The Securities and Exchange Commission has charged Florida-based GQG Partners LLC with violating the whistleblower protection rule.
In a news release, the SEC announced settled charges against GQG, a registered investment adviser, for entering into agreements with candidates for employment and a former employee that made it more difficult for them to report potential securities law violations to the SEC. The firm will have to pay a $500,000 civil penalty.
The commission found that from November 2020 through September 2023, GQG entered into non-disclosure agreements with 12 candidates for employment that prohibited them from disclosing confidential information about GQG, including to government agencies.
Under those agreements, candidates were allowed to respond to requests for information from the SEC, but GQG was required to be notified of any such request and prohibited responding to requests that arose from a candidate’s voluntary disclosure.
According to the SEC, GQG also reached a settlement agreement with a former employee whose counsel had told GQG that he or she intended to report alleged securities law violations to the Commission.
That settlement agreement allowed reporting possible securities law violations to government agencies, including the SEC, but it also required the former employee to affirm that he or she had not done so; was not aware of facts that would support an investigation; and would withdraw any statements already made that might support an investigation. These provisions violated the whistleblower protection rule.
“Whether through agreements or otherwise, firms cannot impose barriers to persons providing evidence about possible securities law violations to the SEC, as GQG did,” said Corey Schuster, Co-Chief of the Division of Enforcement’s Asset Management Unit. “Even agreements that contain carve-out language allowing people to voluntarily report to the SEC can be violative if restrictive language in a separate provision impedes voluntary reporting to the Commission staff.”
GQG was found to be in violation of whistleblower protection Rule 21F-17(a), which prohibits any action to impede an individual from communicating directly with the SEC staff about a possible securities law violation. The firm did not admit or deny the SEC’s findings, but agreed to be censured, to cease and desist from violating the whistleblower protection rule, and to pay the civil penalty.
The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. If your firm is facing an investigation from a regulatory agency, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.
