CFTC

SEC, CFTC and OSHA Officials Offer Candid Insights into Whistleblower Programs’ Results, Priorities, and Future Directions

On June 28, 2017, three prominent whistleblower law regulators spoke at PLI’s Corporate Whistleblowing in 2017, which was co-chaired by Orrick partners Mike Delikat and Renee Phillips. With the standard disclaimer that their comments and opinions were their own and not the official comments of their respective agencies, each spoke candidly about their agencies’ whistleblower program’s progress, challenges, and priorities.

SEC’s Office of the Whistleblower

The Chief of the SEC’s Office of the Whistleblower (“OWB”), Jane Norberg, kicked off the panel with her views on the current status and priorities of the OWB in the new administration: “From my point of view, the SEC’s whistleblower program is open for business and we are moving forward as we have in the past.”  She elaborated on the program’s results to date, noting that the Commission has received over 18,000 tips and awarded over $154 million to 44 tipsters, reflecting over $1 billion recovered through the SEC’s enforcement actions and related actions arising from whistleblower tips.  Norberg explained, “the real value of the program comes from individuals who help prevent ongoing fraud at a company while also giving victims a chance to recover some of what they lost.” READ MORE

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

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.”  READ MORE

Commodity Whistleblowers May Hit the Jackpot: Enhanced Bounty Rules in the Works

The Commodity Futures Trading Commission (“CFTC”) is proposing amendments to its Dodd-Frank whistleblower regulations to bring them more in line with the SEC’s whistleblower bounty program. This is perhaps not surprising given the relative success of the SEC’s program compared to the CFTC’s program to date (over $100 million in SEC bounties versus about $10 million in CFTC bounties).  The proposed changes would include the following:

  • Giving the CFTC the ability to bring anti-retaliation suits in its own name (previously it interpreted Dodd-Frank as only providing for private causes of action);
  • Providing that “no person may take any action to impede an individual from communicating directly with the Commission’s staff about a possible violation of the Commodity Exchange Act, including by enforcing, or threatening to enforce, a confidentiality agreement….”  This is much like the SEC’s Rule 21F-17, which that agency has used to aggressively prosecute cases against companies and collect significant fines; and
  • Enhancing the ability of whistleblowers to recover bounties for “related” actions brought by agencies other than the CFTC.

In addition, the proposed regulations would extend the time frame for a whistleblower to report to the CFTC after reporting internally and still be award-eligible from 120 to 180 days.  Comments will be accepted until September 29, 2016, and we will keep our readers posted on the rule-making in this area.

U.S. Commodity Futures Trading Commission Issues First Whistleblower Award

Whistle

On Monday, May 19, 2014, the U.S. Commodity Futures Trading Commission (“CFTC”) issued its first award to a whistleblower under its Dodd-Frank bounty program.

The Commission will pay $240,000 to an unidentified whistleblower who “voluntarily provided original information that caused the Commission to launch an investigation that led to an enforcement action” in which the judgment and sanctions exceeded $1 million. The heavily redacted award determination on the CFTC’s website does not reveal the name of the implicated company, the nature of the wrongdoing involved, the percentage of bounty the whistleblower received (which is required to be between 10 and 30 percent pursuant to the statute), or the factors considered in determining the percentage of the bounty.

Prior to this first grant of an award to a whistleblower under the CFTC’s Dodd-Frank bounty program, there were 25 denials of award claims. The reasons for the denials primarily fell into one or more of several categories:

  1. the individuals provided information before the passage of Dodd-Frank;
  2. they did not file a form TCR as required by the regulations;
  3. they did not provide information “voluntarily” but rather in response to a Commission request; and/or
  4. the information did not cause the Commission to open or expand an investigation or significantly contribute to a success of a Commission matter.

Time will tell whether this first award will have any effect on the number of whistleblowers who report to the CFTC or the quality of information the Commission receives.