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The CBRE SEC Settlement: Understanding Whistleblower Protection Compliance

The recent settlement between CBRE Group, Inc. (“CBRE”), a prominent Dallas-based commercial real estate firm, and the U.S. Securities and Exchange Commission (“SEC”) is a significant development in whistleblower protection.

This case highlights the need for employers to comply with Rule 21F-17 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”), which aims to safeguard the rights of individuals who report potential violations of federal securities laws without fear of retaliation or legal impediment.  

Background of the CBRE Case

The SEC’s allegations against CBRE revolved around the Firm’s employment separation agreements. Between 2011 and 2022, CBRE allegedly mandated departing employees to sign a release as a condition for receiving separation pay. This release required employees to attest that they had not filed a complaint against the company with any federal agency. The SEC found that this practice effectively deterred potential whistleblowers, violating Dodd-Frank Rule 21F-17.

Legal Analysis

Rule 21F-17 explicitly prohibits any action that impedes an individual from communicating directly with the SEC about possible violations of securities laws. This includes enforcing or threatening to enforce a confidentiality agreement restricting such communication. By requiring departing employees to attest that they had not filed any complaints, CBRE’s agreements potentially created a chilling effect on whistleblowing activities.  The settlement called for the following, without limitation:

  • Financial penalty – CBRE agreed to pay approximately $375,000 to settle the allegations, highlighting the substantial financial risks of non-compliance.
  • Revising agreements – As part of its settlement, CBRE was required to revise versions of its separation agreements. This action signifies the importance of regular reviews and updates to employee agreements to ensure that they align with current laws and regulations.
  • Compliance audit – The Firm audited similar agreements worldwide, extending the compliance effort beyond its U.S. operations. This global approach reflects the widespread impact of U.S. securities laws on multinational corporations.
  • Remediation – The SEC acknowledged CBRE’s high level of cooperation and prompt efforts to remediate the issues. This cooperation likely played a role in the settlement and serves as a model for other companies facing similar charges.

Lessons for Other Companies

The CBRE case serves as a cautionary tale for companies in drafting and enforcing employee agreements, particularly in relation to separation and confidentiality clauses. Companies must do the following, without limitation:

  • Ensure legal compliance – Regularly review and update agreements to ensure that they do not contain language that may impede whistleblowing.
  • Train and educate – Provide training for HR and legal teams on compliance with whistleblower protection laws.
  • Monitor and adapt policies – Establish ongoing monitoring mechanisms to ensure continued compliance with evolving laws and regulations.

The Takeaway

CBRE’s settlement with the SEC is a reminder to follow whistleblower protection laws. It demonstrates the SEC’s commitment to enforcing these laws and the potential consequences for companies that fail to comply. This case is a clear signal to all corporate entities to rigorously review and amend their employment practices to align with the legal standards of Dodd-Frank and the SEC’s whistleblower protection rules. Ultimately, companies must prioritize the rights of whistleblowers, not only to avoid legal repercussions but also to foster a culture of transparency and ethical conduct. 

Contact Nematzadeh PLLC by calling (646) 799-6729 or emailing lawyer@nematlawyers.com for a confidential, free consultation.

Justin Nematzadeh
About the Author
Justin S. Nematzadeh, Esq. is the Founder and Managing Member of Nematzadeh PLLC. From practicing at the most prestigious law firms in the world on behalf of plaintiffs and defendants, Justin possesses a wealth of experience. He has amassed a track record of results through first-chair litigation—especially in trials—on behalf of asset managers, small businesses, large corporations, entrepreneurs, government entities, public and private institutional investors, and individuals. Justin specializes in litigation concerning antitrust, business disputes, class actions, contracts, intellectual property, securities fraud, real estate, and qui tam and whistleblower matters. Acclaimed with highly coveted awards, Justin has been integrally involved in litigation that has recovered over $3.53 billion for litigants. If you have questions about this article, contact Justin today here.