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ARTICLE · 15 AUGUST 2016

SEC Penalizes Company For Severance Language Purportedly Impeding Complaints

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The Company agreed to pay a penalty of $265,000 and revise its agreements.

United StatesEmployment and HR
Steven Pearlman
Steven Pearlman
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On August 10, 2016, the SEC announced that BlueLinx Holdings Inc. (Company) is settling charges that it violated Rule 21F-17 by requiring outgoing employees to waive whistleblower bounty awards in connection with severance agreements and by using an overly restrictive confidentiality clause. The Company agreed to pay a penalty of $265,000 and revise its agreements. The Order can be accessed here.

The SEC alleged that in mid-2013, the Company added to its severance agreements a provision waiving potential whistleblower awards. The SEC took issue with that waiver based on Rule 21F-17 (on July 21, 2010, Dodd-Frank amended the Exchange Act by adding Section 21F, titled "Whistleblower Incentives and Protection"), which prohibits company actions that impede a report of a possible securities law violation to the SEC.

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