Commodity Futures Trading Corporation: Monday, December 6, 2010

Monday,
December 6, 2010
Part II
Commodity Futures
Trading Corporation
17 CFR Part 165
Implementing the Whistleblower
Provisions of Section 23 of the
Commodity Exchange Act; Proposed Rule
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75728 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules
COMMODITY FUTURES TRADING information that you wish to make registered entities and intermediaries
COMMISSION available publicly. If you wish the subject to the Commission’s oversight.
Commission to consider information In addition, Title VII of the Dodd-
17 CFR Part 165 that you believe is exempt from Frank Act contains provisions to
disclosure under the Freedom of provide incentives and protections for
RIN 3038–AD04
Information Act, a petition for whistleblowers.
Implementing the Whistleblower confidential treatment of the exempt Section 748 of the Dodd-Frank Act
Provisions of Section 23 of the information may be submitted according amends the CEA by adding Section 23,
Commodity Exchange Act to the procedures established entitled ‘‘Commodity Whistleblower
procedures in CFTC Regulation 145.9, Incentives and Protection.’’ 4 Section 23
AGENCY: Commodity Futures Trading 17 CFR 145.9. directs that the Commission must pay
Commission. The Commission reserves the right, awards, subject to certain limitations
ACTION: Notice of proposed rulemaking. but shall have no obligation, to review, and conditions, to whistleblowers who
pre-screen, filter, redact, refuse or voluntarily provide the Commission
SUMMARY: The Commodity Futures remove any or all of your submission with original information about a
Trading Commission (‘‘Commission’’ or from http://www.cftc.gov that it may violation of the CEA that leads to
‘‘CFTC’’) is proposing rules to deem to be inappropriate for successful enforcement of an action
implement new statutory provisions publication, such as obscene language. brought by the Commission that results
enacted by Title VII of the Dodd-Frank All submissions that have been redacted in monetary sanctions exceeding
Wall Street Reform and Consumer or removed that contain comments on $1,000,000, and of certain related
Protection Act. These proposed rules the merits of the rulemaking will be actions.
apply to the whistleblowers incentives retained in the public comment file and The Commission is proposing
and protection of section 748. The will be considered as required under the Regulation 165 to implement Section 23
proposed rules establish a Administrative Procedure Act and other of the CEA. As described in detail
whistleblower program that enables the applicable laws, and may be accessible below, the rules contained in proposed
Commission to pay an award, under under the Freedom of Information Act. Regulation 165 define certain terms
regulations prescribed by the FOR FURTHER INFORMATION CONTACT: critical to the operation of the
Commission and subject to certain Edward Riccobene, Chief, Policy and whistleblower program, outline the
limitations, to eligible whistleblowers Review, Division of Enforcement, 202– procedures for applying for awards and
who voluntarily provide the 418–5327, [email protected], the Commission’s procedures for
Commission with original information Commodity Futures Trading making decisions on claims, and
about a violation of the Commodity Commission, Three Lafayette Centre, generally explain the scope of the
Exchange Act that leads to the 1151 21st Street, NW., Washington, DC whistleblower program to the public
successful enforcement of a covered 20581. and to potential whistleblowers.
judicial or administrative action, or a SUPPLEMENTARY INFORMATION:
Further, Proposed Regulation 165
related action. The proposed rules also includes an appendix informing
provide public notice of section 748’s I. Background whistleblowers of their protections from
prohibition on retaliation by employers On July 21, 2010, President Obama employer retaliation under Section 23 of
against individuals that provide the signed the Dodd-Frank Wall Street the CEA.
Commission with information about Reform and Consumer Protection Act Section 23 of the CEA also requires
potential violations. (‘‘Dodd-Frank Act’’).1 Title VII of the the Commission to fund customer
Dodd-Frank Act 2 amended the education initiatives designed to help
DATES: Comments must be received on
Commodity Exchange Act (‘‘CEA’’) 3 to customers protect themselves against
or before February 4, 2011.
establish a comprehensive new fraud or other violations of the CEA, or
ADDRESSES: You may submit comments, rules or regulations thereundeCr. The
identified by RIN number 3038–AD04, regulatory framework for swaps and
security-based swaps. The legislation Commission will, in a future
by any of the following methods: rulemaking, address related internal
• Agency Web site, via its Comments was enacted to reduce risk, increase
transparency, and promote market procedural and organizational issues,
Online process: http:// including establishment of, and
comments.cftc.gov. Follow the integrity within the financial system by,
among other things: (1) Providing for the delegation of authority to, an office or
instructions for submitting comments offices to administer the Commission’s
through the Web site. registration and comprehensive
regulation of swap dealers and major whistleblower and customer education
• Mail: David A. Stawick, Secretary of programs.
the Commission, Commodity Futures swap participants; (2) imposing clearing
Accordingly, the Commission is
Trading Commission, Three Lafayette and trade execution requirements on
proposing rules to implement Section
Centre, 1155 21st Street, NW., standardized derivative products; (3)
748 and establish a whistleblower
Washington, DC 20581. creating robust recordkeeping and real-
program. The Commission requests
• Hand Delivery/Courier: Same as time reporting regimes; and 4)
comment on all aspects of the proposed
mail above. enhancing the Commission’s
rules, as well as comment on the
• Federal eRulemaking Portal: http:// rulemaking and enforcement authorities
specific provisions and issues
www.regulations.gov. Follow the with respect to, among others, all
highlighted in the discussion below.

instructions for submitting comments. 1 See Dodd-Frank Wall Street Reform and
II. Description of the Proposed Rules
Please submit your comments using Consumer Protection Act, Public Law 111–203, 124
only one method. Stat. 1376 (2010). The text of the Dodd-Frank Act A. Proposed Rule 165.1—General
All comments must be submitted in may be accessed at http://www.cftc.gov./
LawRegulation/OTCDERIVATIVES/index.htm. Proposed Rule 165.1 provides a
English, or if not, accompanied by an 2 Pursuant to Section 701 of the Dodd-Frank Act, general, plain English description of
English translation. Comments will be Title VII may be cited as the ‘‘Wall Street
posted as received to http:// Transparency and Accountability Act of 2010.’’ 4 Section 922(a), Public Law 111–203, 124 Stat.
www.cftc.gov. You should submit only 3 7 U.S.C. 1 et seq. (2006). 1841 (2010).
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75729
Section 23 of the CEA. It sets forth the whistleblower awards based on all The Commission generally collects civil
purposes of the rules and states that the monetary sanctions obtained in a single monetary sanctions and disgorgement
Commission administers the proceeding, even when the amounts in civil actions, or fines in
whistleblower program. In addition, the whistleblower’s information did not administrative actions. A federal court
proposed rule states that, unless concern all defendants or claims in that or the Commission generally awards
expressly provided for in the rules, no proceeding? restitution to victims in civil and
person is authorized to make any offer administrative actions, respectively, but
2. Proposed Rule 165.2(b) Aggregate
or promise, or otherwise to bind the the Commission does not ‘‘collect’’
Amount
Commission with respect to the restitution, i.e., restitution is not
payment of an award or the amount Proposed Rule 165.2(b) defines the recorded as a payment receivable on the
thereof. phrase ‘‘aggregate amount’’ to mean the Commission’s books and records.
total amount of an award granted to one Consequently, restitution amounts
B. Proposed Rule 165.2—Definitions or more whistleblowers pursuant to collected in a covered action or related
1. Proposed Rule 165.2(a) Action Proposed Rule 165.7. The term is action will not be deposited into the
relevant for purposes of determining the Fund.
Proposed Rule 165.2(a) defines the
amount of an award pursuant to
term ‘‘action’’ to mean a single captioned 5. Proposed Rule 165.2(e) Covered
Proposed Rule 165.8.
civil or administrative proceeding. This Judicial or Administrative Action
defined term is relevant for purposes of 3. Proposed Rule 165.2(c) Analysis
Proposed Rule 165.2(e) defines the
calculating whether monetary sanctions Under Section 23(a)(4) of the CEA, the phrase ‘‘covered judicial or
in a Commission action exceed the original information provided by a
$1,000,000 threshold required for an administrative action’’ to mean any
whistleblower can include information judicial or administrative action brought
award payment pursuant to Section 23 that is derived from independent
of the CEA, as well as determining the by the Commission under the CEA
knowledge and also from independent whose successful resolution results in
monetary sanctions on which awards ‘‘analysis’’ of a whistleblower. Proposed
are based.5 The Commission proposes to monetary sanctions exceeding
Rule 165.2(c) defines the term ‘‘analysis’’ $1,000,000.
interpret the ‘‘action’’ to include all to mean the whistleblower’s
defendants or respondents, and all examination and evaluation of 6. Proposed Rule 165.2(f) Fund
claims, that are brought within that information that may be generally Proposed Rule 165.2(f) defines the
proceeding without regard to which available, but which reveals information term ‘‘Fund’’ to mean the ‘‘Commodity
specific defendants or respondents, or that is not generally known or available Futures Trading Commission Customer
which specific claims, were included in
to the public. This definition recognizes Protection Fund’’ established by Section
the action as a result of the information
that there are circumstances where 23(g) of the CEA. The Commission will
that the whistleblower provided. This
individuals can review publicly use the Fund to pay whistleblower
approach to determining the scope of an
available information, and, through awards as provided in Proposed Rule
‘‘action’’ appears consistent with the
their additional evaluation and analysis, 165.12 and to finance customer
most common meaning of the term,6
provide vital assistance to the education initiatives designed to help
will effectuate the purposes of Section
Commission staff in understanding customers protect themselves against
23 by enhancing the incentives for
complex schemes and identifying fraud and other violations of the CEA or
individuals to come forward and report
potential violations of the CEA. the Commission’s regulations.
potential violations to the Commission,7
The Commission requests comment
and will avoid the challenges associated 7. Proposed Rule 165.2(g) Independent
on the definition of ‘‘analysis.’’ Is there
with attempting to allocate monetary Knowledge
a different or more specific definition of
sanctions involving multiple Proposed Rule 165.2(g) defines
‘‘analysis’’ that would better effectuate
individuals and claims based upon the ‘‘independent knowledge’’ as factual
the purposes of Section 23 of the CEA?
select individuals and claims reported information in the whistleblower’s
by whistleblowers. 4. Proposed Rule 165.2(d) Collected by possession that is not obtained from
The Commission requests comment the Commission publicly available sources, which would
on the proposed definition of the word Proposed Rule 165.2(d) defines the include such sources as corporate
‘‘action.’’ Is it appropriate to pay phrase ‘‘collected by the Commission,’’ filings, media, and the Internet.
5 See
when used in the context of deposits Importantly, the proposed definition of
Proposed Rule 165.8.
6 See Black’s Law Dictionary 31 (8th ed. 2004)
and credits into the Fund, to refer to a ‘‘independent knowledge’’ does not
(defining an ‘‘action’’ as ‘‘a civil or criminal judicial monetary sanction that is both collected require that a whistleblower have direct,
proceeding’’). Section 23 of the CEA does not appear by the Commission and is recorded as first-hand knowledge of potential
to contemplate the aggregation of separate judicial a payment receivable on the violations. Instead, independent
or administrative actions for purposes of
determining whether the $1,000,000 threshold is Commission’s books and records. While knowledge may be obtained from any of
satisfied, even if the actions arise out of a single the amount of a whistleblower award is the whistleblower’s experiences,
investigation. based upon ‘‘what has been collected of observations, or communications
7 This approach offers enhanced potential
the monetary sanctions imposed in an (subject to the exclusion for knowledge
incentives for whistleblowers when compared to
other similar programs because those programs action or related action,’’ see Section obtained from public sources). Thus, for
have typically limited awards to successful claims 23(b), Congress used different language example, under Proposed Rule 165.2(g),
that the whistleblower actually identified. See to describe the source of funding for a whistleblower would have
Rockwell International Corp. v. United States, whistleblower awards. Specifically,
549 U.S. 457 (2007) (False Claims Act); John Doe
‘‘independent knowledge’’ of
v. United States, 65 Fed. Cl. 184 (2005) (Customs Congress states that the Fund will be information even if that knowledge
moiety statute, 19 U.S.C. 1619); Internal Revenue financed through monetary sanctions derives from facts or other information
Manual 25.2.2.2.8.A (under IRS whistleblower ‘‘collected by the Commission,’’ meaning that has been conveyed to the
program, collected proceeds only include proceeds
from the single issue identified by the
that deposits into the Fund are based whistleblower by third parties.
whistleblower, or substantially similar improper only upon what the Commission The Commission preliminarily
activity). actually collects. See Section 23(g)(3). believes that defining ‘‘independent
knowledge’’ in this manner best communications would not apply in employ to identify problems and
effectuates the purposes of Section 23 of circumstances where the disclosure of advance compliance with legal
the CEA. An individual may learn about the information is otherwise permitted. standards, would not be permitted to
potential violations of the CEA without This could include, for example, use that knowledge to obtain a personal
being personally involved in the circumstances where the privilege has benefit by becoming whistleblowers.
conduct. If an individual voluntarily been waived, and where the privilege is Nevertheless, if the entity failed to
comes forward with such information, not applicable because of a recognized disclose the information to the
and the information leads the exception such as the crime-fraud Commission within sixty (60) days or
Commission to a successful enforcement exception to the attorney-client otherwise proceeds in bad faith, the
action (as defined in Proposed Rule privilege. exclusion would no longer apply,
165.2(i)), that individual should be The second exclusion to ‘‘independent thereby making an individual who
eligible to receive a whistleblower knowledge’’ in the proposed rule applies knows this undisclosed information
award.8 when a person with legal, compliance, eligible to become a whistleblower. The
Proposed Rule 165.2(g) further audit, supervisory, or governance rationale for this provision is that if the
provides that an individual will not be responsibilities for an entity receives entity fails to report information
considered to have ‘‘independent information about potential violations, concerning the violation to the
knowledge’’ in four other circumstances. and the information was communicated Commission, it would be inconsistent
The effect of these provisions would be to the person with the reasonable with the purposes of Section 23 to
to exclude individuals who obtain expectation that the person would take continue to disable individuals with
information under these circumstances appropriate steps to cause the entity to knowledge of the potential violations
from being eligible for whistleblower remedy the violation.9 (Proposed Rule from coming forward and providing the
awards. 165.2(g)(4).) information to the Commission.
The first exclusion contemplated is The third exclusion is closely related Furthermore, this provision provides a
for information that was obtained to the second, and applies any other reasonable period of time for entities to
through a communication that is subject time that information is obtained from report potential violations, thereby
to the attorney-client privilege. or through an entity’s legal, compliance, minimizing the potential of
(Proposed Rule 165.2(g)(2) and (3).) audit, or similar functions or processes circumventing or undermining existing
Compliance with the CEA is promoted for identifying, reporting, and compliance programs.
when individuals, corporate officers, addressing potential non-compliance The fourth and final exclusion to
Commission registrants and others with applicable law. (Proposed Rule ‘‘independent knowledge’’ in the
consult with counsel about potential 165.2(g)(5).) However, each of these two proposed rule applies if the
violations, and the attorney-client exclusions ceases to be applicable, with whistleblower obtains the information
privilege furthers such consultation. the result that an individual may be by means or in a manner that violates
This important benefit could be deemed to have ‘‘independent applicable federal or state criminal law.
undermined if the whistleblower award knowledge,’’ and therefore may become This exclusion is necessary to avoid the
program vitiated the public’s perception a whistleblower, if the entity fails to unintended effect of incentivizing
of the scope of the attorney-client disclose the information to the criminal misconduct.
Commission within sixty (60) days or The Commission requests comment
privilege or created monetary incentives
otherwise proceeds in bad faith. on the definition of ‘‘independent
for counsel to disclose information
Compliance with the CEA is knowledge.’’ Is it appropriate to include
about potential CEA violations that they
promoted when companies implement within the scope of the phrase
learned of through privileged
effective legal, audit, compliance, and ‘‘independent knowledge’’ knowledge
communications.
similar functions. The rationale for that is not direct, first-hand knowledge,
The exception for knowledge obtained
these proposed exclusions is the but is instead learned from others,
through privileged attorney-client
concern that Section 23 not be subject only to an exclusion for
8 In addition, the distinction between implemented in a way that would create knowledge learned from publicly-
‘‘independent knowledge’’ (as knowledge not incentives for persons involved in such available sources? Is it appropriate to
dependent upon publicly available sources) and functions, as well as other responsible exclude from the definition of
direct, first-hand knowledge, is consistent with the
persons who are informed of ‘‘independent knowledge’’ information
approach courts have typically taken in interpreting that is obtained through a
similar terminology in the False Claims Act. Until wrongdoing, to circumvent or
this year, the ‘‘public disclosure bar’’ provisions of undermine the proper operation of the communication that is protected by the
the False Claims Act defined an ‘‘original source’’ entity’s internal processes for attorney-client privilege? Are there
of information, in part, as ‘‘an individual who [had]
investigating and responding to other ways these rules should address
direct and independent knowledge of the privileged communications?
allegations of the information on which the violations of law. Accordingly, under
The Commission also requests
allegations [were] based * * *.’’ 31 U.S.C. the proposed rule, officers, directors,
3130(e)(4) (prior to 2010 amendments). Courts comment on the proposed exclusions
employees, and others who learn of
interpreting these terms generally defined for information obtained by a person
‘‘independent knowledge’’ to mean knowledge that potential violations as part of their
with legal, compliance, audit,
was not dependent on public disclosures, and official duties in the expectation that
supervisory, or governance
‘‘direct knowledge’’ to mean first-hand knowledge they will take steps to address the
from the relator’s own work and experience, with responsibilities for an entity under an
violations, or otherwise from or through
no intervening agency. E.g., United States ex rel. expectation that the person would cause
Fried v. West Independent School District, 527 F.3d the various processes that companies
the entity to take steps to remedy the
439 (5th Cir. 2008); United States ex rel. Paranich
v. Sorgnard, 396 F.3d 326 (3d Cir. 2005). See 9 This exclusion has been adapted from case law violation, and for information otherwise
generally John T. Boese, Civil False Claims and Qui holding that a disclosure to a supervisor who is in obtained from or through an entity’s
Tam Actions § 4.02[D][2] (Aspen Publishers) (2006) a position to remedy the wrongdoing is a protected legal, compliance, audit, or similar
(citing cases). Earlier this year, Congress amended disclosure for purposes of the federal functions. Does this exclusion strike the
the ‘‘public disclosure bar’’ to, among other things, Whistleblower Protection Act, 5 U.S.C. 2302(b)(8).
remove the requirement that a relator have ‘‘direct E.g., Reid v. Merit Systems Protection Board, 508
proper balance? Will the carve-out for
knowledge’’ of information. Sec. 10104(h)(2), Public F.3d 674 (Fed. Cir. 2007); Hooven-Lewis v. Caldera, situations where the entity fails to
Law 111–148, 124 Stat. 901 (Mar. 23, 2010). 249 F.3d 259 (4th Cir. 2001). disclose the information within sixty
(60) days promote effective self-policing inquire about new or different conduct At bottom, successful enforcement of
functions and compliance with the law as part of a current investigation, and a judicial or administrative action
without undermining the operation of situations where the whistleblower depends on the staff’s ability to
Section 23? Is sixty (60) days a provides information about conduct that establish unlawful conduct by a
‘‘reasonable time’’ for the entity to is already under investigation. In the preponderance of evidence. Thus, in
disclose the information and, if not, latter case, awards would be limited to order to have ‘‘led to successful
what period should be specified (e.g., the rare circumstances where the enforcement,’’ the ‘‘original information’’
three months, six months, one year)? whistleblower provided essential provided by a whistleblower should be
Are there alternative provisions the information that the staff would not connected to evidence that plays a
Commission should consider that would have otherwise obtained in the normal significant role in successfully
promote effective self-policing and self- course of the investigation. establishing the Commission’s claim.
reporting while still being consistent Subparagraphs (1) and (2) of Proposed For example, the ‘‘led to’’ standard of
with the goals and text of Section 23? Rule 165.2(i) reflect these Proposed Rule 165.2(i)(1) would be met
Finally, the Commission seeks considerations. if a whistleblower were to provide the
comment on whether there are other Subparagraph (1) of Proposed Rule Commission staff with strong, direct
sources of knowledge that should or 165.2(i) applies to situations where the evidence of violations that supported
should not be deemed ‘‘independent’’ for staff is not already reviewing the one or more claims in a successful
purposes of Section 23 and that should conduct in question, and establishes a enforcement action. To give another
be specifically addressed by rule? two-part test for determining whether example, a whistleblower whose
8. Proposed Rule 165.2(h) Independent ‘‘original information’’ voluntarily information did not provide this degree
Analysis provided by a whistleblower led to of evidence in itself, but who played a
successful enforcement of a Commission critical role in advancing the
Proposed Rule 165.2(h) defines the investigation by leading the staff
phrase ‘‘independent analysis’’ to mean action. First, the information must have
caused the staff to open an directly to evidence that provided
the whistleblower’s own analysis,
investigation, reopen an investigation important support for one or more of the
whether done alone or in combination
that had been closed, or to inquire Commission’s claims could also receive
with others. The proposed rule thus
concerning new and different conduct an award, in particular if the evidence
recognizes that analysis—in particular
as part of an open investigation. This the whistleblower pointed to might have
academic or professional studies—is
does not necessarily contemplate that otherwise been difficult to obtain. A
often the product of collaboration
the whistleblower’s information will be whistleblower who only provided vague
among two or more individuals. The
the only information that the staff information, or an unsupported tip, or
phrase is relevant to the definition of
obtains before deciding to proceed. evidence that was tangential and did not
‘‘original information’’ in Proposed Rule
However, the proposed rule would significantly help the Commission
165.2(k).
apply when the whistleblower gave the successfully establish its claims, would
9. Proposed Rule 165.2(i) Information staff information about conduct that the ordinarily not meet the standard of this
That Led to Successful Enforcement staff is not already investigating or proposed rule.
Under Section 23, a whistleblower’s examining, and that information was the If information that a whistleblower
eligibility for an award depends in part principal motivating factor behind the provides to the Commission consists of
on whether the whistleblower’s original staff’s decision to begin looking into the ‘‘independent analysis’’ (Proposed Rule
information ‘‘led to the successful whistleblower’s allegations. 165.2(h)) rather than ‘‘independent
enforcement’’ of the Commission’s Second, if the whistleblower’s knowledge’’ (Proposed Rule 165.2(g)),
covered judicial or administrative action information caused the Commission the evaluation of whether this analysis
or a related action. Proposed Rule staff to start looking at the conduct for ‘‘led to successful enforcement’’
165.2(i) defines when original the first time, the proposed rule would similarly would turn on whether it
information ‘‘led to successful require that the information significantly contributed to the success
enforcement.’’ ‘‘significantly contributed’’ to the of the action. This would involve, for
The Commission’s enforcement success of an enforcement action filed example, considering the degree to
practice generally proceeds in several by the Commission. The proposed rule which the analysis, by itself and
stages. First, the staff opens an includes this requirement because the without further investigation, indicated
investigation based upon some Commission believes that it is not the a high likelihood of unlawful conduct
indication of potential violations of the intent of Section 23 to authorize that was the basis, or was substantially
CEA and/or Commission regulations. whistleblower awards for any and all the basis, for one or more claims in the
Second, the staff conducts its tips about conduct that led to the Commission’s enforcement action. The
investigation to gather additional facts opening of an investigation if the purpose of this provision is to ensure
in order to determine whether there is resulting investigation concludes in a that the analysis provided to the
sufficient basis to recommend successful covered judicial or Commission results in the efficiency
enforcement action. If so, the staff may administrative action. Rather, implicit and effectiveness benefits to the
recommend, and the Commission may in the requirement in Section 23(b) that enforcement program that were
authorize, the filing of an action. The a whistleblower’s information ‘‘led to intended by Congress. Thus, if a person
definition in Proposed Rule 165.2(i) * * * successful enforcement’’ is the provided analysis based upon readily
addresses the significance of the further expectation that the information, available public information and the
whistleblower’s information to both the because of its high quality, reliability, staff opened an inquiry based upon this
decision to open an investigation and and specificity, had a meaningful analysis but was required to conduct
the success of the resulting enforcement connection to the Commission’s ability significant additional analysis and
action. The proposed rule would to successfully complete its investigation to conclude a successful
distinguish between situations where investigation and to either obtain a enforcement action, the person would
the whistleblower’s information causes settlement or prevail in a litigated not be deemed to have provided
the staff to begin an investigation or proceeding. ‘‘independent analysis.’’
Subparagraph (2) of Proposed Rule contribute, or, in the case of conduct administrative action, to mean (1) any
165.2(i) sets forth a separate, and higher, that is already under investigation, be monies, including penalties,
standard for cases in which a essential, to the success of a claim on disgorgement, restitution, and interest
whistleblower provides original which the Commission prevails in ordered to be paid; and (2) any monies
information to the Commission about litigation. For example, if a court finds deposited into a disgorgement fund or
conduct that is already under in favor of the Commission on a number other fund pursuant to Section 308(b) of
investigation by the Commission, of claims in an enforcement action, but the Sarbanes-Oxley Act of 2002
Congress, any other federal, state, or rejects the claims that are based upon (15 U.S.C. 7246(b)), as a result of such
local authority, any self-regulatory the information the whistleblower action or any settlement of such action.
organization, or the Public Company provided, the whistleblower would not This phrase is relevant to the definition
Accounting Oversight Board. In this be considered eligible to receive an of ‘‘covered judicial or administrative
situation, the information will be award.12 By contrast, in a settled action action’’ in Proposed Rule 165.2(d) and to
considered to have led to the successful the Commission would consider the amount of a whistleblower award
enforcement of a judicial or whether the whistleblower’s under Proposed Rule 165.8.
administrative action if the information information significantly contributed, or
11. Proposed Rule 165.2(k) Original
would not have otherwise been obtained was essential, to allegations included in Information and Proposed Rule 165.2(l)
and was essential to the success of the the Commission’s federal court Original Source
action.10 Although the Commission complaint, or to factual findings in the
believes that awards under Section 23 Commission’s administrative order. Proposed Rule 165.2(k) tracks the
generally should be limited to cases The Commission requests comment definition of ‘‘original information’’ set
where whistleblowers provide original on the proposed standard for when forth in Section 23(a)(4) of the CEA.13
information about violations that are not original information voluntarily ‘‘Original information’’ means
already under investigation,11 there may provided by a whistleblower ‘‘led to’’ information that is derived from the
be rare circumstances where successful enforcement action. Is the whistleblower’s independent knowledge
information received from a proposed standard appropriate? or analysis; is not already known to the
whistleblower in relation to an ongoing The Commission also requests Commission from any other source,
investigation is so significant for the comment on cases where the original unless the whistleblower is the original
success of a Commission action that a information provided by the source of the information; and is not
whistleblower award should be whistleblower caused the staff to begin exclusively derived from an allegation
considered. For example, a looking at conduct for the first time. made in a judicial or administrative
whistleblower who is not within the Should the standard also require that hearing, in a governmental report,
scope of the staff’s investigation, but the whistleblower’s information hearing, audit, or investigation, or from
who nonetheless has access to, and ‘‘significantly contributed’’ to a the news media, unless the
comes forward with a document that successful enforcement action? If not, whistleblower is a source of the
had been concealed from the staff, and what standards should be used in the information. Consistent with Section
that establishes proof of wrongdoing evaluation? If yes, should the proposed 23(l) of the CEA, the Dodd-Frank Act
that is critical to the Commission’s rule define with greater specificity when authorizes the Commission to pay
ability to sustain its burden of proof, information ‘‘significantly contributed’’ whistleblower awards on the basis of
provides the type of assistance that to enforcement action? In what way original information that is submitted
should be considered for an award should the phrase be defined? prior to the effective date of final rules
without regard to whether the staff was Finally, the Commission requests implementing Section 23 (assuming that
already investigating the conduct at the comment on the proposal in all of the other requirements for an
time the document was provided. The Subparagraph (i)(2), which would award are met); the Dodd-Frank Act
Commission anticipates applying consider that a whistleblower’s does not authorize the Commission to
Proposed Rule 165.2(i) in a strict information ‘‘led to’’ successful apply Section 23 retroactively to pay
fashion, however, such that awards enforcement even in cases where the awards based upon information
under the proposed rule would be whistleblower gave the Commission submitted prior to the enactment date of
exceedingly rare. original information about conduct that the statute.14 Consistent with Congress’s
In considering the relationship was already under investigation. Is this intent, Proposed Rule 165.2(k)(4) also
between information obtained from a proposal appropriate? Should the requires that ‘‘original information’’ be
whistleblower and the success of a Commission’s evaluation turn on provided to the Commission for the first
covered judicial or administrative whether the whistleblower’s time after July 21, 2010 (the date of
action, the Commission will take into information would not otherwise have enactment of the Dodd-Frank Act).
account the difference between settled been obtained and was essential to the Under the statutory definition of
and litigated actions. Specifically, in a success of the action? If not, what other ‘‘original information,’’ a whistleblower
litigated action the whistleblower’s standard(s) should apply? who provides information that the
information must significantly Commission already knows from
10. Proposed Rule 165.2(j) Monetary another source has not provided original
10 The proposed rule also makes clear that
Sanctions information, unless the whistleblower is
subparagraph (2) of Proposed Rule 165.2(i) does not Proposed Rule 165.2(j) defines the
apply when a whistleblower provides information 13 7 U.S.C. 26(a)(4).

