[Federal Register Volume 75, Number 233 (Monday, December 6, 2010)]
[Proposed Rules]
[Pages 75728-75760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29022]



[[Page 75727]]

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Part II





Commodity Futures Trading Corporation





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17 CFR Part 165



 Implementing the Whistleblower Provisions of Section 23 of the 
Commodity Exchange Act; Proposed Rule

Federal Register / Vol. 75 , No. 233 / Monday, December 6, 2010 / 
Proposed Rules

[[Page 75728]]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 165

RIN 3038-AD04


Implementing the Whistleblower Provisions of Section 23 of the 
Commodity Exchange Act

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or 
``CFTC'') is proposing rules to implement new statutory provisions 
enacted by Title VII of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act. These proposed rules apply to the whistleblowers 
incentives and protection of section 748. The proposed rules establish 
a whistleblower program that enables the Commission to pay an award, 
under regulations prescribed by the Commission and subject to certain 
limitations, to eligible whistleblowers who voluntarily provide the 
Commission with original information about a violation of the Commodity 
Exchange Act that leads to the successful enforcement of a covered 
judicial or administrative action, or a related action. The proposed 
rules also provide public notice of section 748's prohibition on 
retaliation by employers against individuals that provide the 
Commission with information about potential violations.

DATES: Comments must be received on or before February 4, 2011.

ADDRESSES: You may submit comments, identified by RIN number 3038-AD04, 
by any of the following methods:
    <bullet> Agency Web site, via its Comments Online process: http://comments.cftc.gov. Follow the instructions for submitting comments 
through the Web site.
    <bullet> Mail: David A. Stawick, Secretary of the Commission, 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street, NW., Washington, DC 20581.
    <bullet> Hand Delivery/Courier: Same as mail above.
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.

Please submit your comments using only one method.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
http://www.cftc.gov. You should submit only information that you wish 
to make available publicly. If you wish the Commission to consider 
information that you believe is exempt from disclosure under the 
Freedom of Information Act, a petition for confidential treatment of 
the exempt information may be submitted according to the procedures 
established procedures in CFTC Regulation 145.9, 17 CFR 145.9.
    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from http://www.cftc.gov that it may deem to be 
inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: Edward Riccobene, Chief, Policy and 
Review, Division of Enforcement, 202-418-5327, <a href="/cdn-cgi/l/email-protection#3f5a4d565c5c505d5a515a7f5c594b5c11585049"><span class="__cf_email__" data-cfemail="2643544f45454944434843664540524508414950">[email protected]</span></a>, 
Commodity Futures Trading Commission, Three Lafayette Centre, 1151 21st 
Street, NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background

    On July 21, 2010, President Obama signed the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (``Dodd-Frank Act'').\1\ Title VII 
of the Dodd-Frank Act \2\ amended the Commodity Exchange Act (``CEA'') 
\3\ to establish a comprehensive new regulatory framework for swaps and 
security-based swaps. The legislation was enacted to reduce risk, 
increase transparency, and promote market integrity within the 
financial system by, among other things: (1) Providing for the 
registration and comprehensive regulation of swap dealers and major 
swap participants; (2) imposing clearing and trade execution 
requirements on standardized derivative products; (3) creating robust 
recordkeeping and real-time reporting regimes; and 4) enhancing the 
Commission's rulemaking and enforcement authorities with respect to, 
among others, all registered entities and intermediaries subject to the 
Commission's oversight.
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    \1\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010). The text of the 
Dodd-Frank Act may be accessed at http://www.cftc.gov./
LawRegulation/OTCDERIVATIVES/index.htm.
    \2\ Pursuant to Section 701 of the Dodd-Frank Act, Title VII may 
be cited as the ``Wall Street Transparency and Accountability Act of 
2010.''
    \3\ 7 U.S.C. 1 et seq. (2006).
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    In addition, Title VII of the Dodd-Frank Act contains provisions to 
provide incentives and protections for whistleblowers.
    Section 748 of the Dodd-Frank Act amends the CEA by adding Section 
23, entitled ``Commodity Whistleblower Incentives and Protection.'' \4\ 
Section 23 directs that the Commission must pay awards, subject to 
certain limitations and conditions, to whistleblowers who voluntarily 
provide the Commission with original information about a violation of 
the CEA that leads to successful enforcement of an action brought by 
the Commission that results in monetary sanctions exceeding $1,000,000, 
and of certain related actions.
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    \4\ Section 922(a), Public Law 111-203, 124 Stat. 1841 (2010).
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    The Commission is proposing Regulation 165 to implement Section 23 
of the CEA. As described in detail below, the rules contained in 
proposed Regulation 165 define certain terms critical to the operation 
of the whistleblower program, outline the procedures for applying for 
awards and the Commission's procedures for making decisions on claims, 
and generally explain the scope of the whistleblower program to the 
public and to potential whistleblowers. Further, Proposed Regulation 
165 includes an appendix informing whistleblowers of their protections 
from employer retaliation under Section 23 of the CEA.
    Section 23 of the CEA also requires the Commission to fund customer 
education initiatives designed to help customers protect themselves 
against fraud or other violations of the CEA, or rules or regulations 
thereundeCr. The Commission will, in a future rulemaking, address 
related internal procedural and organizational issues, including 
establishment of, and delegation of authority to, an office or offices 
to administer the Commission's whistleblower and customer education 
programs.
    Accordingly, the Commission is proposing rules to implement Section 
748 and establish a whistleblower program. The Commission requests 
comment on all aspects of the proposed rules, as well as comment on the 
specific provisions and issues highlighted in the discussion below.

II. Description of the Proposed Rules

A. Proposed Rule 165.1--General

    Proposed Rule 165.1 provides a general, plain English description 
of

[[Page 75729]]

Section 23 of the CEA. It sets forth the purposes of the rules and 
states that the Commission administers the whistleblower program. In 
addition, the proposed rule states that, unless expressly provided for 
in the rules, no person is authorized to make any offer or promise, or 
otherwise to bind the Commission with respect to the payment of an 
award or the amount thereof.

