Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Aug. 16 — Health Net Inc. agreed to pay $340,000 to resolve Securities and Exchange Commission allegations over its use of a severance agreement that barred former employees from seeking an award under the agency's whistle-blower program ( In re Health Net, Inc., SEC, Admin. Proc. File No. 3-17396, 8/16/16 ).
The California-based health insurance provider also agreed to notify former employees that they are free to accept an award for blowing the whistle on a suspected securities law violation.
Health Net neither admitted nor denied wrongdoing.
Under the SEC's bounty program, whistle-blowers whose tips lead to a successful enforcement action may be awarded up to 30 percent of the funds collected.
In May 2011, the SEC adopted a rule prohibiting the use of confidentiality agreements designed to deter an employee from telling the commission about a possible securities violation. Allegedly, after the rule was adopted, Health Net started using a severance agreement that required departing employees to waive their right to apply for a whistle-blower award.
Although the company later removed the SEC-specific language from its severance agreements, it didn't remove other restrictive language prohibiting financial incentives for blowing the whistle until last year, the agency said.
The agency has been cracking down on conduct that stifles whistle-blowers from coming forward. On Aug. 10, Atlanta-based building products distributor BlueLinx Holdings Inc. agreed to pay $265,000 to settle claims its severance agreements violated whistle-blower protection rules (155 CARE, 8/11/16).
To contact the reporter on this story: Antoinette Gartrell in Washington at email@example.com
To contact the editor responsible for this story: Phyllis Diamond at firstname.lastname@example.org
The SEC's complaint is available at https://www.sec.gov/litigation/admin/2016/34-78590.pdf.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)