to the Commission about a matter that is already
phrase ‘‘monetary sanctions,’’ when used 14 Section 23(k) of the CEA directs that:
under investigation by another authority if the with respect to any judicial or ‘‘Information submitted to the Commission by a
whistleblower is the ‘‘original source’’ for that whistleblower in accordance with rules or
investigation under Proposed Rule 165.2(l)). In 12 As discussed below, however, if the regulations implementing this section shall not lose
those circumstances, subparagraph (1) of Proposed Commission prevails on a claim that is based upon its status as original information solely because the
Rule 165.2(i) would govern the Commission’s the information the whistleblower provided, and if whistleblower submitted such information prior to
analysis. all the conditions for an award are otherwise the effective date of such rules or regulations,
11 See Lacy v. United States, 221 Ct. Cl. 526 satisfied, the award to the whistleblower would be provided that such information was submitted after
(1979); cf. United States ex rel. Merena v. Smith- based upon all of the monetary sanctions obtained the date of enactment of the Wall Street
Kline Beecham Corp., 205 F.3d 97 (3d Cir. 2000). as a result of the action. See Proposed Rule 165.8. Transparency and Accountability Act of 2010.’’
the ‘‘original source’’ of that information. forms to the Commission within 90 days Act through amendments earlier this
Proposed Rule 165.2(l) defines the term after he provided the information to the year.16
‘‘original source,’’ which will be used in other authority, or 90 days after the The Commission requests comment
the definition of ‘‘original information.’’ other person claiming to be a on all aspects of the definitions of
Under the proposed rule, a whistleblower submits his claim to the ‘‘original information’’ and ‘‘original
whistleblower is an ‘‘original source’’ of Commission, the Commission will source’’ set forth in Proposed Rules
the same information that the consider the whistleblower’s 165.2(k) and (l). Is the provision that
Commission obtains from another submission to be effective. would credit individuals with providing
source if the other source obtained the As noted above, the whistleblower original information to the Commission,
information from the whistleblower or must establish that he is the original as of the date of their submission to
his representative. The whistleblower source of the information provided to another Governmental or regulatory
bears the burden of establishing that he the other authority as well as the date authority, or to company legal,
is the original source of information. of his submission, but the Commission compliance, or audit personnel,
In Commission investigations, this may seek confirmation from the other appropriate? In particular, does the
situation may arise if the staff receives authority, or any other source, in provision regarding the providing of
a referral from another authority such as making this determination. The information to a company’s legal,
the Department of Justice, a self- objective of this procedure is to provide compliance, or audit personnel
regulatory organization, or another further incentive for persons with appropriately accommodate the internal
organization that is identified in the knowledge of CEA violations to come compliance process?
proposed rule. On occasion, the forward (consistent with the purposes of
The Commission also requests
situation may also arise that the Section 23) by assuring potential
comment on whether the ninety (90)
‘‘original source’’ of information shares whistleblowers that they can provide
day deadline for submitting Forms TCR
his information with another person, information to appropriate Government
and such other person files a or regulatory authorities, and their and WB–DEC to the Commission (after
whistleblower claim with the ‘‘place in line’’ will be protected in the initially providing information about
Commission prior to the original source event that other whistleblowers later violations or potential violations to
filing a claim for whistleblower status. provide the same information directly to another authority or the employer’s
In these circumstances, the proposed the Commission. legal, compliance, or audit personnel) is
rule would credit a whistleblower as For similar reasons, the proposed rule the appropriate time frame? Should
being the ‘‘original source’’ of extends the same protection to there be different time frames for
information on which the referral was whistleblowers who provide disclosures to other authorities and
based as long as the whistleblower information about potential violations to disclosures to an employer’s legal,
‘‘voluntarily’’ provided the information the persons specified in Proposed Rule compliance or audit personnel?
to the other authority within the 165.2(g)(3) and (4) (i.e., personnel 12. Proposed Rule 165.2(m) Related
meaning of these rules; i.e., the involved in compliance or similar Action
whistleblower or his representative functions, or who are informed about
must have come forward and given the potential violations with the expectation The phrase ‘‘related action,’’ when
other authority the information before that they will take steps to address used with respect to any judicial or
receiving any request, inquiry, or them), and who, within 90 days, submit administrative action brought by the
demand to which the information was the necessary whistleblower forms to Commission under the CEA, means any
relevant, or was the individual who the Commission. Compliance with the judicial or administrative action brought
originally possessed either the CEA is promoted when companies have by an entity listed in Proposed Rule
independent knowledge or conducted effective programs for identifying, 165.11(a) that is based upon the original
the independent analysis. correcting, and self-reporting unlawful information voluntarily submitted by a
As is described elsewhere in these conduct by company officers or whistleblower to the Commission
proposed rules, a whistleblower will employees. The objective of this pursuant to Proposed Rule 165.3 that
need to submit two forms, a Form TCR provision is to support, not undermine, led to the successful resolution of the
(‘‘Tip, Complaint or Referral’’) and Form the effective functioning of company Commission action. This phrase is
WB–DEC (‘‘Declaration Concerning compliance and related systems by relevant to the Commission’s
Original Information Provided Pursuant allowing employees to take their determination of the amount of a
to Section 23 of the Commodity concerns about potential violations to whistleblower award under Proposed
Exchange Act’’) in order to start the appropriate company officials while Rules 165.8 and 165.11.
process and establish the still preserving their rights under the 13. Proposed Rule 165.2(n) Successful
whistleblower’s eligibility for award Commission’s whistleblower program. Resolution or Successful Enforcement
consideration.15 A whistleblower who Proposed Rule 165.2(l)(3) addresses
either provides information to another circumstances where the Commission Proposed Rule 165.2(n) defines the
authority first, or who shared his already possesses some information phrase ‘‘successful resolution,’’ when
independent knowledge or analysis about a matter at the time that a used with respect to any judicial or
with another who is also claiming to be whistleblower provides additional administrative action brought by the
a whistleblower, will need to follow information about the same matter. The Commission under the Commodity
these same procedures and submit the whistleblower will be considered the Exchange Act, to include any settlement
necessary forms to the Commission in ‘‘original source’’ of any information that of such action or final judgment in favor
order to perfect his status as a is derived from his independent of the Commission. It shall also have the
whistleblower under the Commission’s knowledge or independent analysis and same meaning as ‘‘successful
whistleblower program. However, under that materially adds to the information enforcement.’’ This phrase is relevant to
Proposed Rule 165.2(l)(2), as long as the that the Commission already possesses. the definition of the phrase ‘‘covered
whistleblower submits the necessary The standard is modeled after the
definition of ‘‘original source’’ that 16 31 U.S.C. 3730(e)(4)(B), Public Law 111–148
15 See Proposed Rule 165.3. Congress included in the False Claims § 10104(h)(2), 124 Stat. 901 (Mar. 23. 2010).
judicial or administrative action’’ as set This approach is consistent with the employees of an appropriate regulatory
forth in Proposed Rule 165.2(e). statutory purpose of creating a strong agency, the Department of Justice, a
incentive for whistleblowers to come registered entity, a registered futures
14. Proposed Rule 165.2(o) Voluntary
forward early with information about association, or a self-regulatory
Submission or Voluntarily Submitted
possible violations of the CEA rather organization. The Commission
Under Section 23(b)(1) of the CEA,17 than wait until Government or other anticipates that other similarly-situated
whistleblowers are eligible for awards official investigators ‘‘come knocking on persons should not be eligible for award
only when they provide original the door.’’ 19 This approach is also consideration if they are under a pre-
information to the Commission consistent with the approach federal existing legal duty to report the
‘‘voluntarily.’’ Proposed Rule 165.2(o) courts have taken in determining information to the Commission or to any
would define ‘‘voluntary submission’’ or whether a private plaintiff, suing on of the other authorities described above.
‘‘voluntarily submitted’’ in the context of behalf of the Government under the qui Proposed Rule 165.2(o) accomplishes
submission to the Commission of tam provisions of the False Claims Act, this goal by providing that submissions
original information as a ‘‘voluntarily’’ provided information from such individuals will not be
whistleblower’s provision of about the false or fraudulent claims to considered voluntary for purposes of
information to the Commission before the Government before filing suit.20 Section 23 of the CEA. Proposed Rule
receipt by the whistleblower (or anyone Disclosure to the Government should 165.2(o) also includes a similar
representing the whistleblower, also not be considered voluntary if the exclusion for information that the
including counsel) of any request, individual has a pre-existing legal or whistleblower is contractually obligated
inquiry, or demand from the contractual duty to report violations of to provide. This exclusion is intended to
Commission, Congress, any other the type at issue to the Commission, preclude awards to persons who
federal, state or local authority, or any Congress, any other federal or state provide information pursuant to
self-regulatory organization about a authority, or any self-regulatory preexisting agreements that obligate
matter to which the information in the organization.21 Thus, for example, them to assist Commission staff or other
whistleblower’s submission is relevant. Section 23(c)(2) of the CEA 22 prohibits investigative authorities.
The fact that such request, inquiry or awards to members, officers, or The Commission requests comment
demand is not compelled by subpoena on the definition of ‘‘voluntarily.’’ Does
or other applicable law, does not render 19 See S. Rep. No. 111–176 at 110 (2010) Proposed Rule 165.2(o) appropriately
a subsequent submission voluntary. (discussing Section 922 of the Dodd-Frank Act, define the circumstances when a
which establishes ‘‘Securities Whistleblower whistleblower should be considered to
Proposed Rule 165.2(o) would make Incentives and Protection’’ similar to the
clear that, in order to have acted have acted ‘‘voluntarily’’ in providing
‘‘Commodity Whistleblower Incentives and
‘‘voluntarily’’ under the statute, a Protection’’ in Section 748; ‘‘The Whistleblower information about CEA or Commission
whistleblower must do more than Program aims to motivate those with inside regulation violations to the
merely provide the Commission with
knowledge to come forward and assist the Commission? Are there other
Government to identify and prosecute persons who circumstances not clearly included that
information that is not compelled by have violated securities laws * * *.’’).
subpoena (or by a court order following 20 See United States ex rel. Barth v. Ridgedale
should be in the rule? Is it appropriate
a Commission action to enforce a Electric, Inc., 44 F.3d 699 (8th Cir. 1994); United for the proposed rule to consider a
subpoena) or by other applicable law.18 States ex rel. Paranich v. Sorgnard, 396 F.3d 326 request or inquiry directed to an
(3d Cir. 2005); United States ex rel. Fine v. Chevron, employer to be directed at individual
Rather, the whistleblower or his USA, Inc., 72 F.3d 740 (9th Cir. 1995), cert. denied, employees who possess the documents
representative (such as an attorney) 517 U.S.1233 (1996) (rejecting argument that
provision of information to the Government is or other information needed for the
must come forward with the
always voluntary unless compelled by subpoena). employer’s response? Should the
information before receiving any The qui tam provisions of the False Claims Act persons who are considered to be within
request, inquiry, or demand from the include a ‘‘public disclosure bar,’’ which, as recently the scope of an inquiry be narrowed or
Commission staff or from any other amended, requires a court to dismiss a private
action or claim if substantially the same allegations expanded? Will the carve-out that
investigating authority described in the
or transactions as alleged in the action or claim permits such an employee to become a
proposed rule about a matter to which were publicly disclosed in certain fora, unless the whistleblower if the employer fails to
the whistleblower’s information is Government opposes dismissal or the plaintiff is an disclose the information the employee
relevant. A request, inquiry, or demand ‘‘original source’’ of the information. 31 U.S.C.
3730(e)(4). An ‘‘original source’’ is further defined, provided within sixty (60) days promote
that is directed to an employer is also compliance with the law and the
in part, with reference to whether the plaintiff
considered to be directed to employees ‘‘voluntarily’’ disclosed the information to the effective operation of Section 23? Is
who possess the documents or other Government before filing suit. Id. Because the qui sixty (60) days a ‘‘reasonable time’’ for
information that is necessary for the tam provisions of the False Claims Act have played
employers to disclose the information
employer to respond. Accordingly, a a significant role in the development of
whistleblower law generally, and because some of the employee provided, or should a
subsequent whistleblower submission the terminology used by Congress in Section 23 has different period be specified (e.g., three
from any such employee will not be antecedents in the False Claims Act, the months, six months, one year)?
considered ‘‘voluntary’’ for purposes of Commission believes that precedent under the False The Commission also requests
the rule, and the employee will not be Claims Act can provide helpful guidance in the
interpretation of Section 23 of the CEA. At the same comment on the standard described in
eligible for award consideration, unless time, because the False Claims Act and Section 23 Proposed Rule 165.2(o) that would
the employer fails to provide the serve different purposes, are structured differently, credit an individual with acting
employee’s documents or information to
and the two statutes may use the same words in ‘‘voluntarily’’ in circumstances where
the requesting authority within sixty different contexts, the Commission does not view
False Claims Act precedent as necessarily the individual was aware of fraudulent
(60) days. controlling or authoritative in all circumstances for conduct for an extended period of time,
purposes of Section 23 of the CEA. but chose not to come forward as a
17 7 U.S.C. 26(b)(1). 21 See United States ex rel. Biddle v. Board of
whistleblower until after he became
18 Various books and records provisions of the Trustees of The Leland Stanford, Jr. University, 161 aware of a governmental investigation
CEA and Commission regulations generally require F.3d 533 (9th Cir. 1998), cert. denied, 526 U.S. 1066
registrants to furnish records to the Commission (1999); United States ex rel. Schwedt v. Planning (such as by observing document
upon request. See e.g., Section 4(g) of the CEA, 7 Research Corp., 39 F. Supp. 2d 28 (D.D.C. 1999). requests being served on his employer
U.S.C. 6(g). 22 15 U.S.C. 78u-6(c)(2). or colleagues, but before he received an
inquiry, request, or demand himself, The Commission requests comment 2. Form WB–DEC and Instructions
assuming that he was not within the on whether the anti-retaliation
scope of an inquiry directed to his protections set forth in Section 23(h)(1) In addition to Form TCR, the
employer). Is this an appropriate result, of the CEA should be applied broadly to Commission proposes in subparagraph
and, if not, how should the proposed any person who provides information to (b) of Proposed Rule 165.3 to require
rule be modified to account for it? the Commission concerning a potential that whistleblowers who wish to be
Finally, the Commission seeks violation of the CEA, or should they be considered for an award in connection
Comment on the exclusion set forth in limited by the various procedural or with the information they provide to the
Proposed Rule 165.2(o) for information substantive prerequisites to Commission also complete and provide
provided pursuant to a pre-existing legal consideration for a whistleblower the Commission with proposed Form
or contractual duty to report violations. award? Should the application of the WB–DEC, ‘‘Declaration Concerning
Is the exclusion appropriate? Should the anti-retaliation provisions be limited or Original Information Provided Pursuant
exclusion be expanded to other forms of broadened in any other ways? to Section 23 of the Commodity
duties such as ethical duties or duties C. Proposed Rule 165.3—Procedures for Exchange Act.’’ Proposed Form
imposed by codes of conduct? Submitting Original Information WB–DEC would require a whistleblower
to answer certain threshold questions
15. Proposed Rule 165.2(p) The Commission proposes a two-step concerning the whistleblower’s
Whistleblower(s) process for the submission of original eligibility to receive an award. The form
The term ‘‘whistleblower’’ is defined information under the whistleblower also would contain a statement from the
in Section 23(a)(7) of the CEA.23 award program. In general, the first step whistleblower acknowledging that the
Consistent with this language, Proposed would require the submission of the information contained in the Form
Rule 165.2(p) would define a standard form on which the information
WB–DEC, as well as all information
whistleblower as an individual who, concerning potential violations of the
contained in the whistleblower’s Form
alone or jointly with others, provides CEA are reported. The second step
TCR, is true, correct and complete to the
would require the whistleblower to
information to the Commission relating best of the whistleblower’s knowledge,
complete a unique form, signed under
to a potential violation of the CEA. A information and belief. Moreover, the
penalties of perjury (consistent with
company or another entity is not eligible statement would acknowledge the
Section 23(m) of the CEA), in which the
to receive a whistleblower award. This whistleblower’s understanding that the
whistleblower would be required to
definition tracks the statutory definition whistleblower may be subject to
make certain representations concerning
of a ‘‘whistleblower,’’ except that the prosecution and ineligible for an award
the veracity of the information provided
proposed rule uses the term ‘‘potential if, in the whistleblower’s submission of
and the whistleblower’s eligibility for a
violation’’ in order to make clear that the information, other dealings with the
potential award. The use of
whistleblower anti-retaliation Commission, or dealings with another
standardized forms will greatly assist
protections set forth in Section 23(h) of the Commission in managing and authority in connection with a related
the CEA do not depend on an ultimate tracking the thousands of tips that it action, the whistleblower knowingly
adjudication, finding or conclusion that receives annually. This will also better and willfully makes any false, fictitious,
conduct identified by the whistleblower enable the Commission to connect tips or fraudulent statements or
constituted a violation of the CEA. to each other so as to make better use representations, or uses any false
Proposed Rule 165.2(p) (and Proposed of the information provided, and to writing or document knowing that the
Rule 165.6(b)) would further make clear connect tips to requests for payment writing or document contains any false,
that the anti-retaliation protections set under the whistleblower provisions. fictitious, or fraudulent statement or
forth in Section 23(h) of the CEA apply The purpose of requiring a sworn entry.
irrespective of whether a whistleblower declaration is to help deter the In instances where information is
satisfies all the procedures and submission of false and misleading tips provided by an anonymous
conditions to qualify for an award under and the resulting inefficient use of the
the Commission’s whistleblower whistleblower, proposed subparagraph
Commission’s resources. The (c) of Proposed Rule 165.3 would
program. Section 23(h)(1)(A) of the CEA requirement should also mitigate the
prohibits employment retaliation require that the whistleblower’s identity
potential harm to companies and must be disclosed to the Commission
against a whistleblower who provides individuals that may be caused by false
information to the Commission (i) ‘‘in and verified in a form and manner
or spurious allegations of wrongdoing. acceptable to the Commission consistent
accordance with this section,’’ or (ii) ‘‘in As set forth in Proposed Rule 165.5,
