SEC Charges D.E. Shaw & Co. on Violation of Whistleblower Protection Rule

The SEC has charged New York-based investment adviser D. E. Shaw & Co., L.P. for its practices which hinder whistleblowing. The SEC order revealed that D.E. Shaw had required new employees to sign an agreement that prohibited them from disclosing confidential information to third parties outside the company unless they were authorised by the company or compelled to do so by law, and also made departing employees sign a release affirming that they had not filed any complaints with any government agency in order to receive their deferred compensation and other benefits. D.E. Shaw agreed to pay $10 million as penalty to settle these charges and has also been censured by the SEC. According to the SEC's Division of Enforcement Director Gurbir S. Grewal, entities employing confidentiality and employment agreements should take notice and similarly ensure that they are allowing the protected communication of whistleblowers to the SEC. This action is part of the SEC's commitment to upholding the right of whistleblowers to communicate violations of securities laws without impediment.