BlackRock Charged with Improper Whistleblower Waiver Clauses in Employee Exit Agreements

January 18, 2017

The SEC charged BlackRock with improperly using separation agreements in which exiting employees were forced to waive their ability to obtain whistleblower awards. The SEC found that more than 1,000 departing BlackRock employees signed separation agreements containing violative language stating that they “waive any right to recovery of incentives for reporting of misconduct” in order to receive their monetary separation payments from the firm.  The SEC stated that BlackRock added the waiver provision in October 2011 after the SEC adopted its whistleblower program rules, and the firm continued using it in separation agreements until March 2016.

Practical Perspective:  Severance, confidentiality and other employee agreements must be carefully structured to avoid conflicting with the whistleblower regulations.  When in doubt seek good counsel.

SEC Source Document:  https://www.sec.gov/litigation/admin/2017/34-79804.pdf