidentiality and Future Activities” provision which explicitly states that 

nothing in the agreement is intended to prohibit employees from reporting possible violations of 

federal law or regulation to any governmental agency or entity.   

16. In addition, from June 2015 through December 2015, SandRidge amended several 

of its corporate codes and policies, including its Code of Business Conduct and Ethics, Anti-

Retaliation Policy, Conflicts of Interest Policy, Legal Matters Policy, and Securities Trading 

Policy, that included general prohibitions of communications with third parties and required 

employees to notify the company when they were contacted by the government.  The amendments 

were intended to make clear to employees that those policies do not restrict employees from 

reporting to or communicating with the Commission or other government agencies. 

17. In February 2016, the Commission staff contacted counsel to a former employee of 

SandRidge requesting certain information concerning the circumstances of the employee’s 

departure from the company.  Through counsel, the former employee refused to speak with the 

staff referring to the language contained in the “Future Activities” provision of the separation 

agreement the employee signed with the company as the reason for the employee’s refusal.  The 

Commission staff informed the employee’s counsel of SandRidge’s remediation letter advising 

former employees that the violative provisions in the separation agreements were no longer in 

effect, but the employee still would not speak to the Commission staff voluntarily again referring 

to the original language in the separation agreement as the basis for the employee’s refusal. 

Whistleblower Retaliation 

18. In the fall of 2012, SandRidge hired a new employee (“Whistleblower”) to oversee 

reservoir engineers responsible for a portion of the company’s drilling program.   

19. Beginning within the first months of the Whistleblower’s employment, and 

continuing over the course of the next two and a half years, the Whistleblower raised with senior 

management at the company certain concerns the Whistleblower had regarding the company’s 

process in calculating oil and gas reserves that are reported by the company in its periodic reports 

filed with the Commission.  Prompted by the Whistleblower’s concerns, in the spring of 2014, 

SandRidge’s internal audit department started an audit of the reserves process.       

20. In December 2014, the Whistleblower was provided for review and comment, a 

draft report describing the internal audit.  The Whistleblower expressed strong disagreement with 

the draft report, reiterating the Whistleblower’s concerns about the “SEC reserves” and stating that 

the report “ha[d] missed the primary risks and problems associated with the entire reserves 

process.” 

21. Earlier in the same month, SandRidge had decided to offer promotions to vice 

president positions to three employees, including the Whistleblower.  In offering the promotions, 

the company sought assurances from each of the employees that they would support management 

and were committed to the company.  The Whistleblower was offered the promotion later on the 

same day the Whistleblower had raised concerns about the draft internal audit report.  The 

Whistleblower declined the promotion, or to provide the assurances sought by management, 

because of the Whistleblower’s ongoing concerns about the reserves process. 



 6 

22. The draft internal audit report was subsequently revised to address certain of the 

Whistleblower’s concerns.  This revised draft was provided to the Whistleblower, and on or about 

January 16, 2015, the Whistleblower wrote: “Everything looks good to me.  I like the changes that 

were made.”  But the internal audit was never completed and a final version of the report was 

never disseminated to the company’s Board of Directors or Audit Committee.   

23. On February 9, 2015, the Whistleblower was asked to attend a meeting to discuss 

updating or revising the map of oil and gas well locations that had previously been used by the 

company in its public disclosures.  The Whistleblower asked to be recused from this project 

because, consistent with the concerns the Whistleblower had been raising, the Whistleblower did 

not support the methodology that the Whistleblower and others had used to prepare the prior map 

of locations.  The Whistleblower stated that this had become an “ethical issue” and the 

Whistleblower therefore could not participate in the project.  The Whistleblower later met with a 

member of senior management to discuss the ethical concerns the Whistleblower had regarding 

this project.    

24. In early to mid-March 2015, the Whistleblower again informed the company’s 

senior management of the Whistleblower’s concerns regarding the company’s process in 

calculating oil and gas reserves.  In the same period, senior management was discussing a number 

of structural changes at the company, including a restructuring of reservoir engineering, that would 

have the effect of changing the Whistleblower’s reporting structure and level of responsibility.  In 

the course of these discussions, senior management considered the Whistleblower’s possible 

termination.  The company also conducted a search of the Whistleblower’s past year of emails, 

seeking to determine if there were any external emails where the Whistleblower had made 

disparaging remarks regarding the company or the reserves process, or had used terms such as 

“type curve,” “corporate reserves,” “overstated” or “SEC.”     