B. Proposed Rule 165.2--Definitions

1. Proposed Rule 165.2(a) Action
    Proposed Rule 165.2(a) defines the term ``action'' to mean a single 
captioned civil or administrative proceeding. This defined term is 
relevant for purposes of calculating whether monetary sanctions in a 
Commission action exceed the $1,000,000 threshold required for an award 
payment pursuant to Section 23 of the CEA, as well as determining the 
monetary sanctions on which awards are based.\5\ The Commission 
proposes to interpret the ``action'' to include all defendants or 
respondents, and all claims, that are brought within that proceeding 
without regard to which specific defendants or respondents, or which 
specific claims, were included in the action as a result of the 
information that the whistleblower provided. This approach to 
determining the scope of an ``action'' appears consistent with the most 
common meaning of the term,\6\ will effectuate the purposes of Section 
23 by enhancing the incentives for individuals to come forward and 
report potential violations to the Commission,\7\ and will avoid the 
challenges associated with attempting to allocate monetary sanctions 
involving multiple individuals and claims based upon the select 
individuals and claims reported by whistleblowers.
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    \5\ See Proposed Rule 165.8.
    \6\ See Black's Law Dictionary 31 (8th ed. 2004) (defining an 
``action'' as ``a civil or criminal judicial proceeding''). Section 
23 of the CEA does not appear to contemplate the aggregation of 
separate judicial or administrative actions for purposes of 
determining whether the $1,000,000 threshold is satisfied, even if 
the actions arise out of a single investigation.
    \7\ This approach offers enhanced potential incentives for 
whistleblowers when compared to other similar programs because those 
programs have typically limited awards to successful claims that the 
whistleblower actually identified. See Rockwell International Corp. 
v. United States, 549 U.S. 457 (2007) (False Claims Act); John Doe 
v. United States, 65 Fed. Cl. 184 (2005) (Customs moiety statute, 19 
U.S.C. 1619); Internal Revenue Manual 25.2.2.2.8.A (under IRS 
whistleblower program, collected proceeds only include proceeds from 
the single issue identified by the whistleblower, or substantially 
similar improper activity).
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    The Commission requests comment on the proposed definition of the 
word ``action.'' Is it appropriate to pay whistleblower awards based on 
all monetary sanctions obtained in a single proceeding, even when the 
whistleblower's information did not concern all defendants or claims in 
that proceeding?
2. Proposed Rule 165.2(b) Aggregate Amount
    Proposed Rule 165.2(b) defines the phrase ``aggregate amount'' to 
mean the total amount of an award granted to one or more whistleblowers 
pursuant to Proposed Rule 165.7. The term is relevant for purposes of 
determining the amount of an award pursuant to Proposed Rule 165.8.
3. Proposed Rule 165.2(c) Analysis
    Under Section 23(a)(4) of the CEA, the original information 
provided by a whistleblower can include information that is derived 
from independent knowledge and also from independent ``analysis'' of a 
whistleblower. Proposed Rule 165.2(c) defines the term ``analysis'' to 
mean the whistleblower's examination and evaluation of information that 
may be generally available, but which reveals information that is not 
generally known or available to the public. This definition recognizes 
that there are circumstances where individuals can review publicly 
available information, and, through their additional evaluation and 
analysis, provide vital assistance to the Commission staff in 
understanding complex schemes and identifying potential violations of 
the CEA.
    The Commission requests comment on the definition of ``analysis.'' 
Is there a different or more specific definition of ``analysis'' that 
would better effectuate the purposes of Section 23 of the CEA?
4. Proposed Rule 165.2(d) Collected by the Commission
    Proposed Rule 165.2(d) defines the phrase ``collected by the 
Commission,'' when used in the context of deposits and credits into the 
Fund, to refer to a monetary sanction that is both collected by the 
Commission and is recorded as a payment receivable on the Commission's 
books and records. While the amount of a whistleblower award is based 
upon ``what has been collected of the monetary sanctions imposed in an 
action or related action,'' see Section 23(b), Congress used different 
language to describe the source of funding for whistleblower awards. 
Specifically, Congress states that the Fund will be financed through 
monetary sanctions ``collected by the Commission,'' meaning that 
deposits into the Fund are based only upon what the Commission actually 
collects. See Section 23(g)(3). The Commission generally collects civil 
monetary sanctions and disgorgement amounts in civil actions, or fines 
in administrative actions. A federal court or the Commission generally 
awards restitution to victims in civil and administrative actions, 
respectively, but the Commission does not ``collect'' restitution, 
i.e., restitution is not recorded as a payment receivable on the 
Commission's books and records. Consequently, restitution amounts 
collected in a covered action or related action will not be deposited 
into the Fund.
5. Proposed Rule 165.2(e) Covered Judicial or Administrative Action
    Proposed Rule 165.2(e) defines the phrase ``covered judicial or 
administrative action'' to mean any judicial or administrative action 
brought by the Commission under the CEA whose successful resolution 
results in monetary sanctions exceeding $1,000,000.
6. Proposed Rule 165.2(f) Fund
    Proposed Rule 165.2(f) defines the term ``Fund'' to mean the 
``Commodity Futures Trading Commission Customer Protection Fund'' 
established by Section 23(g) of the CEA. The Commission will use the 
Fund to pay whistleblower awards as provided in Proposed Rule 165.12 
and to finance customer education initiatives designed to help 
customers protect themselves against fraud and other violations of the 
CEA or the Commission's regulations.
7. Proposed Rule 165.2(g) Independent Knowledge
    Proposed Rule 165.2(g) defines ``independent knowledge'' as factual 
information in the whistleblower's possession that is not obtained from 
publicly available sources, which would include such sources as 
corporate filings, media, and the Internet. Importantly, the proposed 
definition of ``independent knowledge'' does not require that a 
whistleblower have direct, first-hand knowledge of potential 
violations. Instead, independent knowledge may be obtained from any of 
the whistleblower's experiences, observations, or communications 
(subject to the exclusion for knowledge obtained from public sources). 
Thus, for example, under Proposed Rule 165.2(g), a whistleblower would 
have ``independent knowledge'' of information even if that knowledge 
derives from facts or other information that has been conveyed to the 
whistleblower by third parties.
    The Commission preliminarily believes that defining ``independent

[[Page 75730]]

