In re Blue Linx Holdings Inc.

     
  UNITED STATES OF AMERICA 
 Be fore  the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Re le ase No. 78528 / Augus t 10, 2016 
 
ADMINISTRATIVE PROCEEDING 
File  No. 3-17371 
 
 
In the  Matter of 
 
Blue Linx Holdings Inc., 
 
Re s pondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS AND 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 BlueLinx  Holdings Inc. (“BlueLinx” or 
“Respondent”).  
II. 
 In anticipation  of the institution  of these proceedings, BlueLinx 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,  Respondent 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 
Remedial  Sanctions  and 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: 
Re s ponde nt 
1. BlueLinx is  a Delaware corporation with its headquarters located in Atlanta, 
Georgia.   BlueLinx’s common  stock is  registered with  the Commission  pursuant to Section  12(b) 
of the Exchange Act and trades on the New York Stock Exchange.  BlueLinx 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.  BlueLinx has approximately 1,700 employees. 
                                              
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 
Facts 
A. Statutory and  Re gulatory Frame work Prote cting Whis tleblowers 
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 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.”
2
 
3. Congress explicitly  noted  the importance  of providing  financial  incentives  to 
promote whistleblowing  to the SEC as it determined that “a critical component of the 
Whistleblower  Program is the minimum  payout that any individua l  could  look  towards in 
determining  whether to take the enormous risk  of blowing  the whistle  in  calling  attention  to 
fraud.”
3
   
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. Blue Linx’s Severance Agreements 
 
5. Beginning  prior  to August 12,  2011,  and continuing  through  the present, BlueLinx 
entered into  agreements with certain employees  who were leaving  the company and who  were 
receiving  severance or other post-employment  consideration  from BlueLinx.   A severance 
agreement is a contract between an employer  and a former employee  documenting  the rights  and 
responsibilities  of both  parties incidental to the employee’s departure.   
6. During  the period  from August  12,  2011  through  the present, BlueLinx  used several 
forms of severance agreements, variously  termed:  (1) “Confidential Severance Agreement and 
General Release (“Termination Agreement”); (2) Separation Agreement; (3) Settlement 
Agreement and Full  and Final Release of Claims (“Settlement Agreement”); (4) Release 
Agreement; and (5) a Letter Agreement that was a severance agreement in the form  of a letter to 
the departing  employee (collectively, “Severance Agreements”).  The vast majority  of non-
                                              
2
  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) (“Adopting Release”). 
 
3
  See The Restoring American Financial Stability Act of 2010, Committee on Banking, Housing, and Urban 
Affairs Report (April 30, 2010). 
 

 
 3 
management employees  who left BlueLinx during  the relevant period and who received severance 
payments were asked to sign Letter Agreements. 
7. Although  the Severance Agreements differed in  certain respects, most of them, 
other than the Letter Agreements, contained  some form of a provision  that prohibited  the employee 
from sharing with  anyone confidential  information  concerning  BlueLinx  that the employee  had 
learned while  employed  by the company, unless  compelled  to do so by law or legal  process.  The 
confidentiality  provisions  also required  employees either to provide  written notice  to the company 
or to obtain written consent from the company’s legal department prior to providing  confidential 
information  pursuant to such legal  process.  None of the confidentiality provisions  contained  an 
exemption  permitting an employee  to provide information voluntarily to the Commission  or other 
regulatory  or law enforcement agencies.   
 8. For  example, the Termination  Agreements defined “Confidential  Information” as 
“data and  information  relating  to the business  of BlueLinx  which  is  or has been disclosed  to  the 
Employee  or of which  the  Employee  became aware as a consequence of or  through  his 
relationship  to BlueLinx,”  and contained  the following  provision: 
 