assisting in any investigation or judicial with the procedure set forth in Proposed
Commission staff may also request Rule 165.7(c) prior to Commission’s
or administrative action of the testimony and additional information
Commission based upon or related to payment of any award.
from a whistleblower relating to the
such information.’’ The Commission whistleblower’s eligibility for an award. The Commission proposes to allow
interprets the statute as designed to two alternative methods of submission
extend the protections against 1. Form TCR and Instructions of Form TCRs and WB–DEC. A
employment retaliation that are Subparagraph (a) of Proposed Rule whistleblower would have the option of
provided for in Section 23(h)(1) to any 165.3 requires the submission of submitting a Form TCR electronically
individual who provides information to information to the Commission on through the Commission’s website, or
the Commission about potential proposed Form TCR. The Form TCR, by mailing or faxing the form to the
violations of the CEA regardless of ‘‘Tip, Complaint or Referral,’’ and the Commission. Similarly, a Form
whether the person satisfies procedures instructions thereto, are designed to WB–DEC could be submitted
and conditions necessary to qualify for capture basic identifying information electronically, in accordance with
an award under the Commission’s about a complainant and to elicit instructions set forth on the
whistleblower program. sufficient information to determine Commission’s website or, alternatively,
whether the conduct alleged suggests a by mailing or faxing the form to the
23 7 U.S.C. 26(a)(7). violation of the CEA. Commission.
3. Perfecting Whistleblower Status for that are unnecessary, or should be information that could reasonably be
Submissions Made Before Effectiveness modified? expected to reveal the identity of a
of the Rules The Commission also requests whistleblower when disclosure is
comment on whether the requirement required to a defendant or respondent in
As previously discussed, Section that an attorney for an anonymous a public proceeding that the
748(k) of Dodd-Frank Act states that whistleblower certify that the attorney Commission files or in another public
information submitted to the has verified the whistleblower’s identity action or a public proceeding filed by an
Commission by a whistleblower after and eligibility for an award is authority to which the Commission is
the date of enactment, but before the appropriate? Is there an alternative authorized to provide the information.
effective date of these proposed rules, process the Commission should For example, in a related action brought
retains the status of original consider that would accomplish its goal as a criminal prosecution by the
information. The Commission has of ensuring that it is communicating Department of Justice, disclosure of a
already received tips from potential with a legitimate whistleblower? whistleblower’s identity may be
whistleblowers after the date of Finally, the Commission seeks required, in light of the requirement of
enactment of the Dodd-Frank Act. comment on whether the Commission’s the Sixth Amendment of the
Proposed Rule 165.3(d) would provide a proposed process for allowing Constitution that a criminal defendant
mechanism by which potential whistleblowers 120 days to perfect their have the right to be confronted with
whistleblowers who provide tips status in cases where the whistleblower witnesses against him.26 Subparagraph
between enactment of the Dodd-Frank provided original information to the (a)(2) would authorize disclosure to:
Act and the effective date of the final Commission in writing after the date of The Department of Justice; an
rules could perfect their status as enactment of the Dodd-Frank Act but appropriate department or agency of the
whistleblowers under the Commission’s before adoption of the proposed rules is Federal Government, acting within the
award program once final rules are reasonable? Should the period be made scope of its jurisdiction; a registered
adopted. Subparagraph (d)(1) requires a shorter (e.g., 30 or 60 days) or longer entity, registered futures association, a
whistleblower who provided original (e.g., 180 days)? self-regulatory organization; a state
information to the Commission in a D. Proposed Rule 165.4—Confidentiality attorney general in connection with a
format or manner other than a Form criminal investigation; any appropriate
Proposed Rule 165.4 summarizes the
TCR to submit a completed Form TCR state department or agency, acting
confidentiality requirements set forth in
within one hundred twenty (120) days within the scope of its jurisdiction; or a
Section 23(h)(2) of the CEA 24 with
of the effective date of the proposed foreign futures authority.
rules and to otherwise follow the respect to information that could
reasonably be expected to reveal the Because many whistleblowers may
procedures set forth in subparagraphs wish to provide information
(a) and (b) of Proposed Rule 165.3. If the identity of a whistleblower. As a general
matter, it is the Commission’s policy anonymously, subparagraph (b) of the
whistleblower provided the original proposed rule, consistent with Section
information to the Commission in a and practice to treat all information
obtained during its investigations as 23(d) of the CEA, states that anonymous
Form TCR, subparagraph (d)(2) would submissions are permitted with certain
require the whistleblower to submit confidential and nonpublic. Disclosures
of enforcement-related information to specified conditions. Subparagraph (b)
Form WB–DEC within one hundred would require that anonymous
twenty (120) days of the effective date any person outside the Commission may
only be made as authorized by the whistleblowers who submit information
of the proposed rules in the manner set to the Commission must follow the
forth in subparagraph (b) of Proposed Commission and in accordance with
applicable laws and regulations. procedure in Proposed Rule 165.3(c) for
Rule 165.3. submitting original information
Consistent with Section 23(h)(2), the
Although the Commission is proposed rule explains that the anonymously. Further, anonymous
proposing alternative methods of Commission will not reveal the identity whistleblowers would be required to
submission of the Form TCR and WB– of a whistleblower or disclose other follow the procedures set forth in
DEC, it expects that electronic information that could reasonably be Proposed Rule 165.7(c) requiring that
submissions would dramatically reduce expected to reveal the identity of a the whistleblower’s identity be
the administrative costs, enhance ability whistleblower, except under disclosed to the Commission and
to evaluate tips (generally and using circumstances described in the statute verified in a form and manner
automated tools), and improve and the rule.25 As is further explained acceptable to the Commission prior to
efficiency in processing whistleblower below, there may be circumstances in Commission’s payment of any award.
submissions. Accordingly, the which disclosure of information that The purpose of this requirement is to
Commission solicits comment on identifies a whistleblower will be prevent fraudulent submissions and to
whether it would be appropriate to legally required or will be necessary for facilitate communication and assistance
eliminate the fax and mail option and the protection of investors. between the whistleblower and the
require that all submissions of proposed Subparagraph (a)(1) of the proposed Commission’s staff. Any whistleblower
Form TCRs and WB–DEC be made rule would authorize disclosure of may be represented by counsel—
electronically. Would the elimination of whether submitting information
submissions by fax and mail create an 24 7 U.S.C. 26(h)(2). anonymously or not.27 The Commission
emphasizes that anonymous
undue burden for some potential 25 Section 23(h)(2)(A) provides that the
whistleblowers who may not have easy Commission shall not disclose any information, whistleblowers have the same rights and
including that provided to the whistleblower to the responsibilities as other whistleblowers
access to a computer or who may prefer Commission, which could reasonably be expected
to submit their information in that to reveal the identity of the whistleblower, except
under Section 23 of the CEA and these
manner? Is there other information that in accordance with the provisions of Section 552a
26 See U.S. Const. Amend. VI.
the Commission should elicit from of title 5, United States Code, unless and until
required to be disclosed to a defendant or 27 See Section 23(d)(1), 7 U.S.C. 26(d)(1). Under
whistleblowers on Form TCRs and WB– respondent in connection with a public proceeding the statute, however, an anonymous whistleblower
DEC? Are there categories of instituted by the Commission or governmental seeking an award is required to be represented by
information included on these forms organizations described subparagraph (C). counsel. Section 23(d)(2), 7 U.S.C. 26(d)(2).
proposed rules, unless expressly F. Proposed Rule 165.6—Whistleblowers G. Proposed Rule 165.7—Procedures for
exempted. Ineligible for an Award Award Applications and Commission
Award Determinations
E. Proposed Rule 165.5—Prerequisites to Subparagraph (a) of Proposed Rule
the Consideration of an Award Proposed Rule 165.7 describes the
165.6 recites the categories of
steps a whistleblower would be required
individuals who are statutorily
Proposed Rule 165.5 summarizes the to follow in order to make an
ineligible for an award under Section 23 application for an award in relation to
general prerequisites for whistleblowers
of the CEA. These include persons who a Commission covered judicial or
to be considered for the payment of
are, or were at the time they acquired administrative action or related action.
awards set forth in Section 23(b)(1) of
the original information a member, In addition, the rule describes the
the CEA. As set forth in the statute,
officer, or employee of: the Commission; Commission’s proposed claims review
subparagraph (a) states that, subject to
the Board of Governors of the Federal process.
the eligibility requirements in the
Reserve System; the Office of the In regard to covered actions, the
Regulations, the Commission will pay
Comptroller of the Currency; the Board proposed process would begin with the
an award or awards to one or more
of Directors of the Federal Deposit publication of a ‘‘Notice of a Covered
whistleblowers who voluntarily provide
Insurance Corporation; the Director of Action’’ (‘‘Notice’’) on the Commission’s
the Commission with original
the Office of Thrift Supervision; the Web site. Whenever a covered judicial
information that led to the successful or administrative action brought by the
National Credit Union Administration
resolution of a covered Commission Commission results in the imposition of
Board; the Securities and Exchange
judicial or administrative action or the monetary sanctions exceeding
Commission; the Department of Justice;
successful enforcement of a related $1,000,000, the Commission will cause
a registered entity; a registered futures
action by: the Department of Justice; an this Notice of a covered judicial or
appropriate department or agency of the association; a self-regulatory
organization; or a law enforcement administrative action to be published on
Federal Government, acting within the the Commission’s Web site subsequent
scope of its jurisdiction; a registered organization. Further Proposed Rule
165.6(a)(2) makes clear that no award to the entry of a final judgment or order
entity, registered futures association, a in the action that by itself, or
self regulatory organization; a state will be made to any whistleblower who
collectively with other judgments or
attorney general in connection with a is convicted of a criminal violation
orders previously entered in the action,
criminal investigation; any appropriate related to the judicial or administrative
exceeds the $1,000,000 threshold. If the
state department or agency, acting action for which the whistleblower
monetary sanctions are obtained
within the scope of its jurisdiction; or a otherwise could receive an award under without a judgment or order, the Notice
foreign futures authority. Proposed Rule 165.7. would be published within thirty (30)
Subparagraph (b) of Proposed Rule In order to prevent evasion of these days of the issuance of the settlement
165.5 emphasizes that, in order to be exclusions, subparagraph (a)(3) of the order that causes total monetary
eligible, the whistleblower must have proposed rule also provides that persons sanctions in the action to exceed
submitted to the Commission original who acquire information from ineligible $1,000,000. The Commission’s proposed
information in the form and manner individuals are ineligible for an award. rule requires claimants to file their
Consistent with Section 23(m) of the claim for an award within sixty (60)
required by Proposed Rule 165.3. The
CEA, also ineligible for an award is any days of the date of the Notice.
whistleblower must also provide the In regard to related actions, a claimant
Commission, upon its staff’s request, whistleblower that, in his submission of
information or an application for an will be responsible for tracking the
certain additional information, resolution of the related action. The
including: explanations and other award, other dealings with the
Commission, or his dealings with Commission’s proposed rule requires
assistance, in the manner and form that claimants to file their claim for an
staff may request, in order that the staff another authority in connection with a
related action: knowingly and willfully award in regard to a related action
may evaluate the use of the information within sixty (60) days of the date of the
submitted; all additional information in makes any false, fictitious, or fraudulent
statement or representation, or uses any monetary sanctions being imposed in
the whistleblower’s possession that is the related action.
related to the subject matter of the false writing or document, knowing that
A claimant’s failure to file timely a
whistleblower’s submission; and it contains any false, fictitious, or
request for a whistleblower award
testimony or other evidence acceptable fraudulent statement or entry; or omits
would bar that individual later seeking
to the staff relating to the any material fact whose absence would a recovery.28
whistleblower’s eligibility for an award. make any other statement or Subparagraph (b) of Proposed Rule
Subparagraph (b) of Proposed Rule representation made to the Commission 165.7 describes the procedure for
165.5 further requires that, to be eligible or any other authority misleading. making a claim for an award.
for an award, a whistleblower must, if Subparagraph (b) of Proposed Rule Specifically, a claimant would be
requested by Commission staff, enter 165.6 reiterates that a determination that required to submit a claim for an award
into a confidentiality agreement in a a whistleblower is ineligible to receive on proposed Form WB–APP
form acceptable to the Commission, an award for any reason does not (‘‘Application for Award for Original
including a provision that a violation of deprive the individual of the anti- Information Provided Pursuant to
the confidentiality agreement may lead retaliation protections set forth in Section 23 of the Commodity Exchange
to the whistleblower’s ineligibility to Section 23(h)(1) of the CEA. Act’’). Proposed Form WB–APP, and the
receive an award. The Commission requests comment instructions thereto, will elicit
on the ineligibility criteria set forth in information concerning a
The terms ‘‘whistleblower,’’
whistleblower’s eligibility to receive an
‘‘voluntarily,’’ ‘‘original information,’’ Proposed Rule 165.6(a). Are there other
‘‘led to successful enforcement,’’ statuses or activities that should render 28 See, e.g., Yuen v. U.S., 825 F.2d 244 (9th Cir.
‘‘action,’’ and ‘‘monetary sanctions’’ are an individual ineligible for a 1987) (taxpayer barred from recovery due to failure
defined in Proposed Rule 165.2. whistleblower award? to timely file a written request for refund).
award at the time the whistleblower review process would begin upon the subparagraph (a)(4) adds a fourth
files his claim. The form will also later of once the time for filing any criterion based upon the discretion
provide an opportunity for the appeals of the Commission’s judicial or given to the Commission to consider
whistleblower to ‘‘make his case’’ for administrative action and the related ‘‘additional relevant factors’’ in
why he is entitled to an award by action(s) has expired, or where an determining the amount of an award.
describing the information and appeal has been filed, after all appeals Subparagraph (a)(1) requires the
assistance he has provided and its in the action or related action(s) have Commission to consider the significance
significance to the Commission’s been concluded. of the information provided by a
successful action.29 Under the proposed process, the whistleblower to the success of the
Subparagraph (b) of Proposed Rule Commission would evaluate all timely Commission action or related action.
165.7 provides that a claim on Form whistleblower award claims submitted Subparagraph (a)(2) requires the
WB–APP, including any attachments, on Form WB–APP. In connection with Commission to consider the degree of
must be received by the Commission this process, the Commission could assistance provided by the
within sixty (60) calendar days of the require that claimants provide whistleblower and any legal
date of the Notice or sixty (60) calendar additional information relating to their representative of the whistleblower in
days of the date of the imposition of the eligibility for an award or satisfaction of the Commission action or related action.
monetary sanctions in the related any of the conditions for an award, as Subparagraph (a)(3) requires the
action, depending upon which action set forth in Proposed Rule 165.5(b). Commission to consider the
the claimant is seeking an award, in Following that evaluation, the programmatic interest of the
order to be considered for an award. Commission would send any claimant a Commission in deterring violations of
Subparagraph (c) includes award Determination setting forth whether the the CEA by making awards to
application procedures for a claim is allowed or denied and, if whistleblowers that provide information
whistleblower who submitted original allowed, setting forth the proposed that led to successful enforcement of
information to the Commission award percentage amount. covered judicial or administrative
anonymously. Whistleblowers who actions or related actions. Subparagraph
H. Proposed Rule 165.8—Amount of
submitted original information (a)(4) would permit the Commission to
Award
anonymously, but who are making a consider whether an award otherwise
claim for a whistleblower award on a If all conditions are met, Proposed enhances the Commission’s ability to
disclosed basis, are required to disclose Rule 165.8 provides that the enforce the CEA, protect customers, and
their identity on the Form WB–APP and whistleblower awards shall be in an encourage the submission of high
include with the Form WB–APP a aggregate amount equal to between 10 quality information from
signed and completed Form WB–DEC. and 30 percent, in total, of what has whistleblowers.
Whistleblowers who submitted been collected of the monetary The Commission anticipates that the
information anonymously, and are sanctions imposed in the Commission’s determination of award amounts
making a claim for a whistleblower action or related actions. This range is pursuant to subparagraphs (a)(1)–(4)
award on an anonymous basis, must be specified in Section 23(b)(1) of the CEA. will involve highly individualized
represented by counsel and must Where multiple whistleblowers are review of the circumstances
provide their counsel with a completed entitled to an award, subparagraph (b) surrounding each award. To allow for
and signed Form WB–DEC by no later states that the Commission will this, the Commission preliminarily
than the date upon which the counsel independently determine the believes that the four criteria afford the
submits to the Commission the appropriate award percentage for each Commission broad discretion to weigh a
whistleblower, but total award multitude of considerations in
whistleblower’s Form WB–APP. In
payments, in the aggregate, will equal determining the amount of any
addition, whistleblower’s counsel must
between 10 and 30 percent of the particular award. Depending upon the
submit with the Form WB–APP a
monetary sanctions collected either in facts and circumstances of each case,
separate Form WB–DEC certifying that
the Commission’s action or the related some of the considerations may not be
the counsel has verified your identity,
action (but not both the Commission’s applicable or may deserve greater
has reviewed the whistleblower’s Form
action and the related action). weight than others.
WB–DEC form for completeness and
The Commission requests comment The permissible considerations
accuracy, will retain the signed original
on whether the provision stating that include, but are not limited to:
of your Form WB–DEC in counsel’s • The character of the enforcement
the percentage amount of an award in a
records, and will produce the action including whether its subject
Commission covered judicial or
whistleblower’s Form WB–DEC upon matter is a Commission priority,
administrative action may differ from
request of the Commission’s staff. whether the reported misconduct
the percentage awarded in a related
Proposed Rule 165.7(c) makes explicit involves regulated entities or
action is appropriate?
that regardless of whether they make an fiduciaries, the type of CEA violations,
award application on a disclosed or I. Proposed Rule 165.9—Criteria for the age and duration of misconduct, the
anonymous basis, the whistleblower’s Determining Amount of Award number of violations, and the isolated,
identity must be verified in a form and Assuming that all of the conditions repetitive, or ongoing nature of the
manner that is acceptable to the for making an award to a whistleblower violations;
Commission prior to the payment of any • The dangers to customers or others
have been satisfied, Proposed Rule

