In re BlackRock

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 79804 / January 17, 2017 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-17786 
 
 
In the Matter of 
 
BlackRock, Inc., 
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
  
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”) against BlackRock, Inc. (“BlackRock” or “Respondent”).  
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
Respondent 
1. BlackRock, Inc. is a Delaware corporation headquartered in New York, New York.  
BlackRock’s common stock is registered with the Commission pursuant to Section 12(b) of the 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 

 
2 
 
Exchange Act and trades on the New York Stock Exchange.  BlackRock files periodic reports, 
including reports on Forms 10-K and 10-Q, with the Commission pursuant to Section 13(a) of the 
Exchange Act and related rules thereunder.  As of December 31, 2015, BlackRock and its 
subsidiaries had approximately 13,000 employees. 
Facts 
A. Statutory and Regulatory Framework Protecting Whistleblowers 
2. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 
Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F, 
“Whistleblower Incentives and Protection.”  The purpose of these provisions was to encourage 
whistleblowers to report possible securities law violations by providing, among other things, 
financial incentives and various confidentiality guarantees. 
3. Congress explicitly noted the critical importance of providing financial incentives 
to promote whistleblowing to the SEC as it determined that “a critical component of the 
Whistleblower Program is the minimum payout that any individual could look towards in 
determining whether to take the enormous risk of blowing the whistle in calling attention to fraud.”  
See “The Restoring American Financial Stability Act of 2010” report from the Committee on 
Banking, Housing, and Urban Affairs (April 30, 2010). 
4. To fulfill this Congressional purpose, the Commission adopted Rule 21F-17, which 
provides in relevant part: 
(a) No person may take any action to impede an individual from communicating 
directly with the Commission staff about a possible securities law violation, 
including enforcing, or threatening to enforce, a confidentiality agreement . . . with 
respect to such communications. 
Rule 21F-17 became effective on August 12, 2011. 
B. BlackRock’s Separation Agreements 
 
5. Historically, BlackRock has entered into voluntary separation agreements with 
many employees who leave the company.  A separation agreement is a contract between an 
employer and a former employee documenting the rights and responsibilities of both parties 
incidental to the employee’s departure.   
6. On October 14, 2011 – after the Commission adopted Rule 21F-17 – BlackRock  
revised its form separation agreement to include language requiring a departing employee to waive 
recovery of incentives for reporting misconduct available under, among other things, the Dodd-
Frank Act in exchange for receiving monetary separation payments and other voluntarily provided 
consideration from BlackRock.  That agreement did not, however, prohibit former employees from 
communicating directly with the Commission or any other governmental agency regarding 
potential violations of law. 

 
3 
 
7. Specifically, Paragraph 5 of BlackRock’s separation agreement in use from October 
14, 2011 through March 31, 2016 stated in relevant part:  
To  the  fullest  extent  permitted  by  applicable  law,  you  hereby  release  and  forever 
discharge,  BlackRock,  as  defined  above, from  all  claims  for,  and  you  waive  any 
right  to  recovery  of,  incentives  for  reporting  of  misconduct,  including,  without 
limitation, under the Dodd-Frank Wall Street Reform and Consumer Protection Act 
and the Sarbanes-Oxley Act of 2002, relating to conduct occurring prior to the date 
of this Agreement.   
8. One thousand sixty seven (1067) departing employees signed agreements that 
contained the above language. 
9. On March 31, 2016, before being contacted by the Commission staff in this matter, 
BlackRock voluntarily revised its separation agreement as part of a regular periodic review and 
update of its agreements.  The revised agreement does not require a separating employee to waive 
his or her right to recovery of incentives available under the Dodd-Frank Act. 
10. Though the Commission is unaware of any instances in which (i) a former 
employee of BlackRock who executed the above-noted agreement did not communicate directly 
with Commission staff about potential securities law violations or (ii) BlackRock took action to 
enforce those provisions or otherwise prevent such communications, BlackRock – from October 
2011 through March 2016 – directly targeted the SEC’s whistleblower program by removing the 
critically important financial incentives that are intended to encourage persons to communicate 
directly with the Commission staff about possible securities law violations.  Such restrictions on 
accepting financial awards for providing information regarding possible securities law violations to 
the Commission undermine the purpose of Section 21F and Rule 21F-17(a), which is to 
“encourag[e] individuals to report to the Commission,” [Adopting Release at p. 201], and violate 
Rule 21F-17(a) by impeding individuals from communicating directly with the Commission staff 
about possible securities law violations. 
Remedial Actions 
11. In determining to accept BlackRock’s Offer, the Commission considered its 
voluntary decision to revise its separation agreements before being contacted by the Commission 
staff and the remedial actions described in paragraphs 12 and 13 below.   
12. BlackRock now provides all employees with mandatory yearly trainings that 
include a summary of and link to a document entitled, “Global Policy for Reporting Illegal or 
Unethical Conduct” (“Policy”).  The Policy summarizes several of the rights the employee 
possesses under the Commission’s Whistleblower Program, including an employee’s rights to:  
(i) report potential violations of law to the Commission or other federal or state agencies or self-
regulatory authorities without permission from or notice to his or her employer, (ii) report 
possible violations anonymously and to provide disclosures that are protected or required under 
whistleblower laws, and (iii) cooperate voluntarily with or respond to any inquiry from the 
Commission or other federal or state agencies or self-regulatory organizations.  The Policy also 
states that employees have the right not to be retaliated against for reporting possible securities 

