Risk Management

Separation agreements contain illegal whistleblower provisions

Judy Greenwald

December 21, 2016 Reprints

Employment Practices Regulation More + Less -

An Oklahoma oil and gas company has agreed to pay $1.4 million to settle charges it used illegal separation agreements and retaliated against a whistleblower.

The U.S. Securities and Exchange Commission on Tuesday said Oklahoma City-based SandRidge Energy Inc. conducted multiple reviews of its separation agreements after a new whistleblower protection rule became effective in August 2011, yet continued to regularly use restrictive language that prohibited department employees from participating in any government investigation or disclosing information that was potentially harmful or embarrassing to the company.

The SEC said this prohibitive language was in the separation agreement of an internal whistleblower, who kept raising concerns about the process used by SandRidge to calculate its publicly reported oil and gas reserves and was fired by the company in April 2015.

The SEC said the company did not conduct a substantial investigation of the whistleblower’s concerns and only initiated an internal audit that was never completed.

“Ignoring a rule that protects communications between outgoing employees and the SEC, SandRidge flatly prohibited such contact in their separation agreements and at the same time retaliated against an employee who raised concerns about the company to its management,” Shamoil T. Shipchandler, director of the SEC’s Fort Worth, Texas, regional office, said in a statement.

SandRidge agreed to pay the $1.4 million subject to the company’s bankruptcy plan without admitting or denying the SEC’s findings, the agency said.

The company had emerged from bankruptcy in October.

SandRidge said in a statement that it “cooperated fully with the SEC throughout its investigation and the company is pleased to have resolved this matter.”