According to the US Securities and Exchange Commission (SEC), prior to leaving, more than 1,000 BlackRock employees signed separation agreements stating that they “waive any right to recovery of incentives for reporting of misconduct”.
BlackRock consented to the SEC’s order without admitting or denying the findings that it had violated the regulator’s rules.
Separation agreements
Separation agreements are used by companies to seal confidential company information or to protect themselves from lawsuits. After signing, employees cannot sue for wrongful termination or for severance pay
The ‘incentive waiver’ was added to BlackRock’s separation agreements in October 2011 after the SEC brought in its whistleblower programme.
“Asset managers simply cannot place restrictions on the ability of whistleblowers to accept financial awards for providing valuable information to the SEC.”
The asset manager continued using the agreements until March 2016.
Valuable information
Anthony Kelly, co-chief of the SEC Enforcement Division’s Asset Management Unit, said: “BlackRock took direct aim at our whistleblower programme by using separation agreements that removed the financial incentives for reporting problems to the SEC.
“Asset managers simply cannot place restrictions on the ability of whistleblowers to accept financial awards for providing valuable information to the SEC.”
Jane Norberg, chief of the office of the whistleblower, said: “This enforcement action against BlackRock underscores our ongoing commitment to ensure the lines of communication between whistleblowers and the SEC remain unimpeded.”