Employee  has not and in  the future will  not use or disclose  to any third  party Confidential 
Information,  unless compelled  by law and after notice to BlueLinx.  * * * If the Employee 
has any question  regarding  what data or information  would  be considered by  BlueLinx  to 
be information  subject to this  provision,  the Employee  agrees to contact BlueLinx’s Legal 
Department in  writing  for written clarification. 
 9. Similarly,  the Release Agreements, the Separation Agreements, and the Settlement 
Agreements each contained the following confidentiality provision:    
  [The employee  shall]  hold  in  a fiduciary capacity for the benefit of the Company  [ ] all 
Confidential  Information....For a period of two years, following  the [employee’s] 
Termination  Date, Executive  shall  not,  without  the prior  written consent of the Company  or 
as may otherwise be required  by law or legal  process, communicate  or divulge  Confidential 
Information. 
 10. While  several forms of the Severance Agreements included  a restriction  on the 
disclosure  of confidential  information, BlueLinx  did  not  add such a provision  to the Letter 
Agreements until  mid-2013. 
 11. Between September 2011 and mid-2013,  approximately eighteen BlueLinx 
employees  signed Severance Agreements that included  one of the confidentiality  provisions 
referred to in  paragraphs 8 and 9,  above.  
 12. In or about June 2013 – nearly two years after the Commission had adopted Rule 
21F-17 – BlueLinx reviewed and revised each of its Severance Agreements, including  the Letter 
Agreement, and either added or amended a number  of provisions  that a departing  employee  was 
required  to accept as a condition for receiving monetary severance payments and other 
consideration  from BlueLinx.  

 
 4 
 13. Specifically, BlueLinx added a confidentiality  clause to its form Letter Agreement 
that was similar  to those that had been included  in  its other Severance Agreements even prior to the 
effective date of Rule 21F-17.   The added confidentiality  clause provided: 
[The Employee  shall  not] disclose  to any person or entity  not  expressly authorized  by  the 
Company  any Confidential  Information or Trade Secrets....Anything herein to the contrary 
notwithstanding,  you  shall  not  be restricted from  disclosing  or using  Confidential 
Information  or Trade Secrets that are required to be disclosed  by  law, court or other legal 
process; provided,  however, that in  the event disclosure  is  required by  law, you  shall 
provide the Company’s Legal Department with prompt written notice of such requirement 
in  time  to permit  the Company  to seek an appropriate protective  order or other similar 
protection  prior  to any such disclosure  by you. 
 14. At the same time, BlueLinx  amended all  of the Severance Agreements, including 
the Letter Agreement, by adding a clause to the general release provision specifically  addressing 
interactions  with  governmental  agencies and associated financial  incentives.  The new clause 
provided that: 
Employee  further acknowledges and agrees that nothing  in  this  Agreement prevents 
Employee from filing a charge with...the Equal  Employment  Opportunity  Commission,  the 
National  Labor Relations  Board,  the Occupational  Safety and Health Administration, the 
Securities  and Exchange Commission or any other administrative  agency if  applicable  law 
requires that Employee  be permitted  to do so; however, Employee understands and agrees 
that Employee  is waiving  the right  to any monetary  recovery in  connection  with  any such 
complaint  or charge that Employee  may file  with  an administrative  agency.  (Emphasis 
added.) 
 15. Approximately 160 BlueLinx employees have signed Severance Agreements that 
contained the provisions described in paragraphs 13 and 14,  above.   
 16. By including those clauses in its Severance Agreements, BlueLinx raised 
impediments  to participation  by its employees in the SEC’s whistleblower program.  By requiring 
departing employees to notify the company’s Legal Department prior to disclosing  any financial 
or business  information  to  any third  parties  without expressly exempting  the Commission from 
the scope of this  restriction,  BlueLinx  forced those employees  to choose  between identifying 
themselves  to the company as whistleblowers  or  potentially  losing  their  severance pay  and 
benefits.    
 17. Further, by requiring  its  departing  employees  to forgo any monetary recovery in 
connection  with  providing  information  to the Commission, BlueLinx removed the critically 
important  financial  incentives that are intended to encourage persons to communicate  directly  with 
the Commission  staff about possible  securities law violations.    
 18. Restrictions  on the ability  of employees to share confidential  corporate information 
regarding  possible  securities law violations  with  the Commission  and to accept financial  awards 
for providing  information  to the Commission,  such as those contained  in  the Severance 
Agreements, undermine the purpose of Section 21F, which is to “encourage individuals  to report to 