award. 165.9 sets forth the criteria that the presented by the underlying violations
Subparagraph (d) of Proposed Rule Commission would take into involved in the enforcement action
165.7 describes the Commission’s consideration in determining the including the amount of harm or
claims review process. The claims amount of the award. Subparagraphs potential harm caused by the underlying
29 See discussion of Proposed 165.9 for a non-
(a)(1) through (3) of the proposed rule violations, the type of harm resulting
exhaustive list of factors the Commission
recite three criteria that Section from or threatened by the underlying
preliminarily believes it will consider in 23(c)(1)(B) of the CEA requires the violations, and the number of
determining award amounts. Commission to consider, and individuals or entities harmed;
• The timeliness, degree, reliability, Proposed Rule 165.13) of Commission covered judicial or administrative
and effectiveness of the whistleblower’s award determinations (under Proposed action. Proposed Rule 165.11 sets forth
assistance; Rule 165.7), Proposed Rule 165.10 sets the requirements for a related action or
• The time and resources conserved forth the contents of record for award related actions to serve as the basis of
as a result of the whistleblower’s determinations relating to covered a whistleblower award. Regardless of
assistance; judicial or administrative actions or whether the Commission’s award
• Whether the whistleblower related actions. The record shall consist determination will be based upon the
encouraged or authorized others to of: Required forms the whistleblower Commission’s covered judicial or
assist the staff who might not have submits to the Commission, including administrative action or a related action
otherwise participated in the related attachments; other or actions, Proposed Rule 165.7 sets
investigation or related action; documentation provided by the forth the procedures for whistleblower
• Any unique hardships experienced whistleblower to the Commission; the award applications and Commission
by the whistleblower as a result of his complaint, notice of hearing, answers award determinations.
or her reporting and assisting in the and any amendments thereto; the final
judgment, consent order, or L. Proposed Rule 165.12—Payment of
enforcement action;
Awards From the Fund, Financing
• The degree to which the administrative speaking order; the
transcript of the related administrative Customer Education Initiatives, and
whistleblower took steps to prevent the
hearing or civil injunctive proceeding, Deposits and Credits to the Fund; and
violations from occurring or continuing;
Proposed Rule 165.15—Delegations of
• The efforts undertaken by the including any exhibits entered at the
hearing or proceeding; any other Authority
whistleblower to remediate the harm
caused by the violations including documents that appear on the docket of Proposed Rules 165.12 and 165.15 set
assisting the authorities in the recovery the proceeding. The record shall also forth certain internal Commission
of the fruits and instrumentalities of the include any statements by litigation staff procedures. Specifically, paragraph (a)
violations; to the Commission regarding: The of Proposed Rule 165.12, consistent
• Whether the information provided significance of the information provided with Section 23(g)(2) of the CEA,
by the whistleblower related to only a by the whistleblower to the success of requires the Commission to pay
portion of the successful claims brought the covered judicial or administrative whistleblower awards from the Fund.
in the covered judicial or administrative action or related action; the degree of Importantly, Proposed Rule 165.12(b)(2)
action or related action; 30 and assistance provided by the makes clear that if there is an
• The culpability of the whistleblower and any legal insufficient amount in the Fund to
whistleblower including whether the representative of the whistleblower in a satisfy a whistleblower award made
whistleblower acted with scienter, both covered judicial or administrative action pursuant to Proposed Rule 165.7, the
generally and in relation to others who or related action; and any facts relating Commission shall deposit into the Fund
participated in the misconduct. to a determination of whether the monetary sanctions that are actually
whistleblower provided original collected by the Commission in an
These considerations are not listed in information, conducted an independent
order of importance nor are they amount equal to the unsatisfied portion
analysis, or possessed independent of the award from any judicial or
intended to be all-inclusive or to require knowledge.
a specific determination in any administrative action based on the
However, Proposed Rule 165.10(b) information provided by any
particular case. explicitly states that the record upon
Finally, subparagraph (b) to Proposed whistleblower.
which the award determination under
Rule 165.9 reiterates the statutory Proposed Rule 165.7 shall be made shall Proposed Rule 165.15 includes the
prohibition in Section 23(c)(2) of the not include any Commission pre- Commission’s delegations to the
CEA from taking into consideration the decisional or internal deliberative Executive Director to take certain
balance of the Fund when making an process materials related to the actions to carry out this Part 165 of the
award determination. Commission or its staff’s determination: Rules and the requirements of Section
To file or settle the covered judicial or 23(h) of CEA. Among the delegations to
J. Proposed Rule 165.10—Contents of the Executive Director in Proposed Rule
Record for Award Determinations administrative action; and/or whether,
to whom and in what amount to make 165.15(a) is the authority to make
In order to promote transparency and a whistleblower award. Further, the deposits into the Fund.
consistency, and also to preserve a clear record upon which the award Proposed Rule 165.12 also includes
record for appellate review (under determination under Proposed Rule the Commission’s financing of customer
165.7 shall be made shall not include education initiatives. Proposed Rule
30 As described elsewhere in these rules, if the
any other entity’s pre-decisional or 165.12(c) provides that the Commission
information provided by a whistleblower relates to
only a portion of a successful covered judicial or internal deliberative process materials shall undertake and maintain customer
administrative action or related action, the related to its or its staff’s determination education initiatives. The initiatives
Commission proposes to look to the entirety of the to file or settle a related action. shall be designed to help customers
action (including all defendants or respondents, all protect themselves against fraud or
claims, and all monetary sanctions obtained) in
The Commission requests comment
determining whether the whistleblower is eligible on what other relevant items the other violations of the CEA, or rules or
for an award and the total dollar amount of Commission should consider as part of regulations thereunder. The
sanctions on which the whistleblower’s award will the record for its award determinations? Commission shall fund the customer
be based. However, under subparagraph (a) of education initiatives, and may utilize
Proposed Rule 165.9, the fact that the K. Proposed Rule 165.11—Awards funds deposited into the Fund during
whistleblower’s information related to only a Based Upon Related Actions
portion of the overall action would be a factor in any fiscal year in which the beginning
determining the amount of the whistleblower’s Proposed Rule 165.11 explains that (October 1) balance of the Fund is
award. Thus, if the whistleblower’s information the Commission, or its delegate, may greater than $10,000,000. The
supported only a small part of a larger case, that
would be a reason for making an award based upon
grant an award based on amounts Commission shall budget on an annual
a smaller percentage amount than otherwise would collected in certain related actions basis the amount used to finance
have been awarded. rather than the amount collected in a customer education initiatives, taking
into consideration the balance of the collected in the covered judicial or or resolution of a related action, they
Fund. administrative action or related action. would share the same payment priority
The Commission limited its discretion Subparagraph (b) states that any and would be paid on a pro rata basis
to finance customer education payment of an award for a monetary until sufficient amounts become
initiatives to fiscal years in which the sanction collected in a covered judicial available in the Fund to pay their entire
beginning (October 1) balance of the or administrative action shall be made payments.
Fund is greater than $10,000,000 in within a reasonable period of time
following the later of either the O. Proposed Rule 165.16—No Immunity
order to limit the possibility that and Proposed Rule 165.17—Awards to
spending on customer education completion of the appeals process for all
whistleblower award claims arising Whistleblowers Who Engage in Culpable
initiatives may inadvertently result in Conduct
from the covered judicial or
the Commission operating the Fund in Proposed Rule 165.16 provides notice
administrative action, or the date on
a deficit and thereby delay award that the provisions of Section 23 of the
which the monetary sanction is
payments to whistleblowers. CEA do not provide immunity to
collected. Likewise, the payment of an
The Commission requests comment award for a monetary sanction collected individuals who provide information to
on whether this limitation is in a related action shall be made within the Commission relating to a violation
appropriate, or would other limitations a reasonable period of time following of the CEA. Whistleblowers who have
better effectuate this purpose? Is the $10 the later of either the completion of the not participated in misconduct will of
million Fund balance trigger too high or appeals process for all whistleblower course not need immunity. However,
too low, and, if so, what would be a award claims arising from the related some whistleblowers who provide
better trigger amount? action, or the date on which the original information that significantly
monetary sanction is collected. This aids in detecting and prosecuting
M. Proposed Rule 165.13—Appeals
provision is intended to cover situations sophisticated manipulation or fraud
Section 23(f) of the CEA provides for where a single action results in multiple schemes may themselves be participants
rights of appeal of Final Orders of the whistleblowers claims. Under this in the scheme who would be subject to
Commission with respect to scenario, if one whistleblower appeals a Commission enforcement actions. While
whistleblower award determinations.31 Final Order of the Commission relating these individuals, if they provide
Subparagraph (a) of Proposed Rule to a whistleblower award determination, valuable assistance to a successful
165.13 tracks this provision and the Commission would not pay any action, will remain eligible for a
describes claimants’ rights to appeal. awards in the action until that whistleblower award, they will not be
Claimants may appeal any Commission whistleblower’s appeal has been immune from prosecution. Rather, the
final award determination, including concluded, because the disposition of Commission will analyze the unique
whether, to whom, or in what amount that appeal could require the facts and circumstances of each case in
to make whistleblower awards, to an Commission to reconsider its accordance with its Enforcement
appropriate court of appeals within determination and thereby affect all Advisory, ‘‘Cooperation Factors in
thirty (30) days after the Commission’s payments for that covered judicial or Enforcement Division Sanction
Final Order of determination. administrative action or related action. Recommendations’’ to determine
Subparagraph (c) of Proposed Rule whether, how much, and in what
Subparagraph (b) of Proposed Rule 165.14 describes how the Commission manner to credit cooperation by
165.13 designates the materials that will address situations where there are whistleblowers who have participated
shall be included in the record on any insufficient amounts available in the in misconduct.
appeal. They include: The Contents of Fund to pay an award to a The options available to the
Record for Award Determination, as set whistleblower or whistleblowers within Commission and its staff for facilitating
forth in Proposed Rule 165.9; any Final a reasonable period of time of when and rewarding cooperation ranges from
Order of the Commission, as set forth in payment should otherwise be made. In taking no enforcement action to
Rule 165.7(e). this situation, the whistleblower or pursuing charges and sanctions in
N. Proposed Rule 165.14—Procedures whistleblowers will be paid when connection with enforcement actions.
Applicable to the Payment of Awards amounts become available in the Fund, Whistleblowers with potential civil
subject to the terms set forth in liability or criminal liability for CEA
Proposed Rule 165.14 addresses the proposed subparagraph (c). Under violations that they report to the
timing for payment of an award to a proposed subparagraph (c), where Commission remain eligible for an
whistleblower. Any award made multiple whistleblowers are owed award. However, pursuant to Section
pursuant to the rules would be paid payments from the Fund based on 23(c)(2)(B) of the CEA,34 if a
from the Fund established by Section awards that do not arise from the same whistleblower is convicted of a criminal
23(g) of the CEA.32 Subparagraph (a) Notice or resolution of a related action, violation related to the judicial or
provides that a recipient of a priority in making payment on these administrative action, they are not
whistleblower award will be entitled to awards would be determined based eligible for an award. Furthermore, if a
payment on the award only to the extent upon the date that the Final Order of the defendant or respondent in a
that a monetary sanction is collected in Commission is made. If two or more of Commission or related action is ordered
the covered judicial or administrative these Final Orders of the Commission to pay monetary sanctions in a civil
action or in a related action upon which are entered on the same date, those enforcement action, this proposed rule
the award is based. This requirement is whistleblowers owed payments will be states that the Commission will not
derived from Section 23(b)(1) of the paid on a pro rata basis until sufficient count the amount of such monetary
CEA,33 which provides that an award is amounts become available in the Fund sanctions toward the $1,000,000
based upon the monetary sanctions to pay their entire payments. Under threshold in considering an award
proposed subparagraph (c)(2), where payment to such a defendant or
31 7 U.S.C. 26(f). multiple whistleblowers are owed respondent in relation to a covered
32 7 U.S.C. 26(g). payments from the Fund based on
33 7 U.S.C. 26(b)(1). awards that arise from the same Notice 34 7 U.S.C. 26(c)(2)(B).
judicial or administrative action, and potential CEA violations to the including reasonable attorney’s fees. For
will not add that amount to the total Commission by reducing or eliminating ease of reference, the Proposed
monetary sanctions collected in the any concerns that whistleblowers might Appendix also includes a verbatim copy
action for purposes of calculating any have that the Commission is required to of the full Section 23(h)(1) of the CEA.
payment to the culpable individual. The request consent of the entity’s counsel
rationale for this limitation is to prevent and, in doing so, might disclose their III. Request for Comment
wrongdoers from financially benefiting identity. The Commission also believes The Commission requests comment
from their own misconduct, and ensures that this proposed rule is appropriate to on all aspects of the proposed rules.
equitable treatment of culpable and non- clarify that, in accordance with
IV. Administrative Compliance
culpable whistleblowers. For example, American Bar Association Model Rule
without such a prohibition, a 4.2, the staff is authorized by law to A. Cost-Benefit Analysis
whistleblower that was the leader or make these communications.36 Under Section 15(a) of the CEA 37 requires
organizer of a fraudulent scheme this provision, for example, the the Commission to consider the costs
involving multiple defendants that Commission could meet or otherwise and benefits of its actions before
resulted in total monetary sanctions of communicate with the whistleblower promulgating a regulation under the
$1,250,000 would exceed the $1,000,000 privately, without the knowledge or CEA. By its terms, section 15(a) does not
minimum threshold required for making presence of counsel or other
require the Commission to quantify the
an award, even though he personally representative of the entity.
costs and benefits of a rule or to
was ordered to pay $750,000 of those
Q. Proposed Rule 165.19— determine whether the benefits of the
monetary sanctions and, under similar
Nonenforceability of Certain Provisions regulation outweigh its costs; rather, it
circumstances, a non-culpable
Waiving Rights and Remedies or requires that the Commission ‘‘consider’’
whistleblower would be deemed
Requiring Arbitration of Disputes the costs and benefits of its actions.
ineligible for an award if they reported
Consistent with Congressional intent Section 15(a) further specifies that the
a CEA or Commission regulation
to protect whistleblowers from costs and benefits shall be evaluated in
violation that resulted in monetary
retaliation as reflected in Section 23(h) light of five broad areas of market and
sanctions of less than $1,000,000. The
of the CEA, Proposed Rule 165.19 public concern: (1) Protection of market
proposed rule would prevent such
provides that the rights and remedies participants and the public; (2)
inequitable treatment.
provided for in this Part 165 of the efficiency, competitiveness and
P. Proposed Rule 165.18—Staff Commission’s regulations may not be financial integrity of futures markets; (3)
Communications With Whistleblowers waived by any agreement, policy, form, price discovery; (4) sound risk
From Represented Entities or condition of employment including management practices; and (5) other
Proposed Rule 165.18 clarifies the by a predispute arbitration agreement. public interest considerations. The
staff’s authority to communicate directly No predispute arbitration agreement Commission may in its discretion give
with whistleblowers who are directors, shall be valid or enforceable, if the greater weight to any one of the five
officers, members, agents, or employees agreement requires arbitration of a enumerated areas and could in its
of an entity that has counsel, and who dispute arising under this Part. discretion determine that,
have initiated communication with the notwithstanding its costs, a particular
R. Proposed Appendix A—Guidance rule is necessary or appropriate to
Commission relating to a potential CEA With Respect to the Protection of
violation. The proposed rule makes protect the public interest or to
Whistleblowers Against Retaliation effectuate any of the provisions or
clear that the staff is authorized to
communicate directly with these The Commission has included a accomplish any of the purposes of the
individuals without first seeking the Proposed Appendix A (‘‘Guidance With CEA.
consent of the entity’s counsel. Respect To The Protection of With respect to benefits, the proposed
Section 23 of the CEA evinces a strong Whistleblowers Against Retaliation’’) to rules would enhance the Commission’s
Congressional policy to facilitate the better inform the public regarding the capacity to ensure fair and equitable
disclosure of information to the protections against retaliation from markets. The Commission has
Commission relating to potential CEA employers provided for whistleblowers determined that market participants and
violations and to preserve the in Section 23 of the CEA. Specifically, the public will benefit substantially
confidentiality of those who do so.35 the Proposed Appendix A informs the from prevention and deterrence of
This Congressional policy would be public that Section 23(h)(1) of CEA violations of the CEA and Commission
significantly impaired were the provides whistleblowers with certain regulations, which will be buttressed by
Commission required to seek the protections against retaliation, the whistleblower incentives and
consent of an entity’s counsel before including: A Federal cause of action protections under Section 23 of the CEA
speaking with a whistleblower who against the employer, which must be and Proposed Part 165 of the
contacts us and who is a director, filed in the appropriate United States regulations.
officer, member, agent, or employee of district court within two (2) years of the With respect to costs, the procedures
the entity. For this reason, Section 23 of employer’s retaliatory act; and potential set forth in the Proposed Rules may
the CEA authorizes the Commission to relief for prevailing whistleblowers, impose certain costs on prospective
including reinstatement, back pay, and whistleblowers. As an initial matter, the
communicate directly with these
compensation for other expenses, procedures require potential

