September 25, 2023

Texas-based real estate investment firm settles with SEC to resolve alleged whistleblower protection violations

The Securities and Exchange Commission recently announced that it had reached a settlement with Dallas-based CBRE, Inc., a commercial real estate services and investment firm, to resolve allegations that the company used a form that violated the Whistleblower Protection Rule.  According to the SEC’s order, between 2011 and 2022, for employees separating from the company, CBRE required those individuals to sign a release acknowledging that they had not filed a complaint against CBRE with any federal agency as a condition of receiving separation pay.  The SEC alleged this deterred potential whistleblowers from reporting complaints to the Commission, thereby undermining the whistleblower protections in Rule 21F-17(a), which prohibits companies from taking any action to impede an individual from communicating directly with the Commission regarding a possible securities law violation.  CBRE settled without admitting or denying the SEC’s allegations.

According to the SEC’s order, CBRE took extensive remedial action to comply with Rule 21F-17 after the SEC launched an investigation into the separation agreements.  CBRE cooperated with SEC staff, promptly revised all versions of its General Release Agreement to comply with Rule 21F-17, and conducted an audit of similar company agreements and templates used by CBRE and its affiliates in 54 countries.  The language in CBRE’s global policy documents and its Standards of Business Conduct (“SOBC”) were also revised to ensure that employees were aware that they were not limited in their ability to file a complaint or cooperate with any government agency, including the SEC.  This language was also communicated to more than 800 employees who had signed the release documents between 2021 and 2022.  Other remedial measures taken by CBRE include training more than 50 global compliance teams on the new Rule 21F-17 language that was added to all relevant employment-related templates, and the mandatory SOBC re-certification of more than 100,000 employees worldwide.

Under the terms of the settlement, CBRE agreed to pay a $375,000 civil penalty, an amount the SEC said reflected CBRE’s cooperation with the SEC’s investigation and the remedial measures implemented by CBRE.

SEC Press Release | SEC Order