knowledge'' in this manner best effectuates the purposes of Section 23 
of the CEA. An individual may learn about potential violations of the 
CEA without being personally involved in the conduct. If an individual 
voluntarily comes forward with such information, and the information 
leads the Commission to a successful enforcement action (as defined in 
Proposed Rule 165.2(i)), that individual should be eligible to receive 
a whistleblower award.\8\
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    \8\ In addition, the distinction between ``independent 
knowledge'' (as knowledge not dependent upon publicly available 
sources) and direct, first-hand knowledge, is consistent with the 
approach courts have typically taken in interpreting similar 
terminology in the False Claims Act. Until this year, the ``public 
disclosure bar'' provisions of the False Claims Act defined an 
``original source'' of information, in part, as ``an individual who 
[had] direct and independent knowledge of the allegations of the 
information on which the allegations [were] based * * *.'' 31 U.S.C. 
3130(e)(4) (prior to 2010 amendments). Courts interpreting these 
terms generally defined ``independent knowledge'' to mean knowledge 
that was not dependent on public disclosures, and ``direct 
knowledge'' to mean first-hand knowledge from the relator's own work 
and experience, with no intervening agency. E.g., United States ex 
rel. Fried v. West Independent School District, 527 F.3d 439 (5th 
Cir. 2008); United States ex rel. Paranich v. Sorgnard, 396 F.3d 326 
(3d Cir. 2005). See generally John T. Boese, Civil False Claims and 
Qui Tam Actions Sec.  4.02[D][2] (Aspen Publishers) (2006) (citing 
cases). Earlier this year, Congress amended the ``public disclosure 
bar'' to, among other things, remove the requirement that a relator 
have ``direct knowledge'' of information. Sec. 10104(h)(2), Public 
Law 111-148, 124 Stat. 901 (Mar. 23, 2010).
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    Proposed Rule 165.2(g) further provides that an individual will not 
be considered to have ``independent knowledge'' in four other 
circumstances. The effect of these provisions would be to exclude 
individuals who obtain information under these circumstances from being 
eligible for whistleblower awards.
    The first exclusion contemplated is for information that was 
obtained through a communication that is subject to the attorney-client 
privilege. (Proposed Rule 165.2(g)(2) and (3).) Compliance with the CEA 
is promoted when individuals, corporate officers, Commission 
registrants and others consult with counsel about potential violations, 
and the attorney-client privilege furthers such consultation. This 
important benefit could be undermined if the whistleblower award 
program vitiated the public's perception of the scope of the attorney-
client privilege or created monetary incentives for counsel to disclose 
information about potential CEA violations that they learned of through 
privileged communications.
    The exception for knowledge obtained through privileged attorney-
client communications would not apply in circumstances where the 
disclosure of the information is otherwise permitted. This could 
include, for example, circumstances where the privilege has been 
waived, and where the privilege is not applicable because of a 
recognized exception such as the crime-fraud exception to the attorney-
client privilege.
    The second exclusion to ``independent knowledge'' in the proposed 
rule applies when a person with legal, compliance, audit, supervisory, 
or governance responsibilities for an entity receives information about 
potential violations, and the information was communicated to the 
person with the reasonable expectation that the person would take 
appropriate steps to cause the entity to remedy the violation.\9\ 
(Proposed Rule 165.2(g)(4).)
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    \9\ This exclusion has been adapted from case law holding that a 
disclosure to a supervisor who is in a position to remedy the 
wrongdoing is a protected disclosure for purposes of the federal 
Whistleblower Protection Act, 5 U.S.C. 2302(b)(8). E.g., Reid v. 
Merit Systems Protection Board, 508 F.3d 674 (Fed. Cir. 2007); 
Hooven-Lewis v. Caldera, 249 F.3d 259 (4th Cir. 2001).
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    The third exclusion is closely related to the second, and applies 
any other time that information is obtained from or through an entity's 
legal, compliance, audit, or similar functions or processes for 
identifying, reporting, and addressing potential non-compliance with 
applicable law. (Proposed Rule 165.2(g)(5).) However, each of these two 
exclusions ceases to be applicable, with the result that an individual 
may be deemed to have ``independent knowledge,'' and therefore may 
become a whistleblower, if the entity fails to disclose the information 
to the Commission within sixty (60) days or otherwise proceeds in bad 
faith.
    Compliance with the CEA is promoted when companies implement 
effective legal, audit, compliance, and similar functions. The 
rationale for these proposed exclusions is the concern that Section 23 
not be implemented in a way that would create incentives for persons 
involved in such functions, as well as other responsible persons who 
are informed of wrongdoing, to circumvent or undermine the proper 
operation of the entity's internal processes for investigating and 
responding to violations of law. Accordingly, under the proposed rule, 
officers, directors, employees, and others who learn of potential 
violations as part of their official duties in the expectation that 
they will take steps to address the violations, or otherwise from or 
through the various processes that companies employ to identify 
problems and advance compliance with legal standards, would not be 
permitted to use that knowledge to obtain a personal benefit by 
becoming whistleblowers.
    Nevertheless, if the entity failed to disclose the information to 
the Commission within sixty (60) days or otherwise proceeds in bad 
faith, the exclusion would no longer apply, thereby making an 
individual who knows this undisclosed information eligible to become a 
whistleblower. The rationale for this provision is that if the entity 
fails to report information concerning the violation to the Commission, 
it would be inconsistent with the purposes of Section 23 to continue to 
disable individuals with knowledge of the potential violations from 
coming forward and providing the information to the Commission. 
Furthermore, this provision provides a reasonable period of time for 
entities to report potential violations, thereby minimizing the 
potential of circumventing or undermining existing compliance programs.
    The fourth and final exclusion to ``independent knowledge'' in the 
proposed rule applies if the whistleblower obtains the information by 
means or in a manner that violates applicable federal or state criminal 
law. This exclusion is necessary to avoid the unintended effect of 
incentivizing criminal misconduct.
    The Commission requests comment on the definition of ``independent 
knowledge.'' Is it appropriate to include within the scope of the 
phrase ``independent knowledge'' knowledge that is not direct, first-
hand knowledge, but is instead learned from others, subject only to an 
exclusion for knowledge learned from publicly-available sources? Is it 
appropriate to exclude from the definition of ``independent knowledge'' 
information that is obtained through a communication that is protected 
by the attorney-client privilege? Are there other ways these rules 
should address privileged communications?
    The Commission also requests comment on the proposed exclusions for 
information obtained by a person with legal, compliance, audit, 
supervisory, or governance responsibilities for an entity under an 
expectation that the person would cause the entity to take steps to 
remedy the violation, and for information otherwise obtained from or 
through an entity's legal, compliance, audit, or similar functions. 
Does this exclusion strike the proper balance? Will the carve-out for 
situations where the entity fails to disclose the information within 
sixty

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(60) days promote effective self-policing functions and compliance with 
the law without undermining the operation of Section 23? Is sixty (60) 
days a ``reasonable time'' for the entity to disclose the information 
and, if not, what period should be specified (e.g., three months, six 
months, one year)? Are there alternative provisions the Commission 
should consider that would promote effective self-policing and self-
reporting while still being consistent with the goals and text of 
Section 23?
    Finally, the Commission seeks comment on whether there are other 
sources of knowledge that should or should not be deemed 
``independent'' for purposes of Section 23 and that should be 
specifically addressed by rule?
8. Proposed Rule 165.2(h) Independent Analysis
    Proposed Rule 165.2(h) defines the phrase ``independent analysis'' 
to mean the whistleblower's own analysis, whether done alone or in 
combination with others. The proposed rule thus recognizes that 
analysis--in particular academic or professional studies--is often the 
product of collaboration among two or more individuals. The phrase is 
relevant to the definition of ``original information'' in Proposed Rule 
165.2(k).
9. Proposed Rule 165.2(i) Information That Led to Successful 
Enforcement
    Under Section 23, a whistleblower's eligibility for an award 
depends in part on whether the whistleblower's original information 
``led to the successful enforcement'' of the Commission's covered 
judicial or administrative action or a related action. Proposed Rule 
165.2(i) defines when original information ``led to successful 
enforcement.''
    The Commission's enforcement practice generally proceeds in several 
stages. First, the staff opens an investigation based upon some 
indication of potential violations of the CEA and/or Commission 
regulations. Second, the staff conducts its investigation to gather 
additional facts in order to determine whether there is sufficient 
basis to recommend enforcement action. If so, the staff may recommend, 
and the Commission may authorize, the filing of an action. The 
definition in Proposed Rule 165.2(i) addresses the significance of the 
whistleblower's information to both the decision to open an 
investigation and the success of the resulting enforcement action. The 
proposed rule would distinguish between situations where the 
whistleblower's information causes the staff to begin an investigation 
or inquire about new or different conduct as part of a current 
investigation, and situations where the whistleblower provides 
information about conduct that is already under investigation. In the 
latter case, awards would be limited to the rare circumstances where 
the whistleblower provided essential information that the staff would 
not have otherwise obtained in the normal course of the investigation. 
Subparagraphs (1) and (2) of Proposed Rule 165.2(i) reflect these 
considerations.
    Subparagraph (1) of Proposed Rule 165.2(i) applies to situations 
where the staff is not already reviewing the conduct in question, and 
establishes a two-part test for determining whether ``original 
information'' voluntarily provided by a whistleblower led to successful 
enforcement of a Commission action. First, the information must have 
caused the staff to open an investigation, reopen an investigation that 
had been closed, or to inquire concerning new and different conduct as 
part of an open investigation. This does not necessarily contemplate 
that the whistleblower's information will be the only information that 
the staff obtains before deciding to proceed. However, the proposed 
rule would apply when the whistleblower gave the staff information 
about conduct that the staff is not already investigating or examining, 
and that information was the principal motivating factor behind the 
staff's decision to begin looking into the whistleblower's allegations.
    Second, if the whistleblower's information caused the Commission 
staff to start looking at the conduct for the first time, the proposed 
rule would require that the information ``significantly contributed'' 
to the success of an enforcement action filed by the Commission. The 
proposed rule includes this requirement because the Commission believes 
that it is not the intent of Section 23 to authorize whistleblower 
awards for any and all tips about conduct that led to the opening of an 
investigation if the resulting investigation concludes in a successful 
covered judicial or administrative action. Rather, implicit in the 
requirement in Section 23(b) that a whistleblower's information ``led 
to * * * successful enforcement'' is the further expectation that the 
information, because of its high quality, reliability, and specificity, 
had a meaningful connection to the Commission's ability to successfully 
complete its investigation and to either obtain a settlement or prevail 
in a litigated proceeding.
    At bottom, successful enforcement of a judicial or administrative 
action depends on the staff's ability to establish unlawful conduct by 
a preponderance of evidence. Thus, in order to have ``led to successful 
enforcement,'' the ``original information'' provided by a whistleblower 
should be connected to evidence that plays a significant role in 
successfully establishing the Commission's claim. For example, the 
``led to'' standard of Proposed Rule 165.2(i)(1) would be met if a 
whistleblower were to provide the Commission staff with strong, direct 
evidence of violations that supported one or more claims in a 
successful enforcement action. To give another example, a whistleblower 
whose information did not provide this degree of evidence in itself, 
but who played a critical role in advancing the investigation by 
leading the staff directly to evidence that provided important support 
for one or more of the Commission's claims could also receive an award, 
in particular if the evidence the whistleblower pointed to might have 
otherwise been difficult to obtain. A whistleblower who only provided 
vague information, or an unsupported tip, or evidence that was 
tangential and did not significantly help the Commission successfully 
establish its claims, would ordinarily not meet the standard of this 
proposed rule.
    If information that a whistleblower provides to the Commission 
consists of ``independent analysis'' (Proposed Rule 165.2(h)) rather 
than ``independent knowledge'' (Proposed Rule 165.2(g)), the evaluation 
of whether this analysis ``led to successful enforcement'' similarly 
would turn on whether it significantly contributed to the success of 
the action. This would involve, for example, considering the degree to 
which the analysis, by itself and without further investigation, 
indicated a high likelihood of unlawful conduct that was the basis, or 
was substantially the basis, for one or more claims in the Commission's 
enforcement action. The purpose of this provision is to ensure that the 
analysis provided to the Commission results in the efficiency and 
effectiveness benefits to the enforcement program that were intended by 
Congress. Thus, if a person provided analysis based upon readily 
available public information and the staff opened an inquiry based upon 
this analysis but was required to conduct significant additional 
analysis and investigation to conclude a successful enforcement action, 
the person would not be deemed to have provided ``independent 
analysis.''