 
 5 
the Commission,”
4
 and violate  Rule  21F-17(a) by  impeding  individua ls  from communicating 
directly  with  the Commission  staff about possible  securities law violations. 
Violation 
19. Through  its  conduct described above, BlueLinx violated Exchange Act Rule  21F-
17.  
Unde rtaking 
 
20.  BlueLinx  undertakes that, from  the date of the issuance of this  Order, it will 
include  the following  provision in all  of its Severance Agreements and/or any other agreements 
with  its employees that include  prohibitions  on the use or disclosure of confidential  information 
relating  to the company: 
“Protected Rights.  Employee  understands that nothing  contained in  this  Agreement 
limits Employee’s ability to file  a charge or complaint  with the Equal  Employment 
Opportunity  Commission,  the National  Labor Relations  Board,  the Occupational  Safety 
and Health Administration,  the Securities and Exchange Commission  or any other 
federal, state or local  governmental agency or commission (“Government 
Agencies”).  Employee  further understands that this Agreement does not  limit 
Employee’s ability to communicate with any Government Agencies or otherwise 
participate  in  any investigation  or proceeding  that may  be conducted by  any 
Government  Agency, including  providing  documents  or other information,  without 
notice  to the Company.  This Agreement does not limit  Employee’s right to receive an 
award for information provided to any Government Agencies.” 
  
21. BlueLinx undertakes that, within  sixty  (60) days from the date the Commission 
enters this Order, it  will make reasonable efforts to contact BlueLinx  former employees  who 
signed  any of the Severance Agreements from August 12,  2011  to the present, and provide  them 
with  an Internet link  to the Order
5
 and a statement that BlueLinx  does not  prohibit  former 
employees  from: (1) providing  information  to, or communicating  with,  Commission  staff without 
notice  to the Company; or (2) accepting a whistleblower  award from the Commission  pursuant to 
Section  21F of the Exchange Act.   
22. BlueLinx undertakes to certify, in  writing, its compliance  with  the undertakings  set 
forth above.  The certification  shall  identify each undertaking,  provide  written evidence of 
compliance  in  the form of a narrative,  and be supported  by exhibits  sufficient  to  demonstrate 
compliance.   The Commission  staff may make reasonable requests for further evidence of 
compliance,  and Respondent agrees to provide  such evidence.  The certification  and supporting 
material  shall  be submitted  to Antonia  Chion,  Associate Director, with  a copy to the Office of the 
                                              
4
   See Adopting Release, at 201. 
 
5
  BlueLinx further agrees to provide a paper copy of the Order to any former employee who requests it. 

 
 6 
Chief Counsel  of the Enforcement Division,  no  later than sixty  (60)  days from the date of 
completion  of the undertakings. 
 
23. In determining  whether to accept the Offer, the Commission  has considered each of 
the undertakings set forth above. 
IV. 
 In view of the foregoing,  the Commission  deems it  appropriate to impose  the sanctions 
agreed to in  Respondent BlueLinx’s Offer. 
 Accordingly,  it  is hereby ORDERED that: 
A. Pursuant to Section  21C of the Exchange Act, Respondent BlueLinx cease and 
desist from committing  or causing any violations  and any future violations  of Exchange Act Rule 
21F-17; 
 
B. Respondent shall pay  a civil  money  penalty  in  the amount  of  $265,000 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) pursuant  to the terms of the 
payment  schedule  set forth  in  paragraph  C below.  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 BlueLinx 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 Antonia  Chion, Associate Director, Division  of 
Enforcement, Securities  and Exchange Commission, 100  F Street, N.E., Washington,  D.C. 20549. 
C. BlueLinx  shall  pay the penalty  due of $265,000.00 in  four installments  to the 
Commission  according  to the following  schedule:   
 
(1) $25,000.00 within  five (5) days of entry of this  Order;  

 
 7 
(2) $60,000.00 within  ninety (90) days of entry of this  Order;  
(3) $80,000.00 within  one hundred  eighty  (180) days of entry of this Order;  
(4) $100,000.00 within  two hundred  seventy (270)  days of entry of this  Order.   
 