individuals without first obtaining the
consent of the entity’s counsel. whistleblowers to complete certain
36 American Bar Association Model Rule 4.2
The Commission believes that provides as follows: ‘‘In representing a client, a
forms to establish eligibility for an
expressly clarifying this authority in the lawyer shall not communicate about the subject of award under the whistleblower
proposed rule would promote the representation with a person the lawyer knows program. As noted above, the
to be represented by another lawyer in the matter, Commission recognizes that it will take
whistleblowers’ willingness to disclose unless the lawyer has the consent of the other
lawyer or is authorized to do so by law or a court time and effort on the part of
35 See Section 23 (b)–(d) & (h) of the CEA, 7 U.S.C order.’’ Model Rules of Prof’l Conduct R. 4.2
26(b)–(d) & (h). (emphasis added). 37 7 U.S.C. 19(a).
whistleblowers to complete and submit of the Act strictly prohibits the to: (i) Evaluate whether the proposed
the required forms. In addition, any Commission, unless specifically collection of information is necessary
whistleblower wishing to submit one of authorized by the Act, from making for the proper performance of the
the required forms in hard copy will public ‘‘data and information that would functions of the Commission, including
need to arrange for delivery and pay the separately disclose the business whether the information will have
postage or other delivery costs. In these transactions or market positions of any practical utility; (ii) evaluate the
Proposed Rules, the Commission has person and trade secrets or names of accuracy of the Commission’s estimate
attempted to mitigate the potential for customers.’’ The Commission is also of the burden of the proposed collection
burden or confusion in the procedures, required to protect certain information of information; (iii) determine whether
but such costs cannot be eliminated. contained in a government system of there are ways to enhance the quality,
The Commission invites public records according to the Privacy Act of utility, and clarity of the information to
comment on its cost-benefit 1974, 5 U.S.C. 552a. be collected; and (iv) minimize the
considerations. Commenters are also burden of the collection of information
invited to submit any data or other 1. Information Provided by Reporting
Persons on those who are to respond, including
information that they may have through the use of automated collection
quantifying or qualifying the costs and The Proposed Rules 165.3 (Procedures techniques or other forms of information
benefits of the proposed rules with their for Submitting Original Information), technology.
comment letters. 165.4 (Confidentiality), and 165.7
Comments may be submitted directly
(Procedures for Award Applications and
B. Anti-Trust Considerations to the Office of Information and
Commission Award Determinations)
Section 15(b) of the CEA, 7 U.S.C. Regulatory Affairs, by fax at (202) 395–
require that all individuals wishing to
19(b), requires the Commission to 6566 or by e-mail at
be eligible for an award under the
consider the public interests protected [email protected]. Please
Commission’s whistleblower program
by the antitrust laws and to take actions provide the Commission with a copy of
must complete the following standard
involving the least anti-competitive forms: Forms TCR (‘‘Tip, Complaint or submitted comments so that they can be
means of achieving the objectives of the Referral’’), WB–DEC (‘‘Declaration summarized and addressed in the final
CEA. The Commission believes that the Concerning Original Information rule. Refer to the ‘‘Addresses’’ section of
proposed rules will have a positive Provided Pursuant to Section 23 of the this notice of proposed rulemaking for
effect on competition by improving the Commodity Exchange Act,’’ signed comment submission instructions to the
fairness and efficiency of the markets under penalty of perjury), and WB–APP Commission. A copy of the supporting
through improving detection and (‘‘Application for Award for Original statements for the collections of
remediation of potential violations of Information Provided Pursuant to information discussed above may be
the CEA and Commission regulations. Section 23 of the Commodity Exchange obtained by visiting RegInfo.gov. OMB
Act’’). The Commission estimates that is required to make a decision
C. Paperwork Reduction Act concerning the collection of information
there will be numerous individuals,
This regulation requires that a approximately 160 per fiscal year, who between 30 and 60 days after
whistleblower seeking an award submit may wish to file such forms. The publication of this release.
whistleblower information and file Commission estimated the number of Consequently, a comment to OMB is
claims for an award determination. An individuals based upon the current most assured of being fully effective if
agency may not conduct or sponsor, and number of tips, complaints and referrals received by OMB (and the Commission)
a person is not required to respond to, received by the Commission’s Division within 30 days after publication of this
a collection of information unless it of Enforcement and news articles notice of proposed rulemaking.
displays a currently valid control regarding the whistleblower protections D. Regulatory Flexibility Act
number. The Office of Management and that indicate the SEC and Commission
Budget (‘‘OMB’’) has not yet assigned a should expect to receive a high volume The Regulatory Flexibility Act
control number to the new collection. of claims. The proposed collection is (‘‘RFA’’) 39 requires that agencies
Proposed Commission Regulation 165 estimated to involve approximately: 2 consider whether the rules they propose
would result in new collection of burden hours per Form TCR; 0.5 burden will have a significant economic impact
information requirements within the hours per Form WB–DEC; and 10 on a substantial number of small entities
meaning of the Paperwork Reduction burden hours per Form WB–APP. The and, if so, provide a regulatory
Act (‘‘PRA’’).38 The Commission Commission expects that this will result flexibility analysis respecting the
therefore is submitting this proposal to in a total cost of 12.5 burden hours per impact.40 The rules proposed by the
OMB for review in accordance with 44 individual seeking to be considered for Commission will not have a significant
U.S.C. 3507(d) and 5 CFR 1320.11. The an award under the Commission’s economic impact on a substantial
title for this collection of information is whistleblower program, for an annual number of small entities. As explained
‘‘Regulation 165—Proposed Rules for aggregate 2,000 burden hours per fiscal above, because only individuals are
Implementing Whistleblower Provisions year. The Commission invites public eligible for participation in the
of Section 23 of the Commodity comment on the accuracy of its estimate Commission’s whistleblower program
Exchange Act.’’ OMB control number regarding the collection requirements under Section 23 of the CEA and
3038–NEW. If adopted, responses to this that would result from the proposed Proposed Part 165 of the regulations, the
new collection of information would be regulations. proposed rules will not have a
mandatory. significant impact on small entities.
The Commission will protect 2. Information Collection Comments Accordingly, the Chairman, on behalf of
proprietary information according to the The Commission invites the public the Commission, hereby certifies,
Freedom of Information Act and 17 CFR and other federal agencies to comment pursuant to 5 U.S.C. 605(b), that the
part 145, ‘‘Commission Records and on any aspect of the reporting and proposed rules will not have a
Information.’’ In addition, section 8(a)(1) recordkeeping burdens discussed above.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the 39 5 U.S.C. 601.
38 44 U.S.C. 3501 et.seq. Commission solicits comments in order 40 Id.
significant impact on a substantial 165.16 No immunity. (e) Covered Judicial or Administrative

