BlueLinx to Pay $265,000 for Violating SEC Whistleblower Rule

BlueLinx Holdings, an Atlanta-based building products distributor, will pay $265,000 to settle charges brought by the Securities and Exchange Commission (SEC) that it violated securities laws by using severance agreements that required outgoing employees to waive their rights to monetary recovery should they file a charge or complaint with the SEC or other federal agencies.


BlueLinx was represented by Jessica Corley of Alston & Bird in Atlanta.

The SEC alleged that BlueLinx added the monetary recovery prohibition to all of its severance agreements in mid-2013, nearly two years after the SEC’s adoption of Rule 21F-17 that prohibits any action to impede someone from communicating with the SEC about possible securities law violations.

BlueLinx’s restrictive language forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits.

“Companies simply cannot undercut a key tenet of our whistleblower program by requiring employees to forego potential whistleblower awards in order to receive their severance payments,” said Jane Norberg, Acting Chief of the SEC’s Office of the Whistleblower.

BlueLinx consented to the SEC’s cease-and-desist order without admitting or denying the findings.

The company agreed to amend its severance agreements to make clear that employees may report possible securities law violations to the SEC and other federal agencies without BlueLinx’s prior approval and without having to forfeit any resulting whistleblower award, and to make reasonable efforts to contact former employees who had executed severance agreements after August 12, 2011 to notify them that BlueLinx does not prohibit former employees from providing information to the SEC staff or from accepting SEC whistleblower awards.

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