Payments shall  be deemed made on the date they are received by the Commission  and shall  be 
applied  first to post order interest, which  accrues pursuant to 31 U.S.C. § 3717 on any unpaid 
amounts  due after twenty-one (21) days of the entry of the Order.  Prior to  making  the final 
payment set forth herein,  BlueLinx shall  contact the staff of the Commission  for the amount  due 
for the final  payment.  If BlueLinx fails  to make any payment by the date agreed and/or in  the 
amount  agreed according to the schedule set forth above,  all  outstanding  payments under this 
Order, including  post-order interest, minus  any payments made, shall  become due and payable 
immediately  at the discretion  of the staff of the Commission  without  further application  to the 
Commission. 
 
D. 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  (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 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. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 78528 / August 10, 2016 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17371 

 

 

In the Matter of 

 

BlueLinx Holdings Inc., 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS AND 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 BlueLinx Holdings Inc. (“BlueLinx” or 
“Respondent”).  

II. 

 In anticipation of the institution of these proceedings, BlueLinx 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, Respondent 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 

Remedial Sanctions and 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. BlueLinx is a Delaware corporation with its headquarters located in Atlanta, 
Georgia.  BlueLinx’s common stock is registered with the Commission pursuant to Section 12(b) 
of the Exchange Act and trades on the New York Stock Exchange.  BlueLinx 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.  BlueLinx has approximately 1,700 employees. 

                                              
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 

Facts  

A. Statutory and Regulatory Framework Protecting Whistleblowers  

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 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.”2 

3. Congress explicitly noted the importance of providing financial incentives to 
promote whistleblowing to the SEC 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.”3   

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. BlueLinx’s Severance Agreements 

 
5. Beginning prior to August 12, 2011, and continuing through the present, BlueLinx 

entered into agreements with certain employees who were leaving the company and who were 
receiving severance or other post-employment consideration from BlueLinx.  A severance 
agreement is a contract between an employer and a former employee documenting the rights and 
responsibilities of both parties incidental to the employee’s departure.   

6. During the period from August 12, 2011 through the present, BlueLinx used several 
forms of severance agreements, variously termed: (1) “Confidential Severance Agreement and 
General Release (“Termination Agreement”); (2) Separation Agreement; (3) Settlement 
Agreement and Full and Final Release of Claims (“Settlement Agreement”); (4) Release 

Agreement; and (5) a Letter Agreement that was a severance agreement in the form of a letter to 
the departing employee (collectively, “Severance Agreements”).  The vast majority of non-

                                              
2  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) (“Adopting Release”). 

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

Affairs Report (April 30, 2010). 

 



 

 3 

management employees who left BlueLinx during the relevant period and who received severance 
payments were asked to sign Letter Agreements. 

7. Although the Severance Agreements differed in certain respects, most of them, 
other than the Letter Agreements, contained some form of a provision that prohibited the employee 
from sharing with anyone confidential information concerning BlueLinx that the employee had 
learned while employed by the company, unless compelled to do so by law or legal process.  The 

confidentiality provisions also required employees either to provide written notice to the company 
or to obtain written consent from the company’s legal department prior to providing confidential 
information pursuant to such legal process.  None of the confidentiality provisions contained an 
exemption permitting an employee to provide information voluntarily to the Commission or other 

regulatory or law enforcement agencies.   

 8. For example, the Termination Agreements defined “Confidential Information” as 
“data and information relating to the business of BlueLinx which is or has been disclosed to the 
Employee or of which the Employee became aware as a consequence of or through his 

relationship to BlueLinx,” and contained the following provision: 
 

Employee has not and in the future will not use or disclose to any third party Confidential 
Information, unless compelled by law and after notice to BlueLinx. * * * If the Employee 

has any question regarding what data or information would be considered by BlueLinx to 
be information subject to this provision, the Employee agrees to contact BlueLinx’s Legal 
Department in writing for written clarification. 

