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Commodity Futures Trading Commission Strengthens Whistleblower Program

On May 22, 2017, the U.S. Commodity Futures Trading Commission (CFTC) adopted amendments to its whistleblower rules, continuing its three-year effort to strengthen the commission’s whistleblower program and its ability to protect whistleblowers from employer retaliation. The amendments expand the commission’s ability to pursue retaliation claims on behalf of whistleblowers and prohibit confidentiality agreements that interfere with whistleblowers’ communications with the CFTC.

The CFTC is charged by the Commodity Exchange Act (CEA) with authority to regulate futures markets including agriculture, energy and metals, and financial products such as interest rates and foreign currency. Strengthened after the 2008 financial crisis, the CEA established the CFTC’s whistleblower protection program, which provides monetary incentives to whistleblowers for reporting possible violations of the CEA. Whistleblowers whose tips lead to monetary sanctions of more than $1 million can be eligible for an award between 10 percent and 30 percent of the total amount collected by the government.

While the CFTC was previously unable to enforce the whistleblower protections of the CEA, they now have the authority to bring cases on behalf of whistleblowers regardless of whether the whistleblower qualifies for an award. Additionally, whistleblowers will be able to bring private actions for retaliation. Under the amended rules, actions taken by an employer between the time the whistleblower reports internally and submits information to the Commission are relevant to establish retaliation.
The new amendments also prohibit employers from requiring employees to waive their potential whistleblower rights through the use of confidentiality and pre-dispute arbitration agreements. Recently, the U.S. Securities & Exchange Commission (SEC) also prohibited these types of waivers and has been proactive in bringing cases against employers who engage in this type of activity. This treatment by the SEC likely foreshadows similarly strict enforcement of this new rule by the CFTC.

The CFTC also changed some procedural rules in an effort to increase transparency of the whistleblower process and expand eligibility. Whistleblowers can now qualify for an award if they report to a foreign regulator, Congress, or another law enforcement agency, as long as they still report to the CFTC within 180 days, a requirement that was previously limited to 120 days.

These changes have been part of an ongoing effort by the CFTC to harmonize their whistleblower practices and authorities with those of the SEC and will go into effect 60 days after publication in the federal register.

Keywords: whistleblower; CFTC; Dodd-Frank; commodities fraud

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