The US Securities and Exchange Commission (SEC) has taken action against GQG Partners LLC, an investment firm founded by Rajiv Jain, for obstructing whistleblower protections. The SEC found that GQG's non-disclosure agreements (NDAs) with 12 candidates for employment and a settlement agreement with a former employee hindered individuals from reporting potential securities law violations to the SEC, says
a report from TheNewsMinute.
"The SEC's order requires GQG to cease and desist from future violations, pay a US$500,000 civil penalty, and implement measures to ensure compliance with whistleblower protections," the report says.
From November 2020 to September 2023, GQG used non-disclosure agreements (NDAs) that prohibited potential employees from disclosing confidential information to any party, including government agencies. "While these NDAs allowed employees to respond to SEC inquiries, they required notifying GQG first and prohibited responses based on voluntary disclosures. This created confusion and contradicted the company's employee confidentiality agreements (ECAs) and Whistleblower Policy, which permitted reporting to the SEC."
"Additionally, a settlement agreement GQG entered with a former employee contained representations that contradicted the carve-out allowing communication with government agencies. These representations could have discouraged the former employee from reporting potential violations to the SEC," the report says.
The SEC determined that GQG's actions were wilful violations of Exchange Act Rule 21F-17(a). "This means that GQG knew what they were doing, even if they were unaware of the specific rule violation. While there is no evidence that GQG enforced the restrictive provisions, their mere presence in the agreements was sufficient to constitute a violation."
GQG is ordered to cease and desist from further violations of Exchange Act Rule 21F-17(a). The report says a formal expression of disapproval for GQG's conduct has been given, and a civil penalty of US$500,000 has been imposed.
According to the report, after the US-based short seller Hindenburg Research's report routed Adani group companies' share prices during the first quarter of 2023, GQG started purchasing these shares. "Between March and October 2023, GQG invested around Rs38,500 crore in six Adani group companies."
In March 2023, US global equity boutique GQG Partners invested Rs15,446 crore (US$1.87bn) in four companies of the Adani group. GQG Partners manages client assets of more than AU$130bn (billion) or about US$92bn.
In March 2023, Adani Enterprises, in a regulatory filing, says, "GQG Partners, a leading US-based global equity investment boutique, announced the completion of an Rs15,446 crore (US$1.87bn) in a series of secondary block trade transactions in the Adani Portfolio companies - Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission Ltd and Adani Enterprises Ltd (all listed on the Bombay Stock Exchange (BSE) and National Stock Exchange(NSE))." (
Read: GQG Partners Buys Stake Worth Rs15,446 Crore in 4 Adani Group Companies)