 9. Similarly, the Release Agreements, the Separation Agreements, and the Settlement 

Agreements each contained the following confidentiality provision:   

  [The employee shall] hold in a fiduciary capacity for the benefit of the Company [ ] all 
Confidential Information….For a period of two years, following the [employee’s] 
Termination Date, Executive shall not, without the prior written consent of the Company or 

as may otherwise be required by law or legal process, communicate or divulge Confidential 
Information. 

 10. While several forms of the Severance Agreements included a restriction on the 
disclosure of confidential information, BlueLinx did not add such a provision to the Letter 

Agreements until mid-2013. 

 11. Between September 2011 and mid-2013, approximately eighteen BlueLinx 
employees signed Severance Agreements that included one of the confidentiality provisions 
referred to in paragraphs 8 and 9, above.  

 12. In or about June 2013 – nearly two years after the Commission had adopted Rule 
21F-17 – BlueLinx reviewed and revised each of its Severance Agreements, including the Letter 
Agreement, and either added or amended a number of provisions that a departing employee was 
required to accept as a condition for receiving monetary severance payments and other 

consideration from BlueLinx.  



 

 4 

 13. Specifically, BlueLinx added a confidentiality clause to its form Letter Agreement 
that was similar to those that had been included in its other Severance Agreements even prior to the 

effective date of Rule 21F-17.  The added confidentiality clause provided: 

[The Employee shall not] disclose to any person or entity not expressly authorized by the 
Company any Confidential Information or Trade Secrets….Anything herein to the contrary 
notwithstanding, you shall not be restricted from disclosing or using Confidential 

Information or Trade Secrets that are required to be disclosed by law, court or other legal 
process; provided, however, that in the event disclosure is required by law, you shall 
provide the Company’s Legal Department with prompt written notice of such requirement 
in time to permit the Company to seek an appropriate protective order or other similar 

protection prior to any such disclosure by you. 

 14. At the same time, BlueLinx amended all of the Severance Agreements, including 
the Letter Agreement, by adding a clause to the general release provision specifically addressing 
interactions with governmental agencies and associated financial incentives.  The new clause 

provided that: 

Employee further acknowledges and agrees that nothing in this Agreement prevents 
Employee from filing a charge with…the Equal Employment Opportunity Commission, the 
National Labor Relations Board, the Occupational Safety and Health Administration, the 

Securities and Exchange Commission or any other administrative agency if applicable law 
requires that Employee be permitted to do so; however, Employee understands and agrees 
that Employee is waiving the right to any monetary recovery in connection with any such 
complaint or charge that Employee may file with an administrative agency.  (Emphasis 

added.) 

 15. Approximately 160 BlueLinx employees have signed Severance Agreements that 
contained the provisions described in paragraphs 13 and 14, above.   

 16. By including those clauses in its Severance Agreements, BlueLinx raised 

impediments to participation by its employees in the SEC’s whistleblower program.  By requiring 
departing employees to notify the company’s Legal Department prior to disclosing any financial 
or business information to any third parties without expressly exempting the Commission from 
the scope of this restriction, BlueLinx forced those employees to choose between identifying 

themselves to the company as whistleblowers or potentially losing their severance pay and 
benefits.   

 17. Further, by requiring its departing employees to forgo any monetary recovery in 
connection with providing information to the Commission, BlueLinx removed the critically 

important financial incentives that are intended to encourage persons to communicate directly with 
the Commission staff about possible securities law violations.   

 18. Restrictions on the ability of employees to share confidential corporate information 
regarding possible securities law violations with the Commission and to accept financial awards 

for providing information to the Commission, such as those contained in the Severance 
Agreements, undermine the purpose of Section 21F, which is to “encourage individuals to report to 



 

 5 

the Commission,”4 and violate Rule 21F-17(a) by impeding individuals from communicating 
directly with the Commission staff about possible securities law violations. 