[[Page 75732]]

    Subparagraph (2) of Proposed Rule 165.2(i) sets forth a separate, 
and higher, standard for cases in which a whistleblower provides 
original information to the Commission about conduct that is already 
under investigation by the Commission, Congress, any other federal, 
state, or local authority, any self-regulatory organization, or the 
Public Company Accounting Oversight Board. In this situation, the 
information will be considered to have led to the successful 
enforcement of a judicial or administrative action if the information 
would not have otherwise been obtained and was essential to the success 
of the action.\10\ Although the Commission believes that awards under 
Section 23 generally should be limited to cases where whistleblowers 
provide original information about violations that are not already 
under investigation,\11\ there may be rare circumstances where 
information received from a whistleblower in relation to an ongoing 
investigation is so significant for the success of a Commission action 
that a whistleblower award should be considered. For example, a 
whistleblower who is not within the scope of the staff's investigation, 
but who nonetheless has access to, and comes forward with a document 
that had been concealed from the staff, and that establishes proof of 
wrongdoing that is critical to the Commission's ability to sustain its 
burden of proof, provides the type of assistance that should be 
considered for an award without regard to whether the staff was already 
investigating the conduct at the time the document was provided. The 
Commission anticipates applying Proposed Rule 165.2(i) in a strict 
fashion, however, such that awards under the proposed rule would be 
exceedingly rare.
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    \10\ The proposed rule also makes clear that subparagraph (2) of 
Proposed Rule 165.2(i) does not apply when a whistleblower provides 
information to the Commission about a matter that is already under 
investigation by another authority if the whistleblower is the 
``original source'' for that investigation under Proposed Rule 
165.2(l)). In those circumstances, subparagraph (1) of Proposed Rule 
165.2(i) would govern the Commission's analysis.
    \11\ See Lacy v. United States, 221 Ct. Cl. 526 (1979); cf. 
United States ex rel. Merena v. Smith-Kline Beecham Corp., 205 F.3d 
97 (3d Cir. 2000).
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    In considering the relationship between information obtained from a 
whistleblower and the success of a covered judicial or administrative 
action, the Commission will take into account the difference between 
settled and litigated actions. Specifically, in a litigated action the 
whistleblower's information must significantly contribute, or, in the 
case of conduct that is already under investigation, be essential, to 
the success of a claim on which the Commission prevails in litigation. 
For example, if a court finds in favor of the Commission on a number of 
claims in an enforcement action, but rejects the claims that are based 
upon the information the whistleblower provided, the whistleblower 
would not be considered eligible to receive an award.\12\ By contrast, 
in a settled action the Commission would consider whether the 
whistleblower's information significantly contributed, or was 
essential, to allegations included in the Commission's federal court 
complaint, or to factual findings in the Commission's administrative 
order.
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    \12\ As discussed below, however, if the Commission prevails on 
a claim that is based upon the information the whistleblower 
provided, and if all the conditions for an award are otherwise 
satisfied, the award to the whistleblower would be based upon all of 
the monetary sanctions obtained as a result of the action. See 
Proposed Rule 165.8.
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    The Commission requests comment on the proposed standard for when 
original information voluntarily provided by a whistleblower ``led to'' 
successful enforcement action. Is the proposed standard appropriate?
    The Commission also requests comment on cases where the original 
information provided by the whistleblower caused the staff to begin 
looking at conduct for the first time. Should the standard also require 
that the whistleblower's information ``significantly contributed'' to a 
successful enforcement action? If not, what standards should be used in 
the evaluation? If yes, should the proposed rule define with greater 
specificity when information ``significantly contributed'' to 
enforcement action? In what way should the phrase be defined?
    Finally, the Commission requests comment on the proposal in 
Subparagraph (i)(2), which would consider that a whistleblower's 
information ``led to'' successful enforcement even in cases where the 
whistleblower gave the Commission original information about conduct 
that was already under investigation. Is this proposal appropriate? 
Should the Commission's evaluation turn on whether the whistleblower's 
information would not otherwise have been obtained and was essential to 
the success of the action? If not, what other standard(s) should apply?
10. Proposed Rule 165.2(j) Monetary Sanctions
    Proposed Rule 165.2(j) defines the phrase ``monetary sanctions,'' 
when used with respect to any judicial or administrative action, to 
mean (1) any monies, including penalties, disgorgement, restitution, 
and interest ordered to be paid; and (2) any monies deposited into a 
disgorgement fund or other fund pursuant to Section 308(b) of the 
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a result of such 
action or any settlement of such action. This phrase is relevant to the 
definition of ``covered judicial or administrative action'' in Proposed 
Rule 165.2(d) and to the amount of a whistleblower award under Proposed 
Rule 165.8.
11. Proposed Rule 165.2(k) Original Information and Proposed Rule 
165.2(l) Original Source
    Proposed Rule 165.2(k) tracks the definition of ``original 
information'' set forth in Section 23(a)(4) of the CEA.\13\ ``Original 
information'' means information that is derived from the 
whistleblower's independent knowledge or analysis; is not already known 
to the Commission from any other source, unless the whistleblower is 
the original source of the information; and is not exclusively derived 
from an allegation made in a judicial or administrative hearing, in a 
governmental report, hearing, audit, or investigation, or from the news 
media, unless the whistleblower is a source of the information. 
Consistent with Section 23(l) of the CEA, the Dodd-Frank Act authorizes 
the Commission to pay whistleblower awards on the basis of original 
information that is submitted prior to the effective date of final 
rules implementing Section 23 (assuming that all of the other 
requirements for an award are met); the Dodd-Frank Act does not 
authorize the Commission to apply Section 23 retroactively to pay 
awards based upon information submitted prior to the enactment date of 
the statute.\14\ Consistent with Congress's intent, Proposed Rule 
165.2(k)(4) also requires that ``original information'' be provided to 
the Commission for the first time after July 21, 2010 (the date of 
enactment of the Dodd-Frank Act).
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    \13\ 7 U.S.C. 26(a)(4).
    \14\ Section 23(k) of the CEA directs that: ``Information 
submitted to the Commission by a whistleblower in accordance with 
rules or regulations implementing this section shall not lose its 
status as original information solely because the whistleblower 
submitted such information prior to the effective date of such rules 
or regulations, provided that such information was submitted after 
the date of enactment of the Wall Street Transparency and 
Accountability Act of 2010.''
---------------------------------------------------------------------------

