Oklahoma energy company SandRidge Energy Inc. has reached its first settlement agreement with the United States Securities and Exchange Commission (SEC), for allegedly firing employees for their participation in a whistleblower lawsuit.

Both parties agreed to the amount of $1.4 million to settle charges alleging an internal whistleblower firing retaliation movement committed by the energy corporation.

The settlement amount will also settle charges of using “restrictive separation agreements” that allegedly prohibited former employees from cooperating with the SEC and other federal investigations.

SandRidge is accused of conducting a whistleblower firing over an employee who raised concerns about the company’s accounting.

While the $1.4 million will be reduced due to SandRidge’s bankruptcy plan, the company will still be subject to massive payout.

SEC Office of Whistleblower Chief Jane Norberg stated that this whistleblower lawsuit was the first time the agency has charged a company for a whistleblower firing.

While appellate courts are split on whether or not the Dodd Frank Act protects witnesses who have yet to report fraud, the court has maintained that internal tipsters do qualify and are protected from whistleblower firing under law.

“Whistleblowers who step forward and raise concerns internally to their companies about potential securities law violations should be protected from retaliation regardless of whether [or not] they have filed a complaint with the SEC,” Norberg said.

Overview of Whistleblower Allegations

SandRidge allegedly committed the whistleblower firing of an employee who had overseen reservoir engineers that were responsible for at least a portion of the SandRidge drilling program.

This employee had reportedly become concerned with senior management several times regarding the oil and gas reserve calculations, which were reported to the SEC filings.

The company then allegedly retaliated by having its internal audit department conduct an investigation into the reserves program.

The audit department provided the report to the said employee in December 2014, to which the employee had strongly disagreed with the draft. They stated that the report had “missed the primary risks and problems associated with the entire reserves process.”

SandRidge then offered the employee a promotion, but resorted to employment termination when the employee declined the offer.

During that time the company’s senior management was discussing different remedies of the issue, eventually deciding to fire the employee after the employee also raised ethical concerns over the company’s methods.

The SandRidge senior management members felt that the employee’s concerns were disruptive and that the employee could be replaced with someone who did not create “internal strife.”

The employee was terminated on April 1, 2015, while the company was making significantly downsizes to their workforce.

In addition to the alleged whistleblower firing, SandRidge also required employees to sign restrictive separation agreements that prohibited employees from contacting or participating in an any federal investigations that may be related to the company.

SandRidge had agreed to pay the $1.4 million to settle the whistleblower allegations, but will now pay a reduced amount subject to the company’s bankruptcy plan.

While the company has made no comment regarding the current court proceedings, representatives state that the company is relieved to move on from the whistleblower lawsuit.

The Sandridge Energy Whistleblower Firing Lawsuit is Case No. 3-17739, before the U.S. Securities and Exchange Commission.