number of small entities. 165.17 Awards to whistleblowers who action. The phrase ‘‘covered judicial or
Section 603(a) of the Regulatory engage in culpable conduct. administrative action’’ means any
Flexibility Act 41 requires the 165.18 Staff communications with judicial or administrative action brought
whistleblowers from represented
Commission to undertake an initial by the Commission under the
entities.
regulatory flexibility analysis of the 165.19 Nonenforceability of certain Commodity Exchange Act whose
proposed rule on small entities unless provisions waiving rights and remedies successful resolution results in
the Chairman certifies that the rule, if or requiring arbitration of disputes. monetary sanctions exceeding
adopted, would not have a significant Appendix A to Part 165—Guidance With $1,000,000.
economic impact on a substantial Respect to the Protection of (f) Fund. The term ‘‘Fund’’ means the
number of small entities.42 The Whistleblowers Against Retaliation Commodity Futures Trading
Proposed Rules apply only to an Authority: 7 U.S.C. 2, 3, 12a(5) and 26, as Commission Customer Protection Fund.
individual, or individuals acting jointly, amended by Title VII of the Dodd-Frank Wall (g) Independent Knowledge. The
who provide information to the Street Reform and Consumer Protection Act, phrase ‘‘independent knowledge’’ means
Commission relating to the violation of Pub. L. 111–203, 124 Stat. 1376 (June 16, factual information in your possession
the CEA or Commission regulations. 2010). that is not generally known or available
Companies and other entities are not to the public. You may gain
§ 165.1 General.
eligible to participate in the Program as independent knowledge from your
whistleblowers. Consequently, the Section 23 of the Commodity experiences, communications and
persons that would be subject to the Exchange Act, entitled ‘‘Commodity observations in your personal business
proposed rule are not ‘‘small entities’’ for Whistleblower Incentives and or social interactions. The Commission
purposes of the Regulatory Flexibility Protection,’’ requires the Commission to will not consider your information to be
Act. Accordingly, the Chairman, on pay awards, subject to certain derived from your independent
behalf of the Commission, hereby limitations and conditions, to knowledge if you obtained the
certifies pursuant to 5 U.S.C. 605(b) that whistleblowers who voluntarily provide information:
the proposed rules will not have a the Commission with original (1) From sources generally available
significant economic impact on a information about violations of the to the public such as corporate filings
substantial number of small entities. A Commodity Exchange Act. This part 165 and the media, including the Internet;
copy of the certification is attached as describes the whistleblower program (2) Through a communication that
an appendix to this document. that the Commission intends to was subject to the attorney-client
establish to implement the provisions of privilege, unless the disclosure is
List of Subjects in 17 CFR Part 165 Section 23, and explain the procedures otherwise permitted by the applicable
Whistleblower rules. you will need to follow in order to be federal or state attorney conduct rules;
In consideration of the foregoing and eligible for an award. Whistleblowers (3) As a result of the legal
pursuant to the authority contained in should read these procedures carefully, representation of a client on whose
the Commodity Exchange Act, in because the failure to take certain behalf your services, or the services of
particular, Sections 2, 3, 8a(5) and 26 required steps within the time frames your employer or firm, have been
thereof, the Commodity Futures Trading described in this part may serve as retained, and you seek to use the
Commission proposes to add a new 17 disqualification from receiving an information to make a whistleblower
CFR part 165 to read as follows: award. Unless expressly provided for in submission for your own benefit, unless
this part, no person is authorized to disclosure is authorized by the
PART 165—WHISTLEBLOWER RULES make any offer or promise, or otherwise applicable federal or state attorney
to bind the Commission with respect to conduct rules;
Sec. the payment of any award or the amount (4) Because you were a person with
165.1 General. thereof. legal, compliance, audit, supervisory, or
165.2 Definitions.
165.3 Procedures for submitting original
governance responsibilities for an
§ 165.2 Definitions. entity, and the information was
information.
165.4 Confidentiality. (a) Action. The term ‘‘action’’ means a communicated to you with the
165.5 Prerequisites to the consideration of single captioned judicial or reasonable expectation that you would
an award. administrative proceeding. take appropriate steps to cause the
165.6 Whistleblowers ineligible for an (b) Aggregate Amount. The phrase entity to remedy the violation, unless
award. ‘‘aggregate amount’’ means the total the entity subsequently failed to
165.7 Procedures for award applications amount of an award granted to one or disclose the information to the
and commission award determinations. more whistleblowers pursuant to
165.8 Amount of award. Commission within sixty (60) days or
165.9 Criteria for determining amount of
§ 165.8. otherwise proceeded in bad faith;
award. (c) Analysis. The term ‘‘analysis’’ (5) Otherwise from or through an
165.10 Contents of record for award means your examination and evaluation entity’s legal, compliance, audit or other
determination. of information that may be generally similar functions or processes for
165.11 Awards based upon related actions. available, but which reveals information identifying, reporting and addressing
165.12 Payment of awards from the fund, that is not generally known or available potential non-compliance with law,
financing of customer education to the public. unless the entity failed to disclose the
initiatives, and deposits and credits to (d) Collected by the Commission. The
the fund.
information to the Commission within
phrase ‘‘collected by the Commission’’ sixty (60) days or otherwise proceeded
165.13 Appeals.
165.14 Procedures applicable to the refers to any funds received, and in bad faith; or
payment of awards. confirmed by the Treasury, in (6) By a means or in a manner that
165.15 Delegations of authority. satisfaction of part or all of a civil violates applicable federal or state
monetary penalty, disgorgement criminal law.
41 5 U.S.C. 603(a). obligation, or fine owed to the (h) Independent Analysis. The phrase
42 5 U.S.C. 605(b). Commission. ‘‘independent analysis’’ means your own
analysis, whether done alone or in because the whistleblower submitted establish your status as the original
combination with others. such information prior to the source of such information, as well as
(i) Information That Led to Successful [EFFECTIVE DATE OF THE FINAL the effective date of any prior
Enforcement. The Commission will RULE], provided such information was disclosure, report, or submission, to the
consider that you provided original submitted after July 21, 2010, the date Commission’s satisfaction. The
information that led to the successful of enactment of the Wall Street Commission may seek assistance and
enforcement of a judicial or Transparency and Accountability Act of confirmation from the other authority or
administrative action, or related action, 2010. In order to be eligible for an person in making this determination.
in the following circumstances: award, a whistleblower who submits (3) Information already known by the
(1) If you gave the Commission original information to the Commission Commission. If the Commission already
original information that caused the after July 21, 2010, but prior to knows some information about a matter
staff to open an investigation, reopen an [EFFECTIVE DATE OF THE FINAL from other sources at the time you make
investigation that the Commission had RULE], must comply with the procedure your submission, and you are not an
closed, or to inquire concerning new or set forth in § 165.3(d). original source of that information, as
different conduct as part of a current (l) Original Source. You must satisfy described above, the Commission will
investigation, and your information your status as the original source of consider you an ‘‘original source’’ of any
significantly contributed to the success information to the Commission’s information you separately provide that
of the action; or satisfaction. otherwise satisfies the definition of
(2) If you gave the Commission (1) Information obtained from another original information and materially adds
original information about conduct that source. The Commission will consider to the information that the Commission
was already under investigation by the you to be an ‘‘original source’’ of the already possesses.
Commission, Congress, any other same information that the Commission (m) Related Action. The phrase
federal, state, or local authority, any obtains from another source if the ‘‘related action,’’ when used with respect
self-regulatory organization, or the information you provide satisfies the to any judicial or administrative action
Public Company Accounting Oversight definition of original information and brought by the Commission under the
Board (except in cases where you were the other source obtained the Commodity Exchange Act, means any
an original source of this information as information from you or your judicial or administrative action brought
defined in paragraph (i)(1) of this representative. by an entity listed in § 165.11(a) that is
section), and your information would (i) In order to be considered an based upon the original information
not otherwise have been obtained and original source of information that the voluntarily submitted by a
was essential to the success of the Commission receives from Congress, whistleblower to the Commission
action. any other federal state or local authority, pursuant to § 165.3 that led to the
(j) Monetary Sanctions. The phrase or any self-regulatory organization, you successful resolution of the Commission
‘‘monetary sanctions,’’ when used with must have voluntarily given such action.
respect to any judicial or administrative, authorities the information within the (n) Successful Resolution. The phrase
or related action, action means— meaning of this part In determining ‘‘successful resolution,’’ when used with
(1) Any monies, including penalties, whether you are the original source of respect to any judicial or administrative
disgorgement, restitution, and interest information, the Commission may seek action brought by the Commission
ordered to be paid; and assistance and confirmation from one of under the Commodity Exchange Act,
(2) Any monies deposited into a the other entities or authorities includes any settlement of such action
disgorgement fund or other fund described above. or final judgment in favor of the
pursuant to section 308(b) of the (ii) In the event that you claim to be Commission. It shall also have the same
Sarbanes-Oxley Act of 2002 (15 U.S.C. the original source of information that meaning as ‘‘successful enforcement.’’
7246(b)), as a result of such action or an authority or another entity, other (o) Voluntary Submission or
any settlement of such action. than as set forth in paragraph (l)(1)(i) of Voluntarily Submitted. The phrase
(k) Original Information. (1) The this section, provided to the ‘‘voluntary submission’’ or ‘‘voluntarily
phrase ‘‘original information’’ means Commission, the Commission may seek submitted’’ within the context of
information that— assistance and confirmation from such submission of original information to
(i) Is derived from the independent authority or other entity. the Commission under this part, shall
knowledge or independent analysis of a (2) Information first provided to mean the provision of information made
whistleblower; another authority or person. If you prior to any request from the
(ii) Is not already known to the provide information to Congress, any Commission, Congress, any other
Commission from any other source, other federal, state, or local authority, federal or state authority, the
unless the whistleblower is the original any self-regulatory organization, the Department of Justice, a registered
source of the information; Public Company Accounting Oversight entity, a registered futures association,
(iii) Is not exclusively derived from an Board, or to any of any of the persons or a self-regulatory organization to you
allegation made in a judicial or described in paragraphs (g)(3) and (4) of or anyone representing you (such as an
administrative hearing, in a this section, and you, within 90 days, attorney) about a matter to which the
governmental report, hearing, audit, or make a submission to the Commission information in the whistleblower’s
investigation, or from the news media, pursuant to § 165.3, as you must do in submission is relevant. If the
unless the whistleblower is a source of order for you to be eligible to be Commission or any of these other
the information; and considered for an award, then, for authorities make a request, inquiry, or
(iv) Is submitted to the Commission purposes of evaluating your claim to an demand to you or your representative
for the first time after July 21, 2010 (the award under § 165.7, the Commission first, your submission will not be
date of enactment of the Wall Street will consider that you provided considered voluntary, and you will not
Transparency and Accountability Act of information as of the date of your be eligible for an award, even if your
2010). original disclosure, report, or response is not compelled by subpoena
(2) Original information shall not lose submission to one of these other or other applicable law. For purposes of
its status as original information solely authorities or persons. You must this paragraph, you will be considered
to have received a request, inquiry or Your Form WB–DEC must be submitted Commission institutes or in another
demand if documents or information as follows: public proceeding that is filed by an
from you are within the scope of a (1) If you submit a Form TCR authority to which the Commission
request, inquiry, or demand that your electronically, your Form WB–DEC provides the information, as described
employer receives, unless, after must be submitted either: below;
receiving the documents or information (i) Electronically (in accordance with (2) When the Commission determines
from you, your employer fails to provide the instructions set forth on the that it is necessary to accomplish the
your documents or information to the Commission’s Web site); or purposes of the Commodity Exchange
requesting authority in a timely manner. (ii) By mailing or faxing the signed Act and to protect customers, it may
In addition, your submission will not form to the Commission. Your Form provide whistleblower information to:
be considered voluntary if you are WB–DEC must be received by the The Department of Justice; an
under a pre-existing legal or contractual Commission within thirty (30) days of appropriate department or agency of the
duty to report the violations that are the the Commission’s receipt of your Form Federal Government, acting within the
subject of your original information to TCR. scope of its jurisdiction; a registered
the Commission, Congress, any other (2) If you submit a Form TCR either entity, registered futures association, a
federal or state authority, the by mail or fax, your Form WB–DEC self regulatory organization; a state
Department of Justice, a registered must be submitted by mail or fax at the attorney general in connection with a
entity, a registered futures association, same time as the Form TCR. criminal investigation; any appropriate
or a self-regulatory organization. (c) Notwithstanding paragraph (b), if state department or agency, acting
(p) Whistleblower(s). (1) The term you submitted your original information within the scope of its jurisdiction; or a
‘‘whistleblower’’ or ‘‘whistleblowers’’ to the Commission anonymously, then foreign futures authority.
means any individual, or two (2) or your identity must be disclosed to the (3) The Commission may make
more individuals acting jointly, who Commission and verified in a form and disclosures in accordance with the
provides information relating to a manner acceptable to the Commission Privacy Act of 1974 (5 U.S.C. 552a).
potential violation of the Commodity consistent with the procedure set forth (b) Anonymous Whistleblowers. A
Exchange Act to the Commission, in a in § 165.7(c) prior to the Commission’s whistleblower may anonymously
manner established by § 165.3. payment of any award. submit information to the Commission,
(2) The retaliation protections (d) If you submitted original however, the whistleblower must follow
afforded to whistleblowers by the information in writing to the the procedures in § 165.3(c) for
provisions of Section 23(h) of the Commission after July 21, 2010 (the date submitting original information
Commodity Exchange Act apply of enactment of the Wall Street anonymously. Such whistleblower who
irrespective of whether a whistleblower Transparency and Accountability Act of anonymously submits information to
satisfies the procedures and conditions 2010) but before the effective date of the Commission must also follow the
to qualify for an award under this Part these rules, you will be eligible for an procedures in § 165.7(c) in submitting to
165. Moreover, for purposes of the anti- award only if: the Commission an application for a
retaliation provision of paragraph (1) In the event that you provided the whistleblower award.
(h)(1)(A)(i) of Section 23, the original information to the Commission
requirement that a whistleblower in a format or manner other than that § 165.5 Prerequisites to the consideration
described in paragraph (a) of this of an award.
provide ‘‘information to the Commission
in accordance’’ with Section 23 is section, you submit a completed Form (a) Subject to the eligibility
satisfied if an individual provides TCR and Form WB–DEC within one requirements described in this part 165,
information to the Commission that hundred twenty (120) days of the Commission will pay an award to
relates to a potential violation of the [EFFECTIVE DATE OF THE FINAL one or more whistleblowers who:
Commodity Exchange Act. RULE] and otherwise follow the (1) Provide a voluntary submission to
procedures set forth above in paragraphs the Commission;
§ 165.3 Procedures for submitting original (a) and (b) of this section; or (2) That contains original information;
information. (2) In the event that you provided the and
A whistleblower’s submission of original information to the Commission (3) That leads to the successful
information to the Commission will be in a Form TCR in the manner described resolution of a covered Commission
a two-step process. in paragraph (a) of this section, you judicial or administrative action or
(a) First, you will need to submit your submit a Form WB–DEC within one successful enforcement of a related
information to the Commission. You hundred twenty (120) days of the action; and
may submit your information: effective date of this section in the (b) In order to be eligible, the
(1) By completing and submitting a manner set forth above in paragraph (b) whistleblower must:
Form TCR online and submitting it of this section. (1) Have given the Commission
electronically through the Commission’s original information in the form and
Web site at [insert link] or; § 165.4 Confidentiality. manner that the Commission requires in
(2) By completing the Form TCR and (a) In General. Section 23(h)(2) of the § 165.3 and be the original source of
mailing or faxing the form to the Commodity Exchange Act requires that information;
Commission, Three Lafayette Centre, the Commission not disclose (2) Provide the Commission, upon its
1155 21st Street, NW., Washington, DC information that could reasonably be staff’s request, certain additional
20581, Fax (202) XXX–XXXX. expected to reveal the identity of a information, including: Explanations
(b) In addition to submitting a Form whistleblower, except that the and other assistance, in the manner and
TCR, you will also need to complete and Commission may disclose such form that staff may request, in order that
provide to the Commission a Form WB– information in the following the staff may evaluate the use of the
DEC, ‘‘Declaration Concerning Original circumstances: information submitted; all additional
Information Provided Pursuant to (1) When disclosure is required to a information in the whistleblower’s
Section 23 of the Commodity Exchange defendant or respondent in connection possession that is related to the subject
Act,’’ signed under penalty of perjury. with a public proceeding that the matter of the whistleblower’s
submission; and testimony or other set forth in paragraph (a) of this section, which your counsel submits to the
evidence acceptable to the staff relating the whistleblower will remain eligible Commission the Form WB–APP. In
to the whistleblower’s eligibility for an for the anti-retaliation protections set addition, your counsel must submit
award; and forth in Section 23(h) of the Commodity with the Form WB–APP a separate Form
(3) If requested by Commission staff, Exchange Act. WB–DEC completed and signed by
enter into a confidentiality agreement in counsel certifying that counsel has
a form acceptable to the Commission, § 165.7 Procedures for award applications verified your identity, has reviewed the
and commission award determinations.
including a provision that a violation of whistleblower’s Form WB–DEC for
the confidentiality agreement may lead (a) Whenever a Commission judicial completeness and accuracy, and will
to the whistleblower’s ineligibility to or administrative action results in retain the signed original of
receive an award. monetary sanctions totaling more than whistleblower’s Form WB–DEC in
$1,000,000 (i.e., a covered judicial or counsel’s records. Upon request of the
§ 165.6 Whistleblowers ineligible for an administrative action) the Commission Commission staff, whistleblower’s
award. will cause to be published on the counsel must produce to the
(a) No award under § 165.7 shall be Commission’s Web site a ‘‘Notice of Commission the whistleblower’s WB–
made: Covered Action.’’ Such Notice of DEC and the whistleblower’s identity
(1) To any whistleblower who is, or Covered Action will be published must be verified in a form and manner
was at the time, the whistleblower who subsequent to the entry of a final that is acceptable to the Commission
acquired the original information judgment or order that alone, or prior to the payment of any award.
submitted to the Commission, a collectively with other judgments or (d) Once the time for filing any
member, officer, or employee of: The orders previously entered in the appeals of the Commission’s judicial or
Commission; the Board of Governors of Commission covered administrative or administrative action and all related
the Federal Reserve System; the Office judicial action, exceeds $1,000,000 in actions has expired, or where an appeal
of the Comptroller of the Currency; the monetary sanctions. A whistleblower has been filed, after all appeals in the
Board of Directors of the Federal claimant will have sixty (60) calendar judicial, administrative and related
Deposit Insurance Corporation; the days from the date of the Notice of actions have been concluded, the
Director of the Office of Thrift Covered Action to file a claim for an Commission will evaluate all timely
Supervision; the National Credit Union award based on that action, or the claim whistleblower award claims submitted
Administration Board; the Securities will be barred. on Form WB–APP in accordance with
and Exchange Commission; the (b) To file a claim for a whistleblower the criteria set forth in this part 165. In
Department of Justice; a registered award, you must file Form WB–APP, connection with this process, the
entity; a registered futures association; a ‘‘Application for Award for Original Commission may require that you
self-regulatory organization; or a law Information Provided Pursuant to provide additional information relating
enforcement organization; Section 23 of the Commodity Exchange to your eligibility for an award or
(2) To any whistleblower who is Act.’’ You must sign this form as the satisfaction of any of the conditions for
convicted of a criminal violation related claimant and submit it to the an award, as set forth in § 165.5(b).
to the judicial or administrative action Commission by mail or fax to Following that evaluation, the
for which the whistleblower otherwise Commodity Futures Trading Commission will send you a
could receive an award under this Commission, Three Lafayette Centre, Determination setting forth whether the
section; 1155 21st Street, NW., Washington, DC claim is allowed or denied and, if
(3) To any whistleblower who submits 20581, Fax (202) XXX–XXXX. allowed, setting forth the award
information to the Commission that is The Form WB–APP, including any
percentage amount.
based on the facts underlying the attachments, must be received by the (e) The Commission’s Office of the
covered judicial or administrative action Commission within sixty (60) calendar Secretariat will provide you with the
submitted previously by another days of the date of the Notice of Covered Final Order of the Commission.
whistleblower; Action or sixty (60) calendar days
(4) To any whistleblower who following the date of a final judgment in § 165.8 Amount of award.
acquired the information you gave the a related action in order to be If all of the conditions are met for a
Commission from any of the individuals considered for an award. whistleblower award in connection with
described in paragraphs (a)(1), (2), or (3) (c) If you provided your original a covered judicial or administrative
of this section; or information to the Commission action or a related action, the
(5) To any whistleblower who, in the anonymously pursuant to §§ 165.3 and Commission will then decide the
whistleblower’s submission, the 165.4 and: amount of the award pursuant to the
whistleblower’s other dealings with the (1) You are making your claim for a procedure set forth in § 165.7.
Commission, or the whistleblower’s whistleblower award on a disclosed (a) Whistleblower awards shall be in
dealings with another authority in basis, you must disclose your identity an aggregate amount equal to—
connection with a related action, on the Form WB–APP and include with (1) Not less than 10 percent, in total,
knowingly and willfully makes any your Form WB–APP a signed and of what has been collected of the
false, fictitious, or fraudulent statement completed Form WB–DEC. Your monetary sanctions imposed in the
or representation, or use any false identity must be verified in a form and covered judicial or administrative action
writing or document, knowing that it manner that is acceptable to the or related actions; and
contains any false, fictitious, or Commission prior to the payment of any (2) Not more than 30 percent, in total,
fraudulent statement or entry, or award; or of what has been collected of the
omitted any material fact, where in the (2) You are making your claim for a monetary sanctions imposed in the
absence of such fact, other statements or whistleblower award on an anonymous covered judicial or administrative action
representations made by the basis, you must be represented by or related actions.
whistleblower would be misleading. counsel. You must provide your counsel (b) If the Commission makes awards
(b) Notwithstanding a whistleblowers with a completed and signed Form WB– to more than one whistleblower in
ineligibility for an award for any reason DEC by no later than the date upon connection with the same action or
related action, the Commission will (4) The final judgment, consent order, resolution of the Commission’s judicial
determine an individual percentage or administrative speaking order; or administrative action.
award for each whistleblower, but in no (5) The transcript of the related
event will the total amount awarded to administrative hearing or civil § 165.12 Payment of awards from the fund,
financing of customer education initiatives,
all whistleblowers as a group be less injunctive proceeding, including any
and deposits and credits to the fund.
than 10 percent or greater than 30 exhibits entered at the hearing or
percent of the amount the Commission proceeding; (a) The Commission shall pay awards
or the other authorities collect. (6) Any other documents that appear to whistleblowers from the Fund.
on the docket of the proceeding; and (b) The Commission shall deposit into
§ 165.9 Criteria for determining amount of (7) Any statements by the or credit to the Fund:
award. Commission litigation staff, or the (1) Any monetary sanctions collected
The determination of the amount of litigation staff involved in prosecuting by the Commission in any covered
an award shall be in the discretion of the related action, to the Commission judicial or administrative action that is
the Commission. The Commission may regarding: The significance of the not otherwise distributed or ordered to
