Whistling a Common Tune
New CFTC amendments represent the latest development in the ever-evolving landscape of regulatory programs designed to encourage whistleblowers to report financial misconduct. Take a look at an overview of the CFTC's program and the key amendments, as well as their potential impact on market participants.
June 12, 2017 at 01:50 PM
11 minute read
On May 22, 2017, in one of its first official actions in the new administration, the U.S. Commodity Futures Trading Commission (CFTC) issued final rules amending its whistleblower program. These amendments serve to adopt anti-retaliation protections, clarify whistleblower incentives, and revise the award process. Whistleblower Awards Process, 82 Fed. Reg. 24487 (May 30, 2017) (amending 17 C.F.R. pt. 165) (Amendments). Once the amendments become effective on July 31, 2017, the CFTC's whistleblower rules will more closely parallel the whistleblower program administered by the U.S. Securities and Exchange Commission (SEC). The new amendments represent the latest development in the ever-evolving landscape of regulatory programs designed to encourage whistleblowers to report financial misconduct. This article provides an overview of the CFTC's program and the key amendments, as well as their potential impact on market participants.
|Emergence of the Financial Regulatory Whistleblower Programs
Among the responses to the financial crisis embodied in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), Congress authorized the creation of new whistleblower programs to be administered by the CFTC and SEC. Using parallel language, Congress established the two programs to offer bounties that would incentivize those with information about potential misconduct to report it to the authorities. The CFTC, which regulates the commodity futures, options, and swaps markets, and the SEC, which oversees the securities markets, promptly issued rules to implement their new whistleblower programs.
In the past six years, both agencies' whistleblower programs have been active, but the SEC has issued more frequent and greater awards. As of its most recent award on May 2, 2017, the SEC has issued 44 awards totaling approximately $154 million. SEC Press Release 2017-90, Whistleblower Award of More Than Half Million Dollars for Company Insider (May 2, 2017). To date, the CFTC has made four whistleblower awards, announcing its largest-ever award of more than $10 million on April 4, 2016. CFTC Press Release 7411-16, CFTC Announces Fourth Whistleblower Award (July 26, 2016); CFTC Press Release 7351-16, CFTC Announces Whistleblower Award of More Than $10 Million (April 4, 2016).
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