    Under the statutory definition of ``original information,'' a 
whistleblower who provides information that the Commission already 
knows from another source has not provided original information, unless 
the whistleblower is

[[Page 75733]]

the ``original source'' of that information. Proposed Rule 165.2(l) 
defines the term ``original source,'' which will be used in the 
definition of ``original information.'' Under the proposed rule, a 
whistleblower is an ``original source'' of the same information that 
the Commission obtains from another source if the other source obtained 
the information from the whistleblower or his representative. The 
whistleblower bears the burden of establishing that he is the original 
source of information.
    In Commission investigations, this situation may arise if the staff 
receives a referral from another authority such as the Department of 
Justice, a self-regulatory organization, or another organization that 
is identified in the proposed rule. On occasion, the situation may also 
arise that the ``original source'' of information shares his 
information with another person, and such other person files a 
whistleblower claim with the Commission prior to the original source 
filing a claim for whistleblower status. In these circumstances, the 
proposed rule would credit a whistleblower as being the ``original 
source'' of information on which the referral was based as long as the 
whistleblower ``voluntarily'' provided the information to the other 
authority within the meaning of these rules; i.e., the whistleblower or 
his representative must have come forward and given the other authority 
the information before receiving any request, inquiry, or demand to 
which the information was relevant, or was the individual who 
originally possessed either the independent knowledge or conducted the 
independent analysis.
    As is described elsewhere in these proposed rules, a whistleblower 
will need to submit two forms, a Form TCR (``Tip, Complaint or 
Referral'') and Form WB-DEC (``Declaration Concerning Original 
Information Provided Pursuant to Section 23 of the Commodity Exchange 
Act'') in order to start the process and establish the whistleblower's 
eligibility for award consideration.\15\ A whistleblower who either 
provides information to another authority first, or who shared his 
independent knowledge or analysis with another who is also claiming to 
be a whistleblower, will need to follow these same procedures and 
submit the necessary forms to the Commission in order to perfect his 
status as a whistleblower under the Commission's whistleblower program. 
However, under Proposed Rule 165.2(l)(2), as long as the whistleblower 
submits the necessary forms to the Commission within 90 days after he 
provided the information to the other authority, or 90 days after the 
other person claiming to be a whistleblower submits his claim to the 
Commission, the Commission will consider the whistleblower's submission 
to be effective.
---------------------------------------------------------------------------

    \15\ See Proposed Rule 165.3.
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    As noted above, the whistleblower must establish that he is the 
original source of the information provided to the other authority as 
well as the date of his submission, but the Commission may seek 
confirmation from the other authority, or any other source, in making 
this determination. The objective of this procedure is to provide 
further incentive for persons with knowledge of CEA violations to come 
forward (consistent with the purposes of Section 23) by assuring 
potential whistleblowers that they can provide information to 
appropriate Government or regulatory authorities, and their ``place in 
line'' will be protected in the event that other whistleblowers later 
provide the same information directly to the Commission.
    For similar reasons, the proposed rule extends the same protection 
to whistleblowers who provide information about potential violations to 
the persons specified in Proposed Rule 165.2(g)(3) and (4) (i.e., 
personnel involved in compliance or similar functions, or who are 
informed about potential violations with the expectation that they will 
take steps to address them), and who, within 90 days, submit the 
necessary whistleblower forms to the Commission. Compliance with the 
CEA is promoted when companies have effective programs for identifying, 
correcting, and self-reporting unlawful conduct by company officers or 
employees. The objective of this provision is to support, not 
undermine, the effective functioning of company compliance and related 
systems by allowing employees to take their concerns about potential 
violations to appropriate company officials while still preserving 
their rights under the Commission's whistleblower program.
    Proposed Rule 165.2(l)(3) addresses circumstances where the 
Commission already possesses some information about a matter at the 
time that a whistleblower provides additional information about the 
same matter. The whistleblower will be considered the ``original 
source'' of any information that is derived from his independent 
knowledge or independent analysis and that materially adds to the 
information that the Commission already possesses. The standard is 
modeled after the definition of ``original source'' that Congress 
included in the False Claims Act through amendments earlier this 
year.\16\
---------------------------------------------------------------------------

    \16\ 31 U.S.C. 3730(e)(4)(B), Public Law 111-148 Sec.  
10104(h)(2), 124 Stat. 901 (Mar. 23. 2010).
---------------------------------------------------------------------------

    The Commission requests comment on all aspects of the definitions 
of ``original information'' and ``original source'' set forth in 
Proposed Rules 165.2(k) and (l). Is the provision that would credit 
individuals with providing original information to the Commission, as 
of the date of their submission to another Governmental or regulatory 
authority, or to company legal, compliance, or audit personnel, 
appropriate? In particular, does the provision regarding the providing 
of information to a company's legal, compliance, or audit personnel 
appropriately accommodate the internal compliance process?
    The Commission also requests comment on whether the ninety (90) day 
deadline for submitting Forms TCR and WB-DEC to the Commission (after 
initially providing information about violations or potential 
violations to another authority or the employer's legal, compliance, or 
audit personnel) is the appropriate time frame? Should there be 
different time frames for disclosures to other authorities and 
disclosures to an employer's legal, compliance or audit personnel?
12. Proposed Rule 165.2(m) Related Action
    The phrase ``related action,'' when used with respect to any 
judicial or administrative action brought by the Commission under the 
CEA, means any judicial or administrative action brought by an entity 
listed in Proposed Rule 165.11(a) that is based upon the original 
information voluntarily submitted by a whistleblower to the Commission 
pursuant to Proposed Rule 165.3 that led to the successful resolution 
of the Commission action. This phrase is relevant to the Commission's 
determination of the amount of a whistleblower award under Proposed 
Rules 165.8 and 165.11.
13. Proposed Rule 165.2(n) Successful Resolution or Successful 
Enforcement
    Proposed Rule 165.2(n) defines the phrase ``successful 
resolution,'' when used with respect to any judicial or administrative 
action brought by the Commission under the Commodity Exchange Act, to 
include any settlement of such action or final judgment in favor of the 
Commission. It shall also have the same meaning as ``successful 
enforcement.'' This phrase is relevant to the definition of the phrase 
``covered