25. On or about March 31, 2015, SandRidge senior management decided to terminate 

the Whistleblower.  In discussing the Whistleblower’s termination, members of SandRidge senior 

management expressed among themselves their belief that the manner in which the Whistleblower 

was raising concerns regarding the reserve process was disruptive, and that the company could 

replace the Whistleblower with someone “who could do the work without creating all of the 

internal strife.”    At that time, SandRidge had not investigated the Whistleblower’s concerns 

regarding the reserves process, other than conducting its incomplete internal audit. 

26. The company terminated the Whistleblower on April 1, 2015, the same day it made 

its large scale reduction in force.  As it did with the employees subject to the reduction in force, 

SandRidge provided the Whistleblower with its standard form of separation agreement, which 

contained the violative provisions that would have precluded the Whistleblower from 

communicating with the Commission staff.  Through counsel, the Whistleblower negotiated with 

the company over the severance amount and other terms of the separation.  Included in those 

negotiations was a request on May 28, 2015, by the Whistleblower’s counsel that the company 

“remov[e] the provisions that violate federal law,” referring to the violative provisions contained in 

the separation agreement.  At that time, nearly two months had elapsed since the Commission had 

issued its KBR order and SandRidge had already provided the name of the Whistleblower and a 

description of the Whistleblower’s allegations to the Commission staff in response to a subpoena.  

Nevertheless, the company stated in its response to the Whistleblower’s counsel that it would not 

be in a position to respond to any of the Whistleblower’s demands, including the Whistleblower’s 



 7 

request to remove the violative provisions, until it had completed a review of the matter, including 

interviewing the Whistleblower.  SandRidge agreed to remove the violative provisions from the 

proposed separation agreement, which has never been signed, on June 9, 2015.   

Violations 

 

27. Through its conduct described above, SandRidge violated Section 21F(h) of the 

Exchange Act and Rule 21F-17 under the Exchange Act.  

IV. 

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

agreed to in Respondent SandRidge’s Offer. 

 Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent SandRidge, including 

Reorganized SandRidge as defined in the Plan, cease and desist from committing or causing any 

violations and any future violations of Section 21F(h) of the Exchange Act and Rule 21F-17 under 

the Exchange Act; 

 

B. Subject to the payment provisions set forth in the remainder of this Paragraph IV.B., 

Respondent is ordered to pay a civil money penalty in the amount of $1,400,000.00 to the 

Securities and Exchange Commission for transfer to the general fund of the United States 

Treasury in accordance with Exchange Act Section 21F(g)(3).  Respondent’s payment of such 

$1,400,000.00 civil money penalty shall be accomplished as follows: (i) the Respondent shall 

allow and not contest the Commission’s general unsecured claim in the amount of $1,400,000.00 

in the Bankruptcy Case; and (ii) because the Commission generally cannot accept securities, and 

the Plan provides for the payment of allowed general unsecured claims in both securities and cash, 

Respondent shall pay, and the Commission shall accept (a) the cash amount that the Commission is 

entitled to receive as the holder of an allowed general unsecured claim in the amount of 

$1,400,000.00 under the Plan, plus (b) an additional cash amount equal to 50% of the monetary 

value of the securities it would otherwise be entitled to receive as the holder of an allowed general 

unsecured claim in the amount of $1,400,000.00  under the Plan (together, the “Post-Bankruptcy 

Penalty Amount”).  Upon, or as soon as reasonably practicable after, bankruptcy court approval of 

the settlement contemplated by this Order, (a) the Respondent shall notify the Commission in 

writing of the Post-Bankruptcy Penalty Amount, along with supporting documentation as to how 

such amount was calculated, and (b) the Respondent shall pay the Post-Bankruptcy Penalty 

Amount.  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 

 



 8 

(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 

SandRidge 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 David L. Peavler, Associate 

Regional Director, Fort Worth Regional Office, Division of Enforcement, Securities and 

Exchange Commission, 801 Cherry Street, Suite 1900, Fort Worth, Texas, 76102.     

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 Action, it 

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

by the amount of any part of Respondent’s payment of a civil penalty in this action (“Penalty 

Offset”).  If the court or agency in any Related Action grants such a Penalty Offset, Respondent 

agrees that it shall, within 30 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 Action” means an administrative claim filed with respect 

to, or a private damages action brought against Respondent, based on substantially the same facts 

as alleged in the Order instituted by the Commission in this proceeding. 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary