The Commodity Futures Trading Commission amended its whistle-blowing rules to augment anti-retaliation protections for whistleblowers. Simultaneously the CFTC issued guidance that it had the authority to bring enforcement actions against violators of its anti-retaliation rules, revoking a contrary 2011-issued interpretation. This is in addition to private rights of action already provided for under existing rules. (Click to access the CFTC’s 2011 interpretation.) Moreover, the amended rules prevent any person from impeding another person from communicating with the CFTC’s staff about a possible violation of applicable law (i.e., the Commodity Exchange Act) by enforcing, threatening to enforce a confidentiality agreement or pre-dispute arbitration agreement regarding such communication. (The CFTC previously prohibited a waiver of any of its whistleblower rights and remedies in any agreement, policy, form or condition of employment.) Moreover, under the amended rules, the CFTC’s anti-retaliation requirements apply whether a whistleblower qualifies for an award under the CFTC rules or not. Additionally, the CFTC amended its process to review potential whistleblower awards, relying going forward on claims review staff, as opposed to a whistleblower awards termination panel. As before, the Division of Enforcement will administer the whistleblower program for the CFTC. In general, qualified whistleblowers who voluntarily provide the CFTC with original information about a violation of relevant law that results in monetary sanctions in excess of US $1 million, are eligible for awards of between 10 – 30% of collected sanctions.
Legal Weeds: All companies subject to the Commodity Exchange Act should review confidentiality provisions in their employment and severance agreements with employees to ensure that they do not expressly or implicitly prohibit an employee or ex-employee from taking advantage of CFTC rights and remedies under the Agency’s whistleblowing rules. Moreover, companies must be careful not to take action that could be deemed to impede an employee or employee from taking advantage of such provisions.
The CFTC adopted its current rules to more fully parallel equivalent rules previously enacted by the Securities and Exchange Commission. Using these rules, the SEC has actively pursued enforcement actions against many firms that utilized confidentiality agreements that the Agency believed discouraged employees from reporting potential violations of federal securities laws to it. (Click here for an overview of these enforcement actions in the article, “More Firms Sanctions for Whistleblower Offenses by SEC” in the January 29, 2017 edition of Bridging the Week.)