[[Page 75734]]

judicial or administrative action'' as set forth in Proposed Rule 
165.2(e).
14. Proposed Rule 165.2(o) Voluntary Submission or Voluntarily 
Submitted
    Under Section 23(b)(1) of the CEA,\17\ whistleblowers are eligible 
for awards only when they provide original information to the 
Commission ``voluntarily.'' Proposed Rule 165.2(o) would define 
``voluntary submission'' or ``voluntarily submitted'' in the context of 
submission to the Commission of original information as a 
whistleblower's provision of information to the Commission before 
receipt by the whistleblower (or anyone representing the whistleblower, 
including counsel) of any request, inquiry, or demand from the 
Commission, Congress, any other federal, state or local authority, or 
any self-regulatory organization about a matter to which the 
information in the whistleblower's submission is relevant. The fact 
that such request, inquiry or demand is not compelled by subpoena or 
other applicable law, does not render a subsequent submission 
voluntary.
---------------------------------------------------------------------------

    \17\ 7 U.S.C. 26(b)(1).
---------------------------------------------------------------------------

    Proposed Rule 165.2(o) would make clear that, in order to have 
acted ``voluntarily'' under the statute, a whistleblower must do more 
than merely provide the Commission with information that is not 
compelled by subpoena (or by a court order following a Commission 
action to enforce a subpoena) or by other applicable law.\18\ Rather, 
the whistleblower or his representative (such as an attorney) must come 
forward with the information before receiving any request, inquiry, or 
demand from the Commission staff or from any other investigating 
authority described in the proposed rule about a matter to which the 
whistleblower's information is relevant. A request, inquiry, or demand 
that is directed to an employer is also considered to be directed to 
employees who possess the documents or other information that is 
necessary for the employer to respond. Accordingly, a subsequent 
whistleblower submission from any such employee will not be considered 
``voluntary'' for purposes of the rule, and the employee will not be 
eligible for award consideration, unless the employer fails to provide 
the employee's documents or information to the requesting authority 
within sixty (60) days.
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    \18\ Various books and records provisions of the CEA and 
Commission regulations generally require registrants to furnish 
records to the Commission upon request. See e.g., Section 4(g) of 
the CEA, 7 U.S.C. 6(g).
---------------------------------------------------------------------------

    This approach is consistent with the statutory purpose of creating 
a strong incentive for whistleblowers to come forward early with 
information about possible violations of the CEA rather than wait until 
Government or other official investigators ``come knocking on the 
door.'' \19\ This approach is also consistent with the approach federal 
courts have taken in determining whether a private plaintiff, suing on 
behalf of the Government under the qui tam provisions of the False 
Claims Act, ``voluntarily'' provided information about the false or 
fraudulent claims to the Government before filing suit.\20\
---------------------------------------------------------------------------

    \19\ See S. Rep. No. 111-176 at 110 (2010) (discussing Section 
922 of the Dodd-Frank Act, which establishes ``Securities 
Whistleblower Incentives and Protection'' similar to the ``Commodity 
Whistleblower Incentives and Protection'' in Section 748; ``The 
Whistleblower Program aims to motivate those with inside knowledge 
to come forward and assist the Government to identify and prosecute 
persons who have violated securities laws * * *.'').
    \20\ See United States ex rel. Barth v. Ridgedale Electric, 
Inc., 44 F.3d 699 (8th Cir. 1994); United States ex rel. Paranich v. 
Sorgnard, 396 F.3d 326 (3d Cir. 2005); United States ex rel. Fine v. 
Chevron, USA, Inc., 72 F.3d 740 (9th Cir. 1995), cert. denied, 517 
U.S.1233 (1996) (rejecting argument that provision of information to 
the Government is always voluntary unless compelled by subpoena). 
The qui tam provisions of the False Claims Act include a ``public 
disclosure bar,'' which, as recently amended, requires a court to 
dismiss a private action or claim if substantially the same 
allegations or transactions as alleged in the action or claim were 
publicly disclosed in certain fora, unless the Government opposes 
dismissal or the plaintiff is an ``original source'' of the 
information. 31 U.S.C. 3730(e)(4). An ``original source'' is further 
defined, in part, with reference to whether the plaintiff 
``voluntarily'' disclosed the information to the Government before 
filing suit. Id. Because the qui tam provisions of the False Claims 
Act have played a significant role in the development of 
whistleblower law generally, and because some of the terminology 
used by Congress in Section 23 has antecedents in the False Claims 
Act, the Commission believes that precedent under the False Claims 
Act can provide helpful guidance in the interpretation of Section 23 
of the CEA. At the same time, because the False Claims Act and 
Section 23 serve different purposes, are structured differently, and 
the two statutes may use the same words in different contexts, the 
Commission does not view False Claims Act precedent as necessarily 
controlling or authoritative in all circumstances for purposes of 
Section 23 of the CEA.
---------------------------------------------------------------------------

    Disclosure to the Government should also not be considered 
voluntary if the individual has a pre-existing legal or contractual 
duty to report violations of the type at issue to the Commission, 
Congress, any other federal or state authority, or any self-regulatory 
organization.\21\ Thus, for example, Section 23(c)(2) of the CEA \22\ 
prohibits awards to members, officers, or employees of an appropriate 
regulatory agency, the Department of Justice, a registered entity, a 
registered futures association, or a self-regulatory organization. The 
Commission anticipates that other similarly-situated persons should not 
be eligible for award consideration if they are under a pre-existing 
legal duty to report the information to the Commission or to any of the 
other authorities described above. Proposed Rule 165.2(o) accomplishes 
this goal by providing that submissions from such individuals will not 
be considered voluntary for purposes of Section 23 of the CEA. Proposed 
Rule 165.2(o) also includes a similar exclusion for information that 
the whistleblower is contractually obligated to provide. This exclusion 
is intended to preclude awards to persons who provide information 
pursuant to preexisting agreements that obligate them to assist 
Commission staff or other investigative authorities.
---------------------------------------------------------------------------

    \21\ See United States ex rel. Biddle v. Board of Trustees of 
The Leland Stanford, Jr. University, 161 F.3d 533 (9th Cir. 1998), 
cert. denied, 526 U.S. 1066 (1999); United States ex rel. Schwedt v. 
Planning Research Corp., 39 F. Supp. 2d 28 (D.D.C. 1999).
    \22\ 15 U.S.C. 78u-6(c)(2).
---------------------------------------------------------------------------

    The Commission requests comment on the definition of 
``voluntarily.'' Does Proposed Rule 165.2(o) appropriately define the 
circumstances when a whistleblower should be considered to have acted 
``voluntarily'' in providing information about CEA or Commission 
regulation violations to the Commission? Are there other circumstances 
not clearly included that should be in the rule? Is it appropriate for 
the proposed rule to consider a request or inquiry directed to an 
employer to be directed at individual employees who possess the 
documents or other information needed for the employer's response? 
Should the persons who are considered to be within the scope of an 
inquiry be narrowed or expanded? Will the carve-out that permits such 
an employee to become a whistleblower if the employer fails to disclose 
the information the employee provided within sixty (60) days promote 
compliance with the law and the effective operation of Section 23? Is 
sixty (60) days a ``reasonable time'' for employers to disclose the 
information the employee provided, or should a different period be 
specified (e.g., three months, six months, one year)?
    The Commission also requests comment on the standard described in 
Proposed Rule 165.2(o) that would credit an individual with acting 
``voluntarily'' in circumstances where the individual was aware of 
fraudulent conduct for an extended period of time, but chose not to 
come forward as a whistleblower until after he became aware of a 
governmental investigation (such as by observing document requests 
being served on his employer or colleagues, but before he received an