Violation 

19. Through its conduct described above, BlueLinx violated Exchange Act Rule 21F-
17.  

Undertaking 

 
20.  BlueLinx undertakes that, from the date of the issuance of this Order, it will 

include the following provision in all of its Severance Agreements and/or any other agreements 
with its employees that include prohibitions on the use or disclosure of confidential information 

relating to the company: 

“Protected Rights.  Employee understands that nothing contained in this Agreement 
limits Employee’s ability to file a charge or complaint with the Equal Employment 
Opportunity Commission, the National Labor Relations Board, the Occupational Safety 

and Health Administration, the Securities and Exchange Commission or any other 
federal, state or local governmental agency or commission (“Government 
Agencies”).  Employee further understands that this Agreement does not limit 
Employee’s ability to communicate with any Government Agencies or otherwise 

participate in any investigation or proceeding that may be conducted by any 
Government Agency, including providing documents or other information, without 
notice to the Company.  This Agreement does not limit Employee’s right to receive an 
award for information provided to any Government Agencies.” 

  
21. BlueLinx undertakes that, within sixty (60) days from the date the Commission 

enters this Order, it will make reasonable efforts to contact BlueLinx former employees who 
signed any of the Severance Agreements from August 12, 2011 to the present, and provide them 

with an Internet link to the Order5 and a statement that BlueLinx does not prohibit former 
employees from: (1) providing information to, or communicating with, Commission staff without 
notice to the Company; or (2) accepting a whistleblower award from the Commission pursuant to 
Section 21F of the Exchange Act.   

22. BlueLinx undertakes to certify, in writing, its compliance with the undertakings set 
forth above.  The certification shall identify each undertaking, provide written evidence of 
compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence of 

compliance, and Respondent agrees to provide such evidence.  The certification and supporting 
material shall be submitted to Antonia Chion, Associate Director, with a copy to the Office of the 

                                              
4   See Adopting Release, at 201. 

 
5  BlueLinx further agrees to provide a paper copy of the Order to any former employee who requests it. 



 

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Chief Counsel of the Enforcement Division, no later than sixty (60) days from the date of 
completion of the undertakings. 

 
23. In determining whether to accept the Offer, the Commission has considered each of 

the undertakings set forth above. 

IV. 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent BlueLinx’s Offer. 

 Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent BlueLinx cease and 

desist from committing or causing any violations and any future violations of Exchange Act Rule 
21F-17; 

 
B. Respondent shall pay a civil money penalty in the amount of $265,000 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) pursuant to the terms of the 
payment schedule set forth in paragraph C below.  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 BlueLinx 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 Antonia Chion, Associate Director, Division of 
Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549. 

C. BlueLinx shall pay the penalty due of $265,000.00 in four installments to the 

Commission according to the following schedule:   
 
(1) $25,000.00 within five (5) days of entry of this Order;  



 

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(2) $60,000.00 within ninety (90) days of entry of this Order;  
(3) $80,000.00 within one hundred eighty (180) days of entry of this Order;  

(4) $100,000.00 within two hundred seventy (270) days of entry of this Order.   
 
Payments shall be deemed made on the date they are received by the Commission and shall be 
applied first to post order interest, which accrues pursuant to 31 U.S.C. § 3717 on any unpaid 

amounts due after twenty-one (21) days of the entry of the Order.  Prior to making the final 
payment set forth herein, BlueLinx shall contact the staff of the Commission for the amount due 
for the final payment.  If BlueLinx fails to make any payment by the date agreed and/or in the 
amount agreed according to the schedule set forth above, all outstanding payments under this 

Order, including post-order interest, minus any payments made, shall become due and payable 
immediately at the discretion of the staff of the Commission without further application to the 
Commission. 

 

D. 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 (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 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. 

 

 
 
       Brent J. Fields 
       Secretary