 
4 
 
law violations.  BlackRock has agreed to notify the Chief(s) of the Asset Management Unit of 
the Division of Enforcement, with a copy to the Chief of the Office of the Whistleblower, at least 
sixty (60) days in advance of discontinuing these mandatory yearly trainings. 
13. BlackRock has updated its Code of Business Conduct and Ethics as well as other 
relevant agreements, policies, and procedures to ensure that employees understand that there is 
no restriction on their rights under Rule 21F-17. 
Violation 
14. Through its conduct described above, BlackRock violated Rule 21F-17 under the 
Exchange Act.  
Undertaking 
15. BlackRock has agreed that, within 60 days from the date the Commission enters 
this Order, it will make reasonable efforts to contact BlackRock former employees who signed 
separation agreements from October 14, 2011 through March 31, 2016, and provide them with an 
Internet link to the order
2
 and a statement that BlackRock does not prohibit former employees from 
seeking and obtaining a whistleblower award from the Securities and Exchange Commission 
pursuant to Section 21F of the Exchange Act.  In determining whether to accept the Offer, the 
Commission has considered this undertaking. 
16. BlackRock has agreed to certify, in writing, compliance with the undertaking set 
forth above.  The certification shall identify the undertaking, provide written evidence of 
compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence of 
compliance, and BlackRock agrees to provide such evidence.  The certification and supporting 
material shall be submitted to Anthony S. Kelly, Co-Chief, Asset Management Unit, with a copy to 
the Office of the Chief Counsel of the Enforcement Division, no later than sixty (60) days from the 
date of the completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent BlackRock’s Offer. 
 Accordingly, it is hereby ORDERED that: 
A. Pursuant to Section 21C of the Exchange Act, Respondent BlackRock cease and 
desist from committing or causing any violations and any future violations of Rule 21F-17 under 
the Exchange Act; 
 
                                                 
2
  BlackRock further agrees to provide a paper copy of the Order to any former employee 
who requests it. 

 
5 
 
B. Respondent BlackRock shall, within ten (10) days of the entry of this Order, pay a 
civil money penalty in the amount of $340,000 to the Securities and Exchange Commission for 
transfer to the general fund of the United States Treasury in accordance with Exchange Act 
Section 21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 
U.S.C. § 3717.  Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request; 
(2) Respondent may make direct payment from a bank account via Pay.gov through 
the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
(3) Respondent may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the Securities and Exchange Commission 
and hand-delivered or mailed to: 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
Payments by check or money order must be accompanied by a cover letter identifying BlackRock 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Anthony S. Kelly, Co-Chief, Asset 
Management Unit, Division of Enforcement, Securities and Exchange Commission, 100 F Street, 
N.E., Washington, D.C. 20549-5012. 
 By the Commission. 
 
