D.E. Shaw & Co., a global investment firm, has been fined $10 million by the Securities and Exchange Commission (SEC) for allegedly violating whistleblower protection rules, according to information released on Friday.
The violations reportedly occurred through employee disclosure agreements that were in place from 2011 to 2019. These agreements prohibited new hires from sharing confidential business information externally, a move that is seen as a breach of whistleblower protections.
Notably, an email circulated within the firm in 2017 allowed employees to report potential violations to regulators without D.E. Shaw's knowledge. However, explicit whistleblower protections were not included until 2019.
The SEC investigation also revealed that nearly 400 employees who left the company were required to deny filing complaints with government agencies in order to claim their deferred compensation and benefits. In some cases, these benefits were worth millions of dollars.
The language of these agreements was only revised after the initiation of the regulator's investigation. The recent fine underscores the SEC's commitment to enforcing whistleblower protections and maintaining transparency within financial institutions.
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