SEC Charges Privately Held Monolith Resources for Using Separation Agreements that Violated Whistleblower Protection Rules
FOR IMMEDIATE RELEASE
Washington D.C., Sept. 8, 2023 —
The Securities and Exchange Commission today announced settled charges against Monolith Resources LLC, a privately held energy and technology company headquartered in Lincoln, Nebraska, for using employee separation agreements that violated the SEC’s whistleblower protection rules.
According to the SEC’s order, from February 2020 until early March 2023, Monolith used separation agreements that required certain departing employees to waive their rights to monetary whistleblower awards in connection with filing claims with or participating in investigations by government agencies. The SEC’s order finds that Monolith’s separation agreements raised impediments to participation in the SEC’s whistleblower program by having employees forego important financial incentives that are intended to encourage people to communicate directly with SEC staff about possible securities law violations.
“Both private and public companies must understand that they cannot take actions or use separation agreements that in any way disincentivize employees from communicating with SEC staff about potential violations of the federal securities laws,” said Jason J. Burt, Regional Director of the SEC’s Denver Office. “Any attempt to stifle or discourage this type of communication undermines our regulatory oversight and will be dealt with appropriately.”
The SEC’s order finds that Monolith violated Securities Exchange Act of 1934 Rule 21F-17. Without admitting or denying the SEC’s findings, Monolith consented to cease and desist from committing or causing violations of the SEC’s whistleblower protection rules. Monolith also agreed to pay a civil penalty of $225,000, which takes into account its remedial actions, including notifying former employees who had signed the improper separation agreements that the agreements do not in any way limit their ability to obtain financial awards in connection with providing information to government agencies.
The SEC’s investigation was conducted by Jeffrey S. Lyons and supervised by Ian S. Karpel, Nicholas P. Heinke, and Mr. Burt of the Denver Regional Office.