exercise this discretion directly or information provided by the be distributed, to victims of a violation
through delegated authority pursuant to whistleblower to the success of the of the Commodity Exchange Act
§ 165.15. covered judicial or administrative action underlying such action, unless the
(a) In determining the amount, the or related action; and/or the degree of balance of the Fund at the time the
Commission shall take into assistance provided by the monetary sanctions are collected
consideration— whistleblower and any legal exceeds $100,000,000. In the event the
(1) The significance of the information representative of the whistleblower in a Fund’s value exceeds $100,000,000, any
provided by the whistleblower to the covered judicial or administrative action monetary sanctions collected by the
success of the covered judicial or or related action. Commission in a covered judicial or
administrative action or related action; (b) The record upon which the award administrative action that is not
(2) The degree of assistance provided determination under § 165.7 shall be otherwise distributed or ordered to be
by the whistleblower and any legal made shall not include any Commission distributed to victims of violations of
representative of the whistleblower in a pre-decisional or internal deliberative the Commodity Exchange Act the
covered judicial or administrative action process materials related to the Commissions rules and regulations
or related action; Commission or its staff’s determination: thereunder underlying such action,
(3) The programmatic interest of the To file or settle the related covered shall be deposited into the general fund
Commission in deterring violations of judicial or administrative action; and/or of the U.S. Treasury.
the Commodity Exchange Act by whether, to whom and in what amount (2) In the event that the amounts
making awards to whistleblowers who to make a whistleblower award. Further, deposited into or credited to the Fund
provide information that leads to the the record upon which the award under paragraph (b)(1) of this section
successful enforcement of such laws; determination under § 165.7 shall be are not sufficient to satisfy an award
and made shall not include any other made pursuant to 165.7, then, pursuant
(4) Whether the award otherwise entity’s pre-decisional or internal to Section 23(g)(3)(B) of the Commodity
enhances the Commission’s ability to deliberative process materials related to Exchange Act;
enforce the CEA, protect customers, and its or its staff’s determination to file or (i) An amount equal to the unsatisfied
encourage the submission of high settle a related action. portion of the award;
quality information from (ii) Shall be deposited into or credited
whistleblowers. § 165.11 Awards based upon related to the Fund;
(b) The Commission shall not take actions. (iii) From any monetary sanction
into consideration the balance of the Provided that a whistleblower or collected by the Commission, in any
Fund in determining the amount of an whistleblowers comply with the judicial or administrative action brought
award. requirements in §§ 165.3, 165.5 and by the Commission under the
165.7, pursuant to § 165.8, the Commodity Exchange Act, regardless of
§ 165.10 Contents of record for award Commission or its delegate may grant an whether it qualifies as an ‘‘covered
determination. award based on the amount of monetary judicial or administrative action’’;
(a) The following items constitute the sanctions collected in a ‘‘related action’’ provided, such judicial or
record upon which the award or ‘‘related actions,’’ rather than the administrative action is based on
determination under § 165.7 shall be amount collected in a covered judicial information provided by a
made: or administrative action, where— whistleblower.
(1) The whistleblower’s Form TCR, (a) A ‘‘related action’’ is a judicial or (c) The Commission shall undertake
‘‘Tip, Complaint or Referral,’’ and Form administrative action that is brought by: and maintain customer education
WB–DEC, ‘‘Declaration Concerning (1) The Department of Justice; initiatives. The initiatives shall be
Original Information Provided Pursuant (2) An appropriate department or designed to help customers protect
to Section 23 of the Commodity agency of the Federal Government, themselves against fraud or other
Exchange Act,’’ including related acting within the scope of its violations of the Act, or the
attachments, and other documentation jurisdiction; Commissions rules or regulations
provided by the whistleblower to the (3) A registered entity, registered thereunder. The Commission shall fund
Commission; futures association, or self-regulatory the customer education initiatives, and
(2) The whistleblower’s Form WB– organization; or may utilize funds deposited into the
APP, ‘‘Application for Award for (4) A State criminal or appropriate Fund during any fiscal year in which
Original Information Provided Pursuant civil agency; and the beginning (October 1) balance of the
to Section 23 of the Commodity (b) The ‘‘related action’’ is based on Fund is greater than $10,000,000. The
Exchange Act,’’ and related attachments the same original information that the Commission shall budget on an annual
(3) The complaint, notice of hearing, whistleblower voluntarily submitted to basis the amount used to finance
answers and any amendments thereto; the Commission and led to a successful customer education initiatives, taking
into consideration the balance of the amounts become available in the Fund conduct that the whistleblower
Fund. to pay their entire payments. principally directed, planned, or
(2) Where multiple whistleblowers are initiated. Similarly, if the Commission
§ 165.13 Appeals. owed payments from the Fund based on determines that a whistleblower is
(a) Any Final Order of the awards that arise from the same Notice eligible for an award, any amounts that
Commission relating to a whistleblower of Covered Action (or related action), the whistleblower or such an entity pay
award determination, including they will share the same payment in sanctions as a result of the action or
whether, to whom, or in what amount priority and will be paid on a pro rata related actions will not be included
to make whistleblower awards, may be basis until sufficient amounts become within the calculation of the amounts
appealed to the appropriate court of available in the Fund to pay their entire collected for purposes of making
appeals of the United States not more payments. payments pursuant to § 165.14.
than thirty (30) days after the Final
Order of the Commission is issued. § 165.15 Delegations of authority. § 165.18 Staff communications with
(b) The record on appeal shall consist (a) Delegation of Authority to the whistleblowers from represented entities.
of: Executive Director. The Commission If you are a whistleblower who is a
(1) The Contents of Record for Award hereby delegates, until such time as the director, officer, member, agent, or
Determination, as set forth in § 165.9; Commission orders otherwise, to the employee of an entity that has counsel,
(2) The Final Order of the Executive Director or to any and you have initiated communication
Commission, as set forth in § 165.7. Commission employee under the with the Commission relating to a
Executive Director’s supervision as he potential violation of the Commodity
§ 165.14 Procedures applicable to the Exchange Act, the Commission’s staff is
payment of awards.
or she may designate, the authority to
take the following actions to carry out authorized to communicate directly
(a) A recipient of a whistleblower this Part 165 and the requirements of with you regarding the subject of your
award is entitled to payment on the Section 23(h) of Commodity Exchange communication without seeking the
award only to the extent that the Act. consent of the entity’s counsel.
monetary sanction upon which the (1) Delegated authority to deposit
award is based is collected in the § 165.19 Nonenforceability of certain
collected monetary sanctions into the provisions waiving rights and remedies or
Commission judicial or administrative Fund and the payment of awards
action or in a related action; requiring arbitration of disputes.
therefrom shall be with the concurrence The rights and remedies provided for
(b) Payment of a whistleblower award of the General Counsel and the Director
for a monetary sanction collected in a in this Part 165 of the Commission’s
of the Division of Enforcement or of regulations may not be waived by any
Commission action or related action their respective designees.
shall be made within a reasonable time agreement, policy, form, or condition of
(2) [Reserved] employment including by a predispute
following the later of: (b) [Reserved]
(1) The date on which the monetary arbitration agreement. No predispute
sanction is collected; or § 165.16 No immunity. arbitration agreement shall be valid or
(2) The completion of the appeals The Commodity Whistleblower enforceable if the agreement requires
process for all whistleblower award Incentives and Protections provisions arbitration of a dispute arising under
claims arising from: set forth in Section 23(h) of Commodity this Part.
(i) The Notice of Covered Action, in Exchange Act and this Part 165 do not Appendix A to Part 165—Guidance
the case of any payment of an award for provide individuals who provide With Respect to the Protection of
a monetary sanction collected in a information to the Commission with Whistleblowers Against Retaliation
covered judicial or administrative immunity from prosecution. The fact
action; or Section 23(h)(1) of the Commodity
that you may become a whistleblower Exchange Act prohibits employers from
(ii) The related action, in the case of and assist in Commission investigations engaging in retaliation against
any payment of an award for a monetary and enforcement actions does not whistleblowers. This provision provides
sanction collected in a related action. preclude the Commission from bringing whistleblowers with certain protections
(c) If there are insufficient amounts an action against you based upon your against retaliation, including: A federal cause
available in the Fund to pay the entire own conduct in connection with of action against the employer, which must
amount of an award payment within a violations of the Commodity Exchange be filed in the appropriate United States
reasonable period of time from the time Act and the Commission’s regulations. If district court within two (2) years of the
for payment specified by paragraph (b) employer’s retaliatory act; and potential relief
such an action is determined to be
of this section, then subject to the for prevailing whistleblowers, including
appropriate, however, the Commission’s reinstatement, back pay, and compensation
following terms, the balance of the Division of Enforcement will take your for other expenses, including reasonable
payment shall be paid when amounts cooperation into consideration in attorney’s fees. Specifically, Section 23(h)(1)
become available in the Fund, as accordance with its sanction of Commodity Exchange Act provides:
follows: recommendations to the Commission. (A) In General.—No employer may
(1) Where multiple whistleblowers are discharge, demote, suspend, threaten, harass,
owed payments from the Fund based on § 165.17 Awards to whistleblowers who directly or indirectly, or in any other manner
awards that do not arise from the same engage in culpable conduct. discriminate against, a whistleblower in the
Notice of Covered Action (or related In determining whether the required terms and conditions of employment because
action), priority in making these $1,000,000 threshold has been satisfied of any lawful act done by the
payments will be determined based (this threshold is further explained in whistleblower—
upon the date that the Final Order of the § 165.7) for purposes of making any (i) In providing information to the
Commission in accordance with subsection
Commission is made. If two or more of award, the Commission will not take (b); or
these Final Orders of the Commission into account any monetary sanctions (ii) In assisting in any investigation or
are entered on the same date, those that the whistleblower is ordered to pay, judicial or administrative action of the
whistleblowers owed payments will be or that are ordered against any entity Commission based upon or related to such
paid on a pro rata basis until sufficient whose liability is based primarily on information.
(B) Enforcement. (i) Cause of Action.—An (ii) Subpoenas.—A subpoena requiring the (i) Reinstatement with the same seniority
individual who alleges discharge or other attendance of a witness at a trial or hearing status that the individual would have had,
discrimination in violation of subparagraph conducted under this subsection may be but for the discrimination;
(A) may bring an action under this subsection served at any place in the United States. (ii) The amount of back pay otherwise
in the appropriate district court of the United (iii) Statute of Limitations.—An action owed to the individual, with interest; and
States for the relief provided in subparagraph under this subsection may not be brought (iii) Compensation for any special damages
(C), unless the individual who is alleging more than 2 years after the date on which the
sustained as a result of the discharge or
discharge or other discrimination in violation violation reported in subparagraph (A) is
of subparagraph (A) is an employee of the committed. discrimination, including litigation costs,
Federal Government, in which case the (C) Relief.—Relief for an individual expert witness fees, and reasonable attorney’s
individual shall only bring an action under prevailing in an action brought under fees.
section 1221 of title 5, United States Code. subparagraph (B) shall include— BILLING CODE 6351–01–P
EP06DE10.000</GPH>
BILLING CODE 6351–01–C implementing laws, rules, or regulations • You have the right to submit information
Privacy Act of Statement implicated by the information consistent anonymously.
with the confidentiality requirements set • If you are submitting information for the
The Privacy Act requires that the forth therein. Furnishing the information is Commission’s whistleblower award program,
Commodity Futures Trading Commission voluntary, but a decision not to do so may you must submit your information using this
(CFTC) inform individuals of the following result in you not being eligible for award Form TCR. In addition to submitting your
when asking for information. This form may consideration. information by this method, you must also
be used by anyone wishing to provide the Questions concerning this form may be
CFTC with information concerning a submit a declaration on From WB–DEC. The
directed to the Commodity Futures Trading Form WB–DEC can be printed out from the
violation of the Commodity Exchange Act or Commission, Three Lafayette Centre, 1151
the Commission’s regulations. If you are Commission’s Web site or obtained from the
21st Street, NW., Washington, DC 20581. Commission, and it must be manually signed
submitting this information for the
Commission’s whistleblower award program Submission Procedures by you under penalty of perjury.
pursuant to Section 23 of the Commodity • After completing this From TCR, please Instructions for Completing Form TCR
Exchange Act, the information provided will send it to the Commission: electronically via
enable the Commission to determine your the Commission’s Web site; by mail to the Section A: Information About You
eligibility for payment of an award. This Commodity Futures Trading Commission, Questions 1–3: Please provide the
information may be disclosed to Federal, Three Lafayette Centre, 1151 21st Street, following information about yourself:
state, local, or foreign agencies responsible NW., Washington, DC 20581; or by facsimile Æ Last name, first name, and middle
EP06DE10.001</GPH>
for investigating, prosecuting, enforcing, or to (202) XXX–XXXX. initial;
Æ Complete address, including city, state exchange dealer, swap dealer, unknown, or pressure sales techniques; instructions by
and zip code; other (specify). client, customer or participant not followed;
Æ Telephone number and, if available, an Questions 2–4: For each subject, provide investment objectives not followed;
alternative number where you can be the following information, if known: solicitation methods (non-cold calling,
reached; Æ Full name; seminars);
Æ Your e-mail address (to facilitate including city, state and zip code; Æ Customer accounts (unauthorized
communications, the Commission strongly Æ Telephone number; trading); identity theft affecting account;
encourages you to provide your e-mail Æ E-mail address; and inaccurate valuation of Net Asset Value; or
address); and Æ Internet address, if applicable. Æ Other (analyst complaints; market maker
Æ Your preferred method of Section C: Tell Us About Your Complaint. activities; employer/employee disputes;
communication. Question 1: State the date (mm/dd/yyyy) specify other).
Question 4: Describes your occupation, for that the alleged conduct began. Question 3: Indicate whether you were in
example which of the following provides Question 2: Choose the option that you the past, or are currently, an officer,
the best description: believe best describes the nature of your director, employee, consultant, or
Æ Accountant, attorney, auditor, broker- complaint. If you are alleging more than contractor of the entity to which your
dealer, compliance officer, financial one violation, please list all that you complaint relates.
representative, foreign officer, fund manager, believe may apply. Use additional Question 4a: Indicate whether you have
investment advisor, commodity trading sheets, if necessary. taken any prior action regarding your
adviser, investor, customer, company officer Æ Theft/misappropriation; complaint, including whether you
or senior manager, trader, floor broker, Æ Misrepresentation/omission (false/ reported the violation to the entity,
government official (federal, state, or local), misleading marketing/sales literature; including the compliance office,
law enforcement personnel (federal, state, or inaccurate, misleading or non-disclosure by whistleblower hotline or ombudsman;
local), or other (specific). commodity pool operator, commodity trading complained to the Commission, another
advisor, futures commission merchant, regulator, a law enforcement agency, or
Section B: Information About Your Attorney. introducing broker, retail foreign currency any other agency or organization;
Complete This Section Only If Your Are dealer, swap dealer, or their associated initiated legal action, mediation or
Represented By An Attorney In This person(s); false/material misstatements in arbitration, or initiated any other action.
Matter. any report or statement; Question 4b: If you answered ‘‘yes’’ to
Questions 1–4: Provide the following Æ Ponzi/pyramid scheme; question 4a, provide details, including
information about the attorney Æ Off-exchange foreign currency, the date on which you took the action(s)
representing you in this matter: commodity, or precious metal fraud; described, the name of the person or
Æ Attorney’s name; Æ Registration violations (including entity to whom you directed any report
Æ Firm name; unregistered commodity pool operator, or complaint and the contact information
Æ Complete address, including city, state commodity trading advisor, futures for the person or entity, if known, and
and zip code; commission merchant, introducing broker, the complete case name, case number,
Æ Telephone number and fax number; and retail foreign currency dealer, swap dealer, or and forum of any legal action you have
Æ E-mail address. their associated person(s)); taken. Use additional sheets, if
Section C: Tell Us About The Individual Æ Trading (after hours trading; algorithmic necessary.
And/Or Entity You Have A Complaint trading; disruptive trading; front running;
Question 5: State in detail all the facts
Against. If your complaint relates to more insider trading; manipulation/attempted
pertinent to your complaint. Attach
than two individuals and/or entities, you manipulation of commodity prices; market
additional sheets, if necessary.
timing; inaccurate quotes/pricing
may attach additional sheets. Question 6: Describe all supporting
information; program trading; trading
Question 1: Choose the following that best materials in your possession, custody or
suspensions; volatility);
describes the individual or entity to control, and the availability and location
Æ Fees/mark-ups/commissions (excessive,
which your complaint relates: of additional supporting materials not in
unnecessary or unearned administrative,
Æ For Individuals: accountant, analyst, commission or sales fees; failure to disclose your possession, custody or control.
associated person, attorney, auditor, broker, fees; insufficient notice of change in fees; Attach additional sheets, if necessary.
commodity trading advisor, commodity pool excessive or otherwise improper spreads or Question 7: Describe how you obtained the
operator, compliance officer, employee, fills); information that supports your
executing broker, executive officer or Æ Sales and advisory practices allegation. If any information was
director, financial planner, floor broker, floor (background information on past violations/ obtained from a public source, identify
trader, trader, unknown, or other (specify). integrity; breach of fiduciary duty/ the source with as much particularity as
Æ For Entities: bank, commodity trading responsibility; churning/excessive trading; possible. Attach additional sheets, if
advisor, commodity pool operator, cold calling; conflict of interest; a bout of necessary.
commodity pool, futures commission authority in discretionary trading; failure to Question 8: Please provide any additional
merchant, hedge fund, introducing broker, respond to client, customer or participant; information you think may be relevant.
major swap participant, retail foreign guarantee against loss; promise to profit; high BILLING CODE 6351–01–P
EP06DE10.002</GPH>
EP06DE10.003</GPH>
BILLING CODE 6351–01–C Part I: Instructions for Filers who are Commodity Futures Trading Commission,
Privacy Act Statement Disclosing Their Identity Three Lafayette Centre, 1155 21st Street,
You are required to complete Sections A, NW., Washington, DC 20581–XXXX; or
This notice is given under the Privacy Act Æ By faxing the Form WB–APP and the
C, D, and E of this form. If you are
of 1974. The Privacy Act requires that the signed Form WB–DEC to (202) XXX–XXXX.
represented by an attorney in this matter, you
Commodity Futures Trading Commission
must also complete Section B. Specific Part IV: Instructions for Completing Form
(CFTC) inform individuals of the following instructions for answering these questions
when asking for information. The WB–DEC
can be found in Part IV below.
information provided will enable the If you previously submitted your Section A: Submitter’s Information
Commission to determine your eligibility for complaint electronically through the Questions 1–3: Provide the following
payment of an award pursuant to Section 23 Commission’s website, you may submit this information about yourself:
of the Commodity Exchange Act. This Form WB–DEC to us in any of the following • First and last name, and middle initial;
information may be disclosed to Federal, ways: • Complete address, including city, state
state, local, or foreign agencies responsible Æ By mailing or delivering the signed form and zip code;
for investigating, prosecuting, enforcing, or to the Commodity Futures Trading • Telephone number and, if available, an
implementing rules, or regulations Commission, Three Lafayette Centre, 1155 alternate number where you can be
implicated buy the information consistent 21st Street, NW., Washington, DC 20581– reached; and
with the confidentiality requirements set XXXX; or • E-mail address.
forth in Section 23 of the Commodity Æ By faxing the signed form to (202) XXX–
XXXX; or Section B: Information about Your Attorney.
Exchange Act and part 165 of the
Æ By scanning and emailing the form in Complete this section only if you are
Commissions regulations hereunder.
PDF format to [insert e-mail address]. represented by an attorney in this matter.
Furnishing the information is voluntary, but
Please note that the Commission must You must be represented by an attorney, and
a decision not to do so may result in you not
receive your Form WB–DEC within thirty (30) this section must be completed, if you intend
being eligible for award consideration. days of when you submitted your information to apply for a whistleblower award
Questions concerning this form may be to us through the Commission’s website. anonymously.
directed to the Commodity Futures Trading, If you did not previously submit your
Three Lafayette Centre, 1151 21st Street, Questions 1–4: Provide the following
complaint electronically through the CFTC’s information about the attorney
NW., Washington, DC 20581. website, but instead intend to send us a Form representing you in this matter:
General Information TCR, then you must submit your completed • Attorney’s name;
Form TCR and your declaration on this Form • Firm name;
Submitting information for the CFTC’s WB–DEC together. You may do so in one of
whistleblower award program is a two-step • Complete address, including city, state
two ways: and zip code;
process. First, you must provide us with your • By mailing or delivering the Form TCR • Telephone number and fax number; and
information by competing a Form TCR (‘‘Tip, and the signed Form WB–DEC to the • E-mail address.
Complaint, or Referral’’), instructions set Commodity Futures Trading Commission,
forth on the form, and sending it to the Three Lafayette Centre, 1155 21st Street, Section C: Tip/Complaint Details
Commission: electronically via the NW., Washington, DC 20581–XXXX; or Question 1: Indicate the manner in which the
Commission’s website; by mail to the • By faxing the Form TCR and the signed information was submitted to the
Commodity Futures Trading Commission, Form WB–DEC form to (202) XXX–XXXX. Commission.
Three Lafayette Centre, 1151 21st Street, Part II: Instructions for Anonymous Filers Question 2a: Provide the date on which the
NW., Washington, DC 20581; or by facsimile TCR was submitted to the Commission.
If you are submitting information
to (202) XXX–XXXX. Question 2b: Provide the name of the
anonymously, you may be represented by an
• Submitting your information to the attorney in this matter. If you are applying for individual or entity to which your
Commission is the first step. If you want to a whistleblower award, you must be complaint relates.
be considered for a whistleblower award, you represented by an attorney in connection Question 3a: Indicate whether the submitter
must also submit this Form WB–DEC and it with such application. or counsel have had any
must be manually signed under penalty of In order for you to be eligible for a communication(s) with the Commission
perjury. whistleblower award, your attorney must concerning this manner.
• If you submitted your information retain your signed original of Form WB–DEC Question 3b: If you answered ‘‘yes’’ to
electronically through the Commission’s in his or her records, and submit both your question 3a, provide the name of the SEC
website, the Commission must receive your Form WB–APP (if you filled one out instead staff member with whom the submitter
completed Form WB–DEC within 30 days of of submitting your complaint to us or counsel communicated.
your submission. If you did not submit your electronically) and a Form WB–DEC Question 4a: Indicate whether the submitted
information electronically but instead are completed by the attorney declaration to the or counsel have provided the
submitting your information on Form TCR, Commission. You are encouraged to confirm information being submitted to the CFTC
that your attorney followed these steps. to any other agency or organization.
you must submit your declaration on Form
Question 4b: If you answered ‘‘yes’’ to
WB–DEC at the same time that you submit Part III: Instructions for Attorneys question 4a, provide details, including
your Form TCR. Representing Anonymous Whistleblowers the name of the agency or organization,
Follow the instructions set forth below for the date on which you provided your
Obtain a completed and signed original of
submitting this Form WB–DEC. information to the agency or organization
Form WB–DEC from your client. You must
• If you follow these steps, and the retain this signed original in your records and any other relevant details.
information you submit leads to the because it may be required at a later date Question 4c: Provide a name and contact
successful enforcement of a CFTC judicial or upon request of CFTC staff and prior to the information for your point of contact at
administrative action, or a related action, you payment a whistleblower award. the other agency or organization, if
will have an opportunity at a later date to
You must prepare your own Form WB– known.