[[Page 75735]]

inquiry, request, or demand himself, assuming that he was not within 
the scope of an inquiry directed to his employer). Is this an 
appropriate result, and, if not, how should the proposed rule be 
modified to account for it?
    Finally, the Commission seeks Comment on the exclusion set forth in 
Proposed Rule 165.2(o) for information provided pursuant to a pre-
existing legal or contractual duty to report violations. Is the 
exclusion appropriate? Should the exclusion be expanded to other forms 
of duties such as ethical duties or duties imposed by codes of conduct?
15. Proposed Rule 165.2(p) Whistleblower(s)
    The term ``whistleblower'' is defined in Section 23(a)(7) of the 
CEA.\23\ Consistent with this language, Proposed Rule 165.2(p) would 
define a whistleblower as an individual who, alone or jointly with 
others, provides information to the Commission relating to a potential 
violation of the CEA. A company or another entity is not eligible to 
receive a whistleblower award. This definition tracks the statutory 
definition of a ``whistleblower,'' except that the proposed rule uses 
the term ``potential violation'' in order to make clear that the 
whistleblower anti-retaliation protections set forth in Section 23(h) 
of the CEA do not depend on an ultimate adjudication, finding or 
conclusion that conduct identified by the whistleblower constituted a 
violation of the CEA.
---------------------------------------------------------------------------

    \23\ 7 U.S.C. 26(a)(7).
---------------------------------------------------------------------------

    Proposed Rule 165.2(p) (and Proposed Rule 165.6(b)) would further 
make clear that the anti-retaliation protections set forth in Section 
23(h) of the CEA apply irrespective of whether a whistleblower 
satisfies all the procedures and conditions to qualify for an award 
under the Commission's whistleblower program. Section 23(h)(1)(A) of 
the CEA prohibits employment retaliation against a whistleblower who 
provides information to the Commission (i) ``in accordance with this 
section,'' or (ii) ``in assisting in any investigation or judicial or 
administrative action of the Commission based upon or related to such 
information.'' The Commission interprets the statute as designed to 
extend the protections against employment retaliation that are provided 
for in Section 23(h)(1) to any individual who provides information to 
the Commission about potential violations of the CEA regardless of 
whether the person satisfies procedures and conditions necessary to 
qualify for an award under the Commission's whistleblower program.
    The Commission requests comment on whether the anti-retaliation 
protections set forth in Section 23(h)(1) of the CEA should be applied 
broadly to any person who provides information to the Commission 
concerning a potential violation of the CEA, or should they be limited 
by the various procedural or substantive prerequisites to consideration 
for a whistleblower award? Should the application of the anti-
retaliation provisions be limited or broadened in any other ways?

C. Proposed Rule 165.3--Procedures for Submitting Original Information

    The Commission proposes a two-step process for the submission of 
original information under the whistleblower award program. In general, 
the first step would require the submission of the standard form on 
which the information concerning potential violations of the CEA are 
reported. The second step would require the whistleblower to complete a 
unique form, signed under penalties of perjury (consistent with Section 
23(m) of the CEA), in which the whistleblower would be required to make 
certain representations concerning the veracity of the information 
provided and the whistleblower's eligibility for a potential award. The 
use of standardized forms will greatly assist the Commission in 
managing and tracking the thousands of tips that it receives annually. 
This will also better enable the Commission to connect tips to each 
other so as to make better use of the information provided, and to 
connect tips to requests for payment under the whistleblower 
provisions. The purpose of requiring a sworn declaration is to help 
deter the submission of false and misleading tips and the resulting 
inefficient use of the Commission's resources. The requirement should 
also mitigate the potential harm to companies and individuals that may 
be caused by false or spurious allegations of wrongdoing.
    As set forth in Proposed Rule 165.5, Commission staff may also 
request testimony and additional information from a whistleblower 
relating to the whistleblower's eligibility for an award.
1. Form TCR and Instructions
    Subparagraph (a) of Proposed Rule 165.3 requires the submission of 
information to the Commission on proposed Form TCR. The Form TCR, 
``Tip, Complaint or Referral,'' and the instructions thereto, are 
designed to capture basic identifying information about a complainant 
and to elicit sufficient information to determine whether the conduct 
alleged suggests a violation of the CEA.
2. Form WB-DEC and Instructions
    In addition to Form TCR, the Commission proposes in subparagraph 
(b) of Proposed Rule 165.3 to require that whistleblowers who wish to 
be considered for an award in connection with the information they 
provide to the Commission also complete and provide the Commission with 
proposed Form WB-DEC, ``Declaration Concerning Original Information 
Provided Pursuant to Section 23 of the Commodity Exchange Act.'' 
Proposed Form WB-DEC would require a whistleblower to answer certain 
threshold questions concerning the whistleblower's eligibility to 
receive an award. The form also would contain a statement from the 
whistleblower acknowledging that the information contained in the Form 
WB-DEC, as well as all information contained in the whistleblower's 
Form TCR, is true, correct and complete to the best of the 
whistleblower's knowledge, information and belief. Moreover, the 
statement would acknowledge the whistleblower's understanding that the 
whistleblower may be subject to prosecution and ineligible for an award 
if, in the whistleblower's submission of information, other dealings 
with the Commission, or dealings with another authority in connection 
with a related action, the whistleblower knowingly and willfully makes 
any false, fictitious, or fraudulent statements or representations, or 
uses any false writing or document knowing that the writing or document 
contains any false, fictitious, or fraudulent statement or entry.
    In instances where information is provided by an anonymous 
whistleblower, proposed subparagraph (c) of Proposed Rule 165.3 would 
require that the whistleblower's identity must be disclosed to the 
Commission and verified in a form and manner acceptable to the 
Commission consistent with the procedure set forth in Proposed Rule 
165.7(c) prior to Commission's payment of any award.
    The Commission proposes to allow two alternative methods of 
submission of Form TCRs and WB-DEC. A whistleblower would have the 
option of submitting a Form TCR electronically through the Commission's 
website, or by mailing or faxing the form to the Commission. Similarly, 
a Form WB-DEC could be submitted electronically, in accordance with 
instructions set forth on the Commission's website or, alternatively, 
by mailing or faxing the form to the Commission.

