Company Violated Rule Aimed at Protecting Potential Whistleblowers
NeuStar Inc., a Virginia-based technology company, agreed to pay an $180,000 penalty to settle SEC charges for using severance agreements with broad non-disparagement clauses that chilled whistleblowers by threatening forfeiture of severance pay (except $100) for communicating with the SEC, affecting at least 246 former employees between 2011 and 2015.
NeuStar Inc. violated SEC whistleblower protections by requiring at least 246 departing employees to sign severance agreements containing clauses that barred them from communicating any disparaging information about the company to the SEC, with breach resulting in forfeiture of all but $100 of severance pay. The SEC imposed a $180,000 penalty and issued a cease-and-desist order, which NeuStar consented to without admitting or denying the findings. The company also agreed to notify all affected employees that they retain the right to report potential securities law violations to the SEC without fear of penalty.
NeuStar Inc., a Virginia-based technology company, agreed to pay an $180,000 penalty to settle SEC charges for violating whistleblower protections under federal securities laws. Between August 12, 2011, and May 21, 2015, the company used severance agreements containing broad non-disparagement clauses that prohibited former employees from communicating any information that 'disparages, denigrates, maligns or impugns' the company to the SEC or other regulators, with violations triggering forfeiture of all severance pay except $100. These agreements were applied to at least 246 departing employees, and the SEC found that at least one former employee was chilled from reporting potential securities law violations due to the language. NeuStar consented to a cease-and-desist order without admitting or denying the allegations but committed to making reasonable efforts to inform all affected individuals that their right to communicate with the SEC remains intact. The SEC emphasized that public companies cannot use severance terms to obstruct whistleblowers, calling this a critical enforcement of whistleblower protections. The investigation was led by Paul J. Bohr and supervised by Ricky Sachar and Antonia Chion of the SEC’s Enforcement Division. Jane Norberg, Chief of the SEC’s Office of the Whistleblower, underscored the agency’s ongoing commitment to ensuring whistleblowers can report freely without fear of retaliation.
Exhibits & Attached Documents (1)
Extracted insights
- $180K $180,000 $100K–$1M
- $100 $100 <$10K
- person antonia chion
- person jane norberg
- company neustar inc.
- person paul j. bohr
- agency sec’s cease-and-desist order
- agency sec’s investigation
- agency Securities and Exchange Commission
- Securities And Exchange Commission Announced Technology Company Agreed To Pay Penalty Of $180,000
- NeuStar Inc. Violated Whistleblower Protection Rule
- NeuStar Inc. Consented To SEC’s Cease-And-Desist Order
- NeuStar Inc. Agreed To Make Reasonable Efforts To Inform Signatories
- Antonia Chion Said Public Companies Cannot Use Severance Agreements To Impede Whistleblowers
- Jane Norberg Added This Action Demonstrates Continued Strong Enforcement
- SEC’s Investigation Conducted By Paul J. Bohr
- SEC’s Investigation Supervised By Ricky Sachar And Ms. Chion
The Securities and Exchange Commission today announced that a technology company has agreed to pay a penalty of $180,000 to settle charges involving its severance agreements that impeded at least one former employee from communicating information to the SEC. The SEC’s order finds that Virginia-based NeuStar Inc. violated a whistleblower protection rule in the federal securities laws by routinely entering into severance agreements that contained a broad non-disparagement clause forbidding former employees from engaging with the SEC and other regulators “in any communication that disparages, denigrates, maligns or impugns” the company. Former employees could be compelled to forfeit all but $100 of their severance pay for breaching the clause. These severance agreements were used with at least 246 departing employees from Aug. 12, 2011 to May 21, 2015. NeuStar, which voluntarily revised its severance agreements promptly after the SEC began investigating, consented to the SEC’s cease-and-desist order without admitting or denying the findings. The company agreed to make reasonable efforts to inform those who signed the severance agreements that NeuStar does not prohibit former employees from communicating any concerns about potential violations of law or regulation to the SEC. “Public companies cannot use severance agreements to impede whistleblowers from communicating with the SEC about a possible securities law violation,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “NeuStar’s severance agreements broadly prohibited former employees from communicating any disparaging information about the company to the SEC, and unsurprisingly at least one former NeuStar employee was chilled by such language.” Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “This action demonstrates our continued strong enforcement of this critically important whistleblower protection rule and underscores our ongoing commitment to ensuring that potential whistleblowers can freely communicate with the SEC about possible securities law violations.” The SEC’s investigation was conducted by Paul J. Bohr and supervised by Ricky Sachar and Ms. Chion.
The Securities and Exchange Commission today announced that a technology company has agreed to pay a penalty of $180,000 to settle charges involving its severance agreements that impeded at least one former employee from communicating information to the SEC. The SEC’s order finds that Virginia-based NeuStar Inc. violated a whistleblower protection rule in the federal securities laws by routinely entering into severance agreements that contained a broad non-disparagement clause forbidding former employees from engaging with the SEC and other regulators “in any communication that disparages, denigrates, maligns or impugns” the company. Former employees could be compelled to forfeit all but $100 of their severance pay for breaching the clause. These severance agreements were used with at least 246 departing employees from Aug. 12, 2011 to May 21, 2015. NeuStar, which voluntarily revised its severance agreements promptly after the SEC began investigating, consented to the SEC’s cease-and-desist order without admitting or denying the findings. The company agreed to make reasonable efforts to inform those who signed the severance agreements that NeuStar does not prohibit former employees from communicating any concerns about potential violations of law or regulation to the SEC. “Public companies cannot use severance agreements to impede whistleblowers from communicating with the SEC about a possible securities law violation,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “NeuStar’s severance agreements broadly prohibited former employees from communicating any disparaging information about the company to the SEC, and unsurprisingly at least one former NeuStar employee was chilled by such language.” Jane Norberg, Chief of the SEC’s Office of the Whistleblower, added, “This action demonstrates our continued strong enforcement of this critically important whistleblower protection rule and underscores our ongoing commitment to ensuring that potential whistleblowers can freely communicate with the SEC about possible securities law violations.” The SEC’s investigation was conducted by Paul J. Bohr and supervised by Ricky Sachar and Ms. Chion.