The SEC opened its Office of the Whistleblower on August 12, 2011. This new office will oversee the implementation of the SEC’s new whistleblower compensation rules. More information regarding the new whistleblower rules is available here. In a recent speech, Sean McKessy, Chief of the Office of the Whistleblower, responded to industry skepticism regarding the effects the new SEC rules will have on internal compliance programs and confusion regarding limitations on certain professionals, such as attorneys and external auditors, becoming whistleblowers. The text of Mr. McKessy’s speech is available here.
On August 4, 2011, the Commodity Futures Trading Commission (“CFTC”) adopted final rules implementing whistleblower incentives and protections pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Although the CFTC whistleblower rules are substantially similar to the SEC whistleblower rules, certain differences are worthy of note, including:
- Unlike the SEC’s rules, the CFTC definition of “independent knowledge” does not exclude information obtained as a result of the whistleblower’s employment at a public accounting firm or a firm retained to conduct an inquiry into possible violations of law. However, both the CFTC and SEC exclude from award eligibility company employees whose principal duties involve compliance or internal audit responsibilities.
- The CFTC rules permit a whistleblower to receive an award from both the CFTC and the SEC for providing the same information if he or she recovers from the SEC first. The SEC rules do not allow recovery if the whistleblower has already been granted an award from the CFTC.
- In contrast to the SEC rules, which only permit a whistleblower to appeal whether, and to whom, an award is made, a whistleblower may also appeal the amount of the award under the CFTC rules.
- The statute of limitations for a retaliation claim under the CFTC rules is two years from the date of the employer’s retaliatory act, while the SEC rules allow for six years from the date of the violation or three years from when the material facts of the claim were known or should have been known.
The CFTC rules take effect on October 31, 2011.