 
 
       Brent J. Fields 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 79804 / January 17, 2017 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-17786 

 

 

In the Matter of 

 

BlackRock, Inc., 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER  

  

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”) against BlackRock, Inc. (“BlackRock” or “Respondent”).  

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 

Respondent 

1. BlackRock, Inc. is a Delaware corporation headquartered in New York, New York.  

BlackRock’s common stock is registered with the Commission pursuant to Section 12(b) of the 

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 



 

2 

 

Exchange Act and trades on the New York Stock Exchange.  BlackRock files periodic reports, 

including reports on Forms 10-K and 10-Q, with the Commission pursuant to Section 13(a) of the 

Exchange Act and related rules thereunder.  As of December 31, 2015, BlackRock and its 

subsidiaries had approximately 13,000 employees. 

Facts 

A. Statutory and Regulatory Framework Protecting Whistleblowers 

2. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 

Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F, 

“Whistleblower Incentives and Protection.”  The purpose of these provisions was to encourage 

whistleblowers to report possible securities law violations by providing, among other things, 

financial incentives and various confidentiality guarantees. 

3. Congress explicitly noted the critical importance of providing financial incentives 

to promote whistleblowing to the SEC as it determined that “a critical component of the 

Whistleblower Program is the minimum payout that any individual could look towards in 

determining whether to take the enormous risk of blowing the whistle in calling attention to fraud.”  

See “The Restoring American Financial Stability Act of 2010” report from the Committee on 

Banking, Housing, and Urban Affairs (April 30, 2010). 

4. To fulfill this Congressional purpose, the Commission adopted Rule 21F-17, which 

provides in relevant part: 

(a) No person may take any action to impede an individual from communicating 

directly with the Commission staff about a possible securities law violation, 

including enforcing, or threatening to enforce, a confidentiality agreement . . . with 

respect to such communications. 

Rule 21F-17 became effective on August 12, 2011. 

B. BlackRock’s Separation Agreements 

 

5. Historically, BlackRock has entered into voluntary separation agreements with 

many employees who leave the company.  A separation agreement is a contract between an 

employer and a former employee documenting the rights and responsibilities of both parties 

incidental to the employee’s departure.   

6. On October 14, 2011 – after the Commission adopted Rule 21F-17 – BlackRock  

revised its form separation agreement to include language requiring a departing employee to waive 

recovery of incentives for reporting misconduct available under, among other things, the Dodd-

Frank Act in exchange for receiving monetary separation payments and other voluntarily provided 

consideration from BlackRock.  That agreement did not, however, prohibit former employees from 

communicating directly with the Commission or any other governmental agency regarding 

potential violations of law. 



 

3 

 

7. Specifically, Paragraph 5 of BlackRock’s separation agreement in use from October 

14, 2011 through March 31, 2016 stated in relevant part:  

To the fullest extent permitted by applicable law, you hereby release and forever 

discharge, BlackRock, as defined above, from all claims for, and you waive any 

right to recovery of, incentives for reporting of misconduct, including, without 

limitation, under the Dodd-Frank Wall Street Reform and Consumer Protection Act 

and the Sarbanes-Oxley Act of 2002, relating to conduct occurring prior to the date 

of this Agreement.   

8. One thousand sixty seven (1067) departing employees signed agreements that 

contained the above language. 

9. On March 31, 2016, before being contacted by the Commission staff in this matter, 

BlackRock voluntarily revised its separation agreement as part of a regular periodic review and 

update of its agreements.  The revised agreement does not require a separating employee to waive 

his or her right to recovery of incentives available under the Dodd-Frank Act. 

