Rules of the Road: New CFTC Regulations Expand Whistleblower Bounty Program

Orrick - Employment Law and Litigation

The Commodity Futures Trading Commission (CFTC), published updated regulations Monday to bring its whistleblower bounty efforts more in line with the SEC’s.  The rules were proposed last August and generally provide more robust protections to would-be whistleblowers.  According to an agency press release, “In addition to strengthening anti-retaliation protections, the new amendments will add efficiency and transparency to the process of deciding whistleblower award claims and will, in many respects, harmonize the CFTC’s rules with those of the U.S. Securities and Exchange Commission’s whistleblower program.” Most importantly, the new rules allow the CFTC to sue employers for retaliation against whistleblowers and provide that individuals who notify Congress, another law enforcement agency, or a foreign regulator before reporting to their employer first can still be eligible for a whistleblower award.  Furthermore, companies may not use confidentiality provisions, arbitration provisions, or other deterrents to prevent an employee from communicating with CFTC staff.  The new rules also clarify that whistleblowers may be eligible for rewards from “related actions” brought by other enforcement agencies that use information provided to the CFTC; however, the CFTC will not make an award to a whistleblower if the SEC has already granted an award to the person in the same related action.

The new rules make structural changes to the CFTC’s whistleblower program as well.  For instance, the CFTC will replace its Whistleblower Award Determination Panel with a Claims Review Staff similar to the SEC’s.  Additionally, the CFTC will place responsibility for administering its whistleblower program in the hands of the Director of the Division of Enforcement.  Finally, the amendments authorize the CFTC’s Whistleblower Office to handle facially ineligible award claims that do not relate to a Notice of Covered Action, a final judgment in a Related Action, or a previously filed Form TCR (Tip, Complaint, or Referral).

The CFTC has paid out four awards since the inception of its whistleblower program in 2011.  By contrast, the SEC has made awards to over 40 whistleblowers since 2011.  For more information regarding the changes, readers may refer to the CFTC’s fact sheet on its website.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Orrick - Employment Law and Litigation

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