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New Delhi
The US Markets Regulator charges advisory firm GQG partners with violating whistleblower protection rule.
The Securities and Exchange Commission (SEC) said GQG partners' "agreements with potential hires and a former employee raised barriers to reporting information" to government agencies, including the regulator.
What is GQG partners known for?
GQG partners, founded by Rajiv Jain, is an active portfolio management firm with headquarters in Florida, USA.
According to the company's website, GQG is responsible for managing client assets of over $150 billion globally.
US SEC's order
The SEC discovered that 12 job applicants were prevented from disclosing possible securities law breaches.
This was due to GQG's non-disclosure agreements (NDAs) and a settlement agreement with an ex-employee. The regulator said that GQG's NDAs had certain caveats: Candidates could reply to commission demands for information. However, they had to notify GQG first, and they couldn't make any voluntary disclosures.
The regulator's order said GQG entered into a settlement agreement with a former employee. This agreement came after the ex-employee's lawyer informed GQG that the client planned to disclose suspected breaches of securities laws to the SEC.
The SEC, in a press release, said:
"Specifically, the settlement agreement said that it permitted reporting possible securities law violations to government agencies, including the Commission. However, it also required the former employee to affirm that he or she had not done so, was not aware of facts that would support an investigation, and would withdraw any statements already made that might support an investigation." The regulator added: "These provisions violated the whistleblower protection rule."
Crey Schuster, the co-chief of the division of enforcement's asset management unit, said:
"Whether through agreements or otherwise, firms cannot impose barriers to persons providing evidence about possible securities law violations to the sec, as GQG did." Schuster added, "Even agreements that contain carve-out language allowing people to voluntarily report to the SEC can be violative if restrictive language in a separate provision impedes voluntary reporting to the commission staff."
In response to the SEC's findings, GQG paid a $500,000 fine, consented to be censured, and promised not to violate the whistleblower protection rule in the future.
In response to WION's request, GQG partners' spokesperson said:
"GQG takes its regulatory compliance obligations very seriously. We appreciate the professionalism displayed by the SEC staff throughout this inquiry. We believe that we are well positioned to serve our teams and clients going forward."