Securities Regulation Daily CFTC ‘reinterpretation’ empowers whistleblowers
Monday, May 22, 2017

CFTC ‘reinterpretation’ empowers whistleblowers

By Mark S. Nelson, J.D.

The CFTC unanimously approved changes to its rules that allow both the agency and whistleblowers to bring actions against employers who seek to retaliate against employees who blow the whistle on alleged misconduct. The rules likewise seek to ensure whistleblowers’ ability to communicate with the CFTC. The CFTC’s new rules echo similar developments at the SEC, which has also taken an aggressive stance regarding retaliation against whistleblowers in recent years, especially with respect to employment contracts that can hinder whistleblowing. The CFTC rules become effective 60 days after they are published in the Federal Register.

press release announcing the revised rules described them as a "reinterpretation" of the CFTC’s mandate while an FAQ emphasized additional whistleblower protections and agency transparency. The revised rules provide that confidentiality agreements and pre-dispute arbitration agreements cannot waive whistleblower protections afforded by Part 165 of the Commission’ regulations.

The Commission also can bring an action to enforce the anti-retaliation provisions where the retaliation was in response to an employee reporting alleged misconduct to the CFTC after having previously reported the allegations through an internal program. An appendix containing guidance also clarifies that both the CFTC and individuals can bring actions against employers for retaliation.

Another significant change will replace the panel that reviews whistleblower claims in favor of a new claims review staff function. The staff will consist of 3-5 staff members (but not from the Office of General Counsel) with no prior direct involvement in the underlying enforcement action. Moreover, at least one staff member must not work in the Division of Enforcement.

Other changes include a revamp of the CFTC’s whistleblower eligibility requirements. The rules also clarify that awards can be had in both covered actions and related actions.

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