10. Though the Commission is unaware of any instances in which (i) a former 

employee of BlackRock who executed the above-noted agreement did not communicate directly 

with Commission staff about potential securities law violations or (ii) BlackRock took action to 

enforce those provisions or otherwise prevent such communications, BlackRock – from October 

2011 through March 2016 – directly targeted the SEC’s whistleblower program by removing the 

critically important financial incentives that are intended to encourage persons to communicate 

directly with the Commission staff about possible securities law violations.  Such restrictions on 

accepting financial awards for providing information regarding possible securities law violations to 

the Commission undermine the purpose of Section 21F and Rule 21F-17(a), which is to 

“encourag[e] individuals to report to the Commission,” [Adopting Release at p. 201], and violate 

Rule 21F-17(a) by impeding individuals from communicating directly with the Commission staff 

about possible securities law violations. 

Remedial Actions 

11. In determining to accept BlackRock’s Offer, the Commission considered its 

voluntary decision to revise its separation agreements before being contacted by the Commission 

staff and the remedial actions described in paragraphs 12 and 13 below.   

12. BlackRock now provides all employees with mandatory yearly trainings that 

include a summary of and link to a document entitled, “Global Policy for Reporting Illegal or 

Unethical Conduct” (“Policy”).  The Policy summarizes several of the rights the employee 

possesses under the Commission’s Whistleblower Program, including an employee’s rights to:  

(i) report potential violations of law to the Commission or other federal or state agencies or self-

regulatory authorities without permission from or notice to his or her employer, (ii) report 

possible violations anonymously and to provide disclosures that are protected or required under 

whistleblower laws, and (iii) cooperate voluntarily with or respond to any inquiry from the 

Commission or other federal or state agencies or self-regulatory organizations.  The Policy also 

states that employees have the right not to be retaliated against for reporting possible securities 



 

4 

 

law violations.  BlackRock has agreed to notify the Chief(s) of the Asset Management Unit of 

the Division of Enforcement, with a copy to the Chief of the Office of the Whistleblower, at least 

sixty (60) days in advance of discontinuing these mandatory yearly trainings. 

13. BlackRock has updated its Code of Business Conduct and Ethics as well as other 

relevant agreements, policies, and procedures to ensure that employees understand that there is 

no restriction on their rights under Rule 21F-17. 

Violation 

14. Through its conduct described above, BlackRock violated Rule 21F-17 under the 

Exchange Act.  

Undertaking 

15. BlackRock has agreed that, within 60 days from the date the Commission enters 

this Order, it will make reasonable efforts to contact BlackRock former employees who signed 

separation agreements from October 14, 2011 through March 31, 2016, and provide them with an 

Internet link to the order
2
 and a statement that BlackRock does not prohibit former employees from 

seeking and obtaining a whistleblower award from the Securities and Exchange Commission 

pursuant to Section 21F of the Exchange Act.  In determining whether to accept the Offer, the 

Commission has considered this undertaking. 

16. BlackRock has agreed to certify, in writing, compliance with the undertaking set 

forth above.  The certification shall identify the undertaking, provide written evidence of 

compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 

compliance.  The Commission staff may make reasonable requests for further evidence of 

compliance, and BlackRock agrees to provide such evidence.  The certification and supporting 

material shall be submitted to Anthony S. Kelly, Co-Chief, Asset Management Unit, with a copy to 

the Office of the Chief Counsel of the Enforcement Division, no later than sixty (60) days from the 

date of the completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent BlackRock’s Offer. 

 Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent BlackRock cease and 

desist from committing or causing any violations and any future violations of Rule 21F-17 under 

the Exchange Act; 

 

                                                 
2  BlackRock further agrees to provide a paper copy of the Order to any former employee 

who requests it. 



 

5 

 

B. Respondent BlackRock shall, within ten (10) days of the entry of this Order, pay a 

civil money penalty in the amount of $340,000 to the Securities and Exchange Commission for 

transfer to the general fund of the United States Treasury in accordance with Exchange Act 

Section 21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 

U.S.C. § 3717.  Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov through 

the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission 

and hand-delivered or mailed to: 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying BlackRock 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Anthony S. Kelly, Co-Chief, Asset 

Management Unit, Division of Enforcement, Securities and Exchange Commission, 100 F Street, 

N.E., Washington, D.C. 20549-5012. 

 By the Commission. 

 

 

 

       Brent J. Fields 

       Secretary