SEC Fines Brinks for Restricting Whistleblowing in Contracts

SEC Fines

On June 22, the U.S. Securities and Exchange Commission (SEC) announced settled charges with the Brink’s Company, a private security and protection company famous for its armored trucks used to transport cash, over language in confidentiality and nondisclosure agreements which restricted whistleblowing. Brinks is to pay $400,00 and change the language in its agreements to comply with SEC rules.

Rule 21F-17 of the Dodd-Frank Act, the 2010 law which established the SEC Whistleblower Program, prohibits companies from impeding employees from blowing the whistle to the SEC including by “enforcing, or threatening to enforce, a confidentiality agreement.”

According to the SEC, from 2015 through 2019, Brinks required new employees to sign a Confidentiality and Non-Competition Agreement as part of their onboarding process. These agreements allegedly “prohibited employees from divulging confidential information about the company to any third party without the prior written authorization of a Brinks, Inc. executive officer.” Brinks also allegedly added language to the agreements that imposed a $75,000 liquidated damages liability fee on any employees who broke the agreement. Brinks allegedly failed to include language which clearly exempted SEC whistleblowers from the restrictions.

The SEC’s order states that “[b]y requiring current and former employees to notify the company prior to disclosing any financial or business information to any third parties, and threatening them with liquidated damages and legal fees if they did not do so, Brinks took action to impede potential whistleblowers by forcing those employees to choose between identifying themselves to the company as whistleblowers or potentially having to pay $75,000 and the company’s legal fees. This conduct undermines the purpose of Section 21F and Rule 21F-17(a) to ‘encourage[e] individuals to report to the Commission.’”

Brinks agreed to pay a $400,000 penalty to settle the SEC’s charges, though the company neither confirmed nor denied the agency’s findings. Brinks must also include a provision explaining employees’ rights to blow the whistle to the SEC in all employment-related agreements involving U.S.-based employees.

In April, the SEC announced settled charges against David Hansen, co-founder and former Chief Information Officer of the technology company NS8, Inc., for impeding an individual from communicating with the SEC about potential securities violations. Hansen will pay $97,523 for violating a SEC whistleblower protection rule.


The SEC’s Order Against Brinks

More SEC Whistleblower News on WNN

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