A great deal has been written on this blog and elsewhere about the recently adopted SEC Whistleblower Incentives and Protection Program. Much less has been said, however, about the U.S. Commodity Futures Trading Commission’s (CFTC) proposed whistleblower scheme. In addition to requiring the SEC to devise its whistleblower rewards program, The Dodd–Frank Wall Street Reform and Consumer Protection Act requires the CFTC to propose and adopt a set of whistleblower rules. The CFTC proposed its rules in December 2010.
Save the few instances in which Dodd Frank required a (slightly) different approach, the CFTC’s proposed rules mirror to the letter the rules proposed by the SEC in November 2010. The rules are so similar, in fact, that the CFTC’s proposed rules include ostensibly inadvertent references to “the SEC” where it surely meant “CFTC.” One noteworthy difference in the CFTC’s proposed rules is a requirement that companies self-report possible violations to the CFTC within 60 days of discovering the potential infraction. The SEC rules do not include a self-reporting requirement.
The CFTC was scheduled to vote on a final set of whistleblower rules during a public hearing scheduled for Tuesday, July 19, 2011. As Reuters reports, however, the CFTC “unexpectedly pulled its whistleblower provision from the list of rules it had scheduled to finalize Tuesday.” According to the CFTC, the vote had to be postponed pending an evaluation by the U.S. Government Accountability Office on Dodd-Frank. Their review will ultimately determine how the CFTC can dole out funds collected in connection with a whistleblower complaint. The CFTC is expected to vote on the final rules in August.
While the SEC rules are expected to gain more traction with would-be tipsters, the CFTC rules, too, promise handsome rewards for whistleblowers. Because the rules provide another outlet for whistleblowers, they provide another area of exposure for entities regulated by the CFTC. We will follow closely further developments related to the CFTC whistleblower rules and report back once a final set of rules is adopted.