The Commodity Futures Trading Commission has unanimously approved amendments to whistleblower rules that will, among other things, strengthen anti-retaliation protections for whistleblowers and enhance the agency’s process for reviewing whistleblower claims.
Based on a reinterpretation of the CFTC’s anti-retaliation authority under the Commodity Exchange Act, the Commission or the whistleblower may now bring an action against an employer for retaliation.
The amendments also prohibit employers from taking steps to impede a would-be whistleblower from communicating directly with CFTC staff about a possible violation of the CEA by using a confidentiality, pre-dispute arbitration or similar agreement.
The Dodd-Frank Act established a whistleblower program at the CFTC. The program provides monetary incentives to individuals who report possible violations of the CEA that lead to a successful enforcement action, as well as privacy, confidentiality, and anti-retaliation protections for whistleblowers who share information with or assist the CFTC.
Section 748 of the Dodd-Frank Act amended the CEA by adding a new Section 23, “Commodity Whistleblower Incentives and Protection.” It directs that the Commission must pay awards, subject to certain limitations and conditions, to whistleblowers who voluntarily provide the Commission with original information about a violation of the CEA that leads to successful enforcement of an action brought by the Commission that results in monetary sanctions exceeding $1,000,000, and of related actions. On August 25, 2011, the Commission adopted the whistleblower rules.
“The Whistleblower Program is an integral part of the Division’s efforts to identify and prosecute unlawful conduct. The Commission’s approval of these rules today will further strengthen and enhance our efforts to protect customers and promote market integrity,” James McDonald, director of the Division of Enforcement, said in a statement.
In addition to strengthening anti-retaliation protections, the new amendments are intended to add efficiency and transparency to the process of deciding whistleblower award claims. They will also help harmonize the CFTC’s rules with those of the Securities and Exchange Commission and its whistleblower program.
The amended rules establish a claims review process which will utilize a claims review staff, replacing the existing Whistleblower Award Determination Panel, to consider and issue a preliminary determination as to whether an award claim should be granted or denied.
A whistleblower will then have an opportunity to request to view the record and may contest the preliminary determination.
The amendments also make changes to other key areas, such as whistleblower eligibility requirements, and make clear that, with limited exceptions, a whistleblower may receive an award in a covered action, a related action, or both.
The amendments authorize the 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 amended rules will go into effect 60 days after publication in the Federal Register.
In specifics, the amendments make the following key changes and clarifications:
A person may not take any action to impede an individual from communicating directly with the Commission’s staff about a possible violation of the CEA, including by enforcing, or threatening to enforce, a confidentiality agreement or pre-dispute arbitration agreement with respect to such communications.
The Commission has authority to bring an action against an employer who retaliates against a whistleblower, irrespective of whether the whistleblower qualifies for an award. A whistleblower continues to have the right to pursue a private cause of action against such an employer.
Actions that an employer took after a whistleblower reported internally but before providing information to the Commission may be relevant to whether prohibited retaliation occurred.
A whistleblower may be eligible for an award by providing the Commission original information without being the original source of the information.
A whistleblower retains eligibility for an award based on information provided by the whistleblower to certain specified persons or authorities, now to include foreign futures authorities, prior to the time that the whistleblower provided the information to the Commission.
The Commission will not make an award to a whistleblower for a related action if the whistleblower has been granted an award by the SEC for the same action under that agency’s whistleblower program.
The required Form WB-APP may be submitted electronically through the Commission’s website or the whistleblower program’s website.
The Director of Enforcement has general authority to administer the whistleblower program.
The Commission may waive its procedural requirements “based upon a showing of extraordinary circumstances.”