The Commodity Futures Trading Commission has adopted its Final Rules to implement a whistleblower program mandated by the Dodd-Frank Act. The CFTC stated that it sought to harmonize its rules with those recently adopted by the SEC.
Section 748 of the Dodd-Frank Act added Section 23 to the Commodity Exchange Act and directed the CFTC to pay awards to whistleblowers who voluntarily provide the Commission with original information about a violation that leads to the successful enforcement of an action brought by the Commission that results in sanctions greater than $1,000,000, or the successful enforcement of a related action.
In considering the proposed rules, the CFTC stated that it considered the SEC’s recently adopted rules (discussed here and here) and "[w]here appropriate and consistent with the underlying statutory mandate in Section 23 of the [Commodity Exchange Act], the Commission has endeavored to harmonize its whistleblower rules with those of the SEC."
One of the "significant" issues the CFTC considered was "the impact of the whistleblower program on company systems for internal reporting of potential misconduct." The Commission determined that "it is inappropriate to require whistleblowers to report violations internally to be eligible for an award," but recognized the importance of internal compliance and reporting systems and "does not want to discourage employees from using such systems when they are in place." The Rules provide that, when determining the amount of the award, the Commission will consider whether the whistleblower provided information to the company or interfered with internal systems. The Rules also provide that if a whistleblower reports to the company and that company later self-reports to the CFTC (which leads to a successful enforcement action), all information provided by the entity will be attributable to the whistleblower.
The CFTC also stated that it streamlined its procedures for submitting information (condensing the two forms that were originally proposed to a single form) and that it would establish a Whistleblower Office. The Rules also provide that, when two or more smaller actions arise from the same nucleus of operative facts, the amount of monetary sanctions may be combined to reach the $1 million threshold to qualify for an award.
The Rules will become effective 60 days after their publication in the Federal Register.
