The Securities and Exchange Commission has settled charges against CBRE Inc. over language in the real estate services and investment firm’s employee release agreement that it says violated the whistleblower protection rule.
As a condition of receiving separation pay, between 2011 and 2022, CBRE required its outgoing employees to sign an agreement certifying the individual had not filed a complaint against the company with any federal agency, according to the SEC’s order.
The move to make severance dependent on employees’ requirement to sign the release thus impeded potential whistleblowers from reporting complaints to the SEC, as protected by the rule, the order found.
Based in Dallas, CBRE operates globally with more than 115,000 professionals worldwide. According to the SEC order, the company, a wholly owned indirect subsidiary and the operating entity of CBRE Group Inc., has more than 35,000 employees in the U.S.
At least 884 employees signed the CBRE general release agreement in 2021 and 2022, according to the order. The language included in the “Employee Representations” of the agreement read:
Employee represents and acknowledges [t]hat Employee has not filed any complaint or charges against CBRE, or any of its respective subsidiaries, affiliates, divisions, predecessors, successors, officers, directors, shareholders, employees, representatives or agents (hereinafter collectively “Agents”), with any state or federal court or local, state or federal agency, based on the events occurring prior to the date on which this Agreement is executed by Employee.
Once informed of the investigation, the SEC said that CBRE cooperated with staff and “began taking extensive remedial action,” including revising domestic releases as well as similar agreements to make sure they comply with the whistleblower protection rule.
Without admitting or denying the findings, CBRE consented to cease and desist from committing or causing any violations of the same guideline in addition to agreeing to pay a $375,000 civil penalty.
The company also communicated with the more than 800 employees who had signed the release to clarify their protections under the rule.
The order states that the commission was not aware of any specific instances in which a former CBRE employee was prevented from communicating with its staff about potential securities laws violations, or in which the company took action against a former employee based on the agreement.
“It is critical that employees are able to communicate with SEC staff about potential violations of the federal securities laws without compromising their financial interests or the confidentiality protections of the SEC’s whistleblower program,” said Eric Werner, regional director of the SEC’s Fort Worth Office. “We commend CBRE for its swift and far-reaching remediation and for its high level of cooperation with our staff, which is reflected in the terms of the resolution.”
The commission said that in determining to accept the offer of settlement, it considered the company’s cooperation and remedial actions. According to the SEC, CBRE began taking action within approximately one month of learning about the investigation.
“Our separation agreements have included language that has long been the standard in release agreements for many companies,” a CBRE spokesperson told NJBIZ in a statement. “When the SEC contacted us, we immediately clarified our relevant language and the agency has noted our ‘high-level of cooperation’ and commended our remediation efforts. We are pleased to put this matter behind us.”
The SEC investigation was conducted by Jeffrey Cohen and supervised by Sarah Mallett and Werner of the Fort Worth Regional Office.
In New Jersey, CBRE has offices in East Brunswick, Florham Park, Saddle Brook and Mount Laurel.