The Commodity Futures Trading Commission passed the final rule on Section 23 amending the Commodity Exchange Act to implement incentives and a protection program for whistleblowers. During today's meeting, the Commission determined that potential whistleblowers will be awarded between 10 percent and 30 percent of sanctions of more than $1 million collected from wrongdoers depending on the significance of the information and the degree of involvement by whistleblowers leading to successful prosecutions of fraudulent cases.
A panel comprised of the agencies' staffs will be selected to determine the reward amount for tipsters based on individual cases. The CFTC received on average 16 to 24 sanctions of over $1 million a year. The Commission also passed the law governing protection programs available to whistleblowers, which include federal protection against retaliations by employers. In the event of retaliation actions by employers, whistleblowers can potentially get their pay reinstated, and attorney fees incurred during litigation shall be reimbursed by companies seeking legal actions against them.
The agency's chairman, Gary Gensler, said the rule will encourage people to assist the CFTC in identifying, investigating, and prosecuting potential violations of the act. “The final rule authorizes the Commodity Futures Trading Commission to provide a monetary award to whistleblowers when their original information leads to a successful enforcement action,” he said in a statement.
To address the issue of undermining public companies' internal compliance programs, the agency in the final version of the rule said it will consider increasing the award amount if a whistleblower chooses to report the incident to the company's internal compliance office, provided the company in question has an effective program in place. During the open comment period, public companies expressed concerns over the CFTC's whistleblower program, arguing it could potentially undermine their own internal compliance efforts.
The agency also outlined eligibility of tipsters under the final rules. “Those who are not eligible for the whistleblower program include government employees, executives who learn of the information from internal companies' sources, internal auditors and legal counsels who received the information from clients,” said the agency.
Other issues addressed in the final rulemaking include the announcement to fund andestablish an office for consumer outreach by the agency. The consumer office will be responsible for designing and executing initiatives to help consumers protect themselves against fraud and other violations of the act.