US state treasurers ask SEC for investigation into Apple’s use of NDAs

In the summer of 2021, the “AppleToo” movement attempted to expose patterns of racism, sexism, inequality, and abuse inside Apple. Later reports pointed to the interference of non-disclosure agreements (NDAs) that have the potential to stifle employee commentary and whistleblowing, claims that could be investigated by the Securities and Exchange Commission.

The letter to SEC Chairman Gary Gensler, dated January 30 and published by the Washington Post on Monday, discusses efforts by the SEC to end the “use of concealment clauses in employment and post-employment agreements” that could affect speech on discriminatory or harassment issues.

The state treasurers say the use of such clauses are meant to protect corporate information, like IP or trade secrets. “However, many companies have not excluded from these concealment clauses their workers’ rights to speak openly about harassment, discrimination, and other unlawful acts,” the letter reads.

This means investors “cannot be confident in their knowledge about the state of their investee companies’ workplace cultures.”

As part of the letter, the treasurer group request for the SEC to “investigate Apple’s statements to the SEC about their use of employment and post-employment agreements” from a letter to the SEC from October. Reports have pointed out that “whistleblower documents demonstrate Apple uses the very concealment clauses it repeatedly claimed it does not use in its bid to have the SEC grant No Action relief,” the statement adds.

The letter was co-signed by eight U.S. state treasurers, including those from California, Colorado, Delaware, Illinois, Iowa, Kansas, Rhode Island, and Washington State.

Ifeoma Ozoma, a Pinterest whistleblower who aided in organizing the letter to the SEC, told the report there “at the very least should be an investigation,” adding the opinion that there “should be fines levied against the company for using a formal process to lie to a federal agency.”

The Apple NDA fight included a group of shareholders pressuring Apple to make such exceptions in September via a proposal submitted to the Board of Directors. However, Apple’s lawyers apparently refused an earlier request to make the change, insisting exceptions were already covered by Apple’s Business Conduct Policy.

In November, Cher Scarlett, an organizer within the AppleToo movement, claimed Apple tried to get a strict NDA signed as part of a separation agreement, which Scarlett didn’t end up signing. Scarlett says the NDA would have dictated the language used to describe the departure, but she declined stating “in my mind, I should be able to say whatever I want as long as I’m not defaming Apple.”