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Virginia-based technology company NeuStar Inc. agreed Dec. 19 to pay $180,000 to resolve Securities and Exchange Commission allegations its severance agreements violated whistle-blower protection rules ( In re NeuStar, Inc. , S.E.C., No. Admin. Proc. File No. 3-17736, 12/19/16 ).
The company, without admitting or denying wrongdoing, voluntarily revised the agreements immediately after the SEC began its investigation, the agency said. As part of its settlement, Neustar agreed to contact former employees to tell them they aren’t prohibited from accepting SEC whistle-blower awards.
1934 Securities Exchange Act Rule 21F-17, enacted in August 2011, specifically prohibits confidentiality agreements designed to prevent an individual from communicating with the commission about potential securities violations.
According to the SEC, NeuStar’s agreements included broad language forbidding former employees from communicating with the SEC and other regulators regarding company misconduct. Former employees could be compelled to forfeit all but $100 of their severance pay for breaching the clause, the agency said. Since at least 2011, approximately 246 NeuStar employees signed the agreement.
In August, Atlanta-based building products distributor BlueLinx Holdings Inc. was slammed with a $265,000 penalty by the industry watchdog for similar alleged violations.
NeuStar was represented by Barry Goldsmith of Gibson, Dunn & Crutcher LLP, New York.
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To view the settlement, visit: https://www.sec.gov/litigation/admin/2016/34-79593.pdf
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