The Securities and Exchange Commission today charged Nationwide Planning Associates Inc. and two of its affiliated investment advisors with whistleblower violations, saying the firms used non-disclosure agreements to block customers from reporting complaints to the agency after they had been compensated for grievances.

Over a period of months from May 2021 to February 2024, Nationwide, a firm based in Fairlawn, N.J., along with two other registered firms, paid off 11 retail clients who had complained about losses. At the same time, the firms required these customers to sign confidentiality agreements that forbade them from voluntarily reporting or discussing the payments with the SEC, the regulator said in its administrative order. The two other firms were registered investment advisor NPA Asset Management Inc. and state-registered Blue Point Strategic Wealth Management LLC.

The three firms agreed to pay combined civil penalties of $240,000 to settle the charges without admitting or denying guilt, the SEC said in the order.

“Pure and simple, investors need to be able to report complaints or evidence of wrongdoing to the SEC without impediment,” said Corey Schuster, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a statement. “We will continue to hold firms accountable for putting roadblocks between us and their investors.”

According to the agency, while “the payments were intended to compensate the clients for losses caused by the firms’ alleged breaches of federal or state securities laws,” the non-disclosure agreements stipulated that all 11 clients had to “forever” refrain from discussing their complaints and the payments with the SEC unless the regulator first initiated an inquiry.

To receive payments, which were undisclosed, some of the agreements also required the clients to vouch they had not already reported their complaints or payments to the SEC or to other securities regulators.

The SEC’s order finds that Nationwide, NPA and Blue Point each violated the whistleblower protections rule in the Securities Exchange Act, which prohibits firms from taking any action to impede an individual from communicating directly with SEC staff about possible securities law violations.

The three firms each agreed to be censured and to cease and desist from violating the whistleblower protection rule. The combined $240,000 penalty was apportioned according to their size and financial condition, with NPA agreeing to pay $160,000, Nationwide $70,000, and Blue Point $10,000, the SEC said.

The firms did not immediately respond to requests for comment.