submit a claim for an award. That is a DEC, completing only Sections B, C and F.
separate process and is described in our Specific instructions for answering these Section D: Eligibility Requirements
whistleblower rules, which are available on questions can be found in Part IV below. Question 1: State whether you are currently,
the Commission’s Web site [insert link]. You must submit your client’s application or were at the time you acquired the
• You have the right to submit information on Form WB–APP and your attorney original information that you submitted
anonymously. If you are doing so, please skip declaration on this Form WB–DEC together. to the CFTC a member, officer, or
Part I of these instructions and proceed You may do so in one of two ways: employee of the Department of Justice
directly to Part II. Otherwise, please begin by Æ By mailing or delivering the Form WB– the Securities and Exchange
following the instructions in Part I. APP and the signed Form WB–DEC to the Commission; the Comptroller of the
Currency, the Board of Governors of the Question 5: If you answered ‘‘yes’’ to including the name of the agency or
Federal Reserve System, the Federal questions 1 though 4, please provide organization that conducted the
Deposit Insurance Corporation, the details. investigation or initiated the action
Office of Thrift Supervision; National Question 5a: State whether you provided the against you, the name and telephone
Credit Union Administration Board, information identified submitted to the number of your point of contact at the
registered entity, a registered futures CFTC before you (or anyone representing agency or organization, if available and
association, a self-regulatory you) received any request, inquiry or the investigation/case name and number,
organization or; any law enforcement demand from the CFTC, Congress, or any
if applicable. Use additional sheets, if
organization. other federal, state or local authority, or
Question 2: State whether you provided the any self regulatory organization about a necessary. If you previously provided
information submitted to the CFTC matter to which the information your this information on Form WB–DEC, you
pursuant to a cooperation agreement submission was relevant. may leave this question blank, unless
with the Commission or with any other Question 5b: If you answered ‘‘no’’ to your response has changed since the
agency or organization. questions 5a, please provide details. Use time you submitted your Form WB–DEC.
Question 3: State whether you are a spouse, additional sheets if necessary. Section E: Declaration
parent, child or sibling of a member or Question 6a: State whether you are the
employee of the Commission, or whether subject or target of a criminal To be completed and signed by person
you reside in the same household as a investigation or have been convicted of submitting the information
member or employee of the Commission. a criminal violation in connection with
Section F: Counsel Certification
Question 4: State whether you acquired the the information upon which your
information you are providing to the application for award is based. To be completed and signed by attorney for
CFTC from any individual described in Question 6b: If you answered ‘‘yes’’ to an anonymous person submitting
Question 1 through 3 of this Section. question 9a, please provide details, information
EP06DE10.004</GPH>
EP06DE10.005</GPH>
BILLING CODE 6351–01–P the CFTC anonymously, you must now • E-mail address
Privacy Act Statement disclose your identity on this form and your
identity must be verified in a form and Section B: Attorney’s Information. If you are
This notice is given under the Privacy Act manner that is acceptable to the CFTC prior represented by an attorney in this matter,
of 1974. The Privacy Act requires that the to the payment of any award. provide the information requested. If you are
Commodity Futures Trading Commission • If you are filing your claim in connection not representing an attorney in this matter,
(CFTC or Commission) inform individuals of with information that you provided to the leave this Section blank.
the following when asking for information. CFTC, then Form WB–APP and any Questions 1–4: Provide the following
The information provided will enable the attachments thereto, must be received by the information about the attorney
Commission to determine your eligibility for CFTC within sixty (60) days of the date of the representing you in this matter:
payment of an award pursuant to Section 23 Notice of Covered Action or the date of a • Attorney’s name;
of the Commodity Exchange Act. This final judgment in a related action to which • Firm name;
information may be disclosed to Federal, the claim relates. • Complete address, including city, state
state, local, or foreign agencies responsible • If you are filing your claim in connection
for investigating, prosecuting, enforcing, or and zip code;
with information you provided to another • Telephone number and fax number; and
implementing the laws, rules, or regulations agency in a related action, then your Form
implicated by the information consistent • E-mail address.
WB–APP, and any attachments there to, must
with the confidentiality requirements set be received by the CFTC within sixty (60) Section C: Tip/Complaint Details
forth in Section 23 of the Commodity days of the date of a final judgment in the
Exchange Act and part 165 of the Question 1: Indicate the manner in which
related action to which the claim relates. your original information was submitted
Commissions regulations thereunder. You must submit your Form WB–APP to us
Furnishing the information is voluntary, but to the CFTC.
in one of the following two ways: Question 2a: Provide the date on which you
a decision not to do so may result in you not • By mailing or delivering the signed form
being eligible for award consideration. submitted your TCR (Tip, Complaint or
to the Commodity Futures Trading Referral) information to the CFTC.
Questions concerning this form may be Commission, Three Lafayette Centre, 1155
directed to the Commodity Futures Trading Question 2b: Provide the name of the
21st Street, NW., Washington, DC 20581; or individual(s) or entity(s) to which your
Commission, Three Lafayette Centre, 1151 • By faxing the signed form to (202) XXX–
21st Street, NW., Washington, DC 20581. complaint related.
XXXX.
General Section D: Notice of Covered Action
Instructions for Completing Form WB–APP
This form should be used by persons The process for making a claim for a
making a claim for a whistleblower award in Section A: Applicant’s Information whistleblower award begins with the
connection with information provided to the Questions 1–3: Provide the following publication of a ‘‘Notice of a Covered Action’’
CFTC or to another agency in a related information about yourself: on the Commission’s Web site. This notice is
action. In order to be deemed eligible for an • First and last name, and middle initial; published whenever a judicial or
award, you must meet all the requirements • Complete address, including city, state administrative action brought by the
set forth in Section 23 of the Commodities and zip code; Commission results in the imposition of
Exchange Act and the rules hereunder. • Telephone number and, if available, an monetary sanctions exceeding $1,000,000.
You must sign the Form WB–APP as the alternate number where you can be The Notice is published on the Commission’s
EP06DE10.006</GPH>
claimant. If you provided your information to reached; and Web site subsequent to the entry of a final
judgment or order in the action that by itself, you reside in the same household as a determining the amount of an award, the
or collectively with other judgments or member or employee of the Commission. Commission will evaluate the following
orders previously entered in the action, Question 4: State whether you acquired the factors: (a) The significance of the
exceeds the $1,000,000 threshold. information you are providing to the information provided by a whistleblower to
Question 1: Provide the date of the Notice of CFTC from any individual described in the success of the Commission action or
Covered Action to which this claim Question 1 through 3 of this Section. related action; (b) the degree of assistance
relates. Question 5: If you answered ‘‘yes’’ to provided by the whistleblower and any legal
Question 2: Provide the notice number of the questions 1 though 4, please provide representative of the whistleblower in the
Notice of Covered Action. details. Commission action or related action; (c) the
Question 3a: Provide the case name Question 5a: State whether you provided the programmatic interest of the Commission in
referenced in Notice of Covered Action. information identified submitted to the deterring violations of the securities laws by
Question 3b: Provide the case number CFTC before you (or anyone representing making awards to whistleblowers who
referenced in Notice of Covered Action. you) received any request, inquiry or provide information that leads to the
demand from the CFTC, Congress, or any successful enforcement of such laws; and (d)
Section E: Claims Pertaining to Related other federal, state or local authority, or whether the award otherwise enhances the
Actions any self regulatory organization about a Commission’s ability to enforce the
Question 1: Provide the name of the agency matter to which the information your Commodity Exchange Act, protect customers,
or organization to which you provided submission was relevant. and encourage the submission of high quality
your information. Question 5b: If you answered ‘‘no’’ to information from whistleblowers. Address
Question 2: Provide the name and contact questions 5a, please provide details. Use these factors in your response as well.
information for your point of contact at additional sheets if necessary.
the agency or organization, if known. Question 6a: State whether you are the Section G: Declaration
Question 3a: Provide the date on which that subject or target of a criminal This section must be signed by the
you provided your information to the investigation or have been convicted of claimant.
agency or organization referenced in a criminal violation in connection with By the Commission.
question E1. the information upon which your Dated: November 10, 2010.
Question 3b: Provide the date on which the application for award is based.
agency or organization referenced in Question 6b: If you answered ‘‘yes’’ to David Stawick,
question E1 filed the related action that question 9a, please provide details, Secretary.
was based upon the information you including the name of the agency or
Statement of Chairman Gary Gensler
provided. organization that conducted the
Question 4a: Provide the case name of the investigation or initiated the action Proposed Rules for Implementing the
related action. against you, the name and telephone Whistleblower Provisions of Section 23
Question 4b: Provide the case number of the number of your point of contact at the of the Commodity Exchange Act
related action. agency or organization, if available and
the investigation/case name and number, I support the proposed rulemaking to
Section F: Eligibility Requirements if applicable. Use additional sheets, if establish a program for whistleblowers
Question 1: State whether you are currently, necessary. If you previously provided as mandated by the Dodd-Frank Act.
or were at the time you acquired the this information on Form WB–DEC, you
original information that you submitted Congress enacted these provisions to
may leave this question blank, unless
to the CFTC a member, officer, or your response has changed since the incentivize whistleblowers to come
employee of the Department of Justice, time you submitted your Form WB–DEC. forward with new information about
the Securities and Exchange potential fraud in the financial markets.
Commission, the Comptroller of the Section G: Entitlement to Award The proposed rulemaking authorizes the
Currency, the Board of Governors of the Use this section to explain the basis for Commission to provide a monetary
Federal Reserve System, the Federal your belief that you are entitled to an award award to whistleblowers when their
Deposit Insurance Corporation, the in connection with your submission of original information results in a
Office of Thrift Supervision, National information to us or to another agency in
successful enforcement action. The rule
Credit Union Administration Board, connection with a related action. Specifically
registered entity, a registered futures address how you believe you voluntarily also provides that moneys recovered
association, a self-regulatory provided the Commission with original will fund new customer education
organization or; any law enforcement information that led to the successful initiatives to protect the public. The
organization. enforcement of a judicial or administrative proposed rules encourage persons with
Question 2: State whether you provided the action filed by the Commission, or a related knowledge to come forward and assist
information submitted to the CFTC action. Refer to § 165.11 of this part for the Commission in identifying,
pursuant to a cooperation agreement further information concerning the relevant investigating and prosecuting potential
with the Commission or with any other award criteria. You may attach additional violations of the Commodity Exchange
agency or organization. sheets, if necessary.
Act.
Question 3: State whether you are a spouse, Section 23(c)(1)(B) of the CEA requires the
parent, child or sibling of a member or Commission to consider, and subparagraph [FR Doc. 2010–29022 Filed 12–3–10; 8:45 am]
employee of the Commission, or whether (a)(1) through (4) provides that in BILLING CODE 6351–01–P

Commodity Futures Trading Corporation: Monday, December 6, 2010

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Commodity Futures Trading Corporation: Monday, December 6, 2010

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Monday,

highlighted in the discussion below.

apply when a whistleblower provides information 13 7 U.S.C. 26(a)(4).

have been satisfied, Proposed Rule

compensation for other expenses, procedures require potential

significant impact on a substantial 165.16 No immunity. (e) Covered Judicial or Administrative

for investigating, prosecuting, enforcing, or to (202) XXX–XXXX. initial;

You must prepare your own Form WB– known.

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