[[Page 75736]]

3. Perfecting Whistleblower Status for Submissions Made Before 
Effectiveness of the Rules
    As previously discussed, Section 748(k) of Dodd-Frank Act states 
that information submitted to the Commission by a whistleblower after 
the date of enactment, but before the effective date of these proposed 
rules, retains the status of original information. The Commission has 
already received tips from potential whistleblowers after the date of 
enactment of the Dodd-Frank Act. Proposed Rule 165.3(d) would provide a 
mechanism by which potential whistleblowers who provide tips between 
enactment of the Dodd-Frank Act and the effective date of the final 
rules could perfect their status as whistleblowers under the 
Commission's award program once final rules are adopted. Subparagraph 
(d)(1) requires a whistleblower who provided original information to 
the Commission in a format or manner other than a Form TCR to submit a 
completed Form TCR within one hundred twenty (120) days of the 
effective date of the proposed rules and to otherwise follow the 
procedures set forth in subparagraphs (a) and (b) of Proposed Rule 
165.3. If the whistleblower provided the original information to the 
Commission in a Form TCR, subparagraph (d)(2) would require the 
whistleblower to submit Form WB-DEC within one hundred twenty (120) 
days of the effective date of the proposed rules in the manner set 
forth in subparagraph (b) of Proposed Rule 165.3.
    Although the Commission is proposing alternative methods of 
submission of the Form TCR and WB-DEC, it expects that electronic 
submissions would dramatically reduce the administrative costs, enhance 
ability to evaluate tips (generally and using automated tools), and 
improve efficiency in processing whistleblower submissions. 
Accordingly, the Commission solicits comment on whether it would be 
appropriate to eliminate the fax and mail option and require that all 
submissions of proposed Form TCRs and WB-DEC be made electronically. 
Would the elimination of submissions by fax and mail create an undue 
burden for some potential whistleblowers who may not have easy access 
to a computer or who may prefer to submit their information in that 
manner? Is there other information that the Commission should elicit 
from whistleblowers on Form TCRs and WB-DEC? Are there categories of 
information included on these forms that are unnecessary, or should be 
modified?
    The Commission also requests comment on whether the requirement 
that an attorney for an anonymous whistleblower certify that the 
attorney has verified the whistleblower's identity and eligibility for 
an award is appropriate? Is there an alternative process the Commission 
should consider that would accomplish its goal of ensuring that it is 
communicating with a legitimate whistleblower?
    Finally, the Commission seeks comment on whether the Commission's 
proposed process for allowing whistleblowers 120 days to perfect their 
status in cases where the whistleblower provided original information 
to the Commission in writing after the date of enactment of the Dodd-
Frank Act but before adoption of the proposed rules is reasonable? 
Should the period be made shorter (e.g., 30 or 60 days) or longer 
(e.g., 180 days)?

D. Proposed Rule 165.4--Confidentiality

    Proposed Rule 165.4 summarizes the confidentiality requirements set 
forth in Section 23(h)(2) of the CEA \24\ with respect to information 
that could reasonably be expected to reveal the identity of a 
whistleblower. As a general matter, it is the Commission's policy and 
practice to treat all information obtained during its investigations as 
confidential and nonpublic. Disclosures of enforcement-related 
information to any person outside the Commission may only be made as 
authorized by the Commission and in accordance with applicable laws and 
regulations. Consistent with Section 23(h)(2), the proposed rule 
explains that the Commission will not reveal the identity of a 
whistleblower or disclose other information that could reasonably be 
expected to reveal the identity of a whistleblower, except under 
circumstances described in the statute and the rule.\25\ As is further 
explained below, there may be circumstances in which disclosure of 
information that identifies a whistleblower will be legally required or 
will be necessary for the protection of investors.
---------------------------------------------------------------------------

    \24\ 7 U.S.C. 26(h)(2).
    \25\ Section 23(h)(2)(A) provides that the Commission shall not 
disclose any information, including that provided to the 
whistleblower to the Commission, which could reasonably be expected 
to reveal the identity of the whistleblower, except in accordance 
with the provisions of Section 552a of title 5, United States Code, 
unless and until required to be disclosed to a defendant or 
respondent in connection with a public proceeding instituted by the 
Commission or governmental organizations described subparagraph (C).
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    Subparagraph (a)(1) of the proposed rule would authorize disclosure 
of information that could reasonably be expected to reveal the identity 
of a whistleblower when disclosure is required to a defendant or 
respondent in a public proceeding that the Commission files or in 
another public action or a public proceeding filed by an authority to 
which the Commission is authorized to provide the information. For 
example, in a related action brought as a criminal prosecution by the 
Department of Justice, disclosure of a whistleblower's identity may be 
required, in light of the requirement of the Sixth Amendment of the 
Constitution that a criminal defendant have the right to be confronted 
with witnesses against him.\26\ Subparagraph (a)(2) would authorize 
disclosure to: The Department of Justice; an appropriate department or 
agency of the Federal Government, acting within the scope of its 
jurisdiction; a registered entity, registered futures association, a 
self-regulatory organization; a state attorney general in connection 
with a criminal investigation; any appropriate state department or 
agency, acting within the scope of its jurisdiction; or a foreign 
futures authority.
---------------------------------------------------------------------------

    \26\ See U.S. Const. Amend. VI.
---------------------------------------------------------------------------

    Because many whistleblowers may wish to provide information 
anonymously, subparagraph (b) of the proposed rule, consistent with 
Section 23(d) of the CEA, states that anonymous submissions are 
permitted with certain specified conditions. Subparagraph (b) would 
require that anonymous whistleblowers who submit information to the 
Commission must follow the procedure in Proposed Rule 165.3(c) for 
submitting original information anonymously. Further, anonymous 
whistleblowers would be required to follow the procedures set forth in 
Proposed Rule 165.7(c) requiring that the whistleblower's identity be 
disclosed to the Commission and verified in a form and manner 
acceptable to the Commission prior to Commission's payment of any 
award.
    The purpose of this requirement is to prevent fraudulent 
submissions and to facilitate communication and assistance between the 
whistleblower and the Commission's staff. Any whistleblower may be 
represented by counsel--whether submitting information anonymously or 
not.\27\ The Commission emphasizes that anonymous whistleblowers have 
the same rights and responsibilities as other whistleblowers under 
Section 23 of the CEA and these

[[Page 75737]]

proposed rules, unless expressly exempted.
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    \27\ See Section 23(d)(1), 7 U.S.C. 26(d)(1). Under the statute, 
however, an anonymous whistleblower seeking an award is required to 
be represented by counsel. Section 23(d)(2), 7 U.S.C. 26(d)(2).
---------------------------------------------------------------------------

E. Proposed Rule 165.5--Prerequisites to the Consideration of an Award

    Proposed Rule 165.5 summarizes the general prerequisites for 
whistleblowers to be considered for the payment of awards set forth in 
Section 23(b)(1) of the CEA. As set forth in the statute, subparagraph 
(a) states that, subject to the eligibility requirements in the 
Regulations, the Commission will pay an award or awards to one or more 
whistleblowers who voluntarily provide the Commission with original 
information that led to the successful resolution of a covered 
Commission judicial or administrative action or the successful 
enforcement of a related action by: the Department of Justice; an 
appropriate department or agency of the Federal Government, acting 
within the scope of its jurisdiction; a registered entity, registered 
futures association, a self regulatory organization; a state attorney 
general in connection with a criminal investigation; any appropriate 
state department or agency, acting within the scope of its 
jurisdiction; or a foreign futures authority.
    Subparagraph (b) of Proposed Rule 165.5 emphasizes that, in order 
to be eligible, the whistleblower must have submitted to the Commission 
original information in the form and manner required by Proposed Rule 
165.3. The whistleblower must also provide the Commission, upon its 
staff's request, certain additional information, including: 
explanations and other assistance, in the manner and form that staff 
may request, in order that the staff may evaluate the use of the 
information submitted; all additional information in the 
whistleblower's possession that is related to the subject matter of the 
whistleblower's submission; and testimony or other evidence acceptable 
to the staff relating to the whistleblower's eligibility for an award. 
Subparagraph (b) of Proposed Rule 165.5 further requires that, to be 
eligible for an award, a whistleblower must, if requested by Commission 
staff, enter into a confidentiality agreement in a form acceptable to 
the Commission, including a provision that a violation of the 
confidentiality agreement may lead to the whistleblower's ineligibility 
to receive an award.
    The terms ``whistleblower,'' ``voluntarily,'' ``original 
information,'' ``led to successful enforcement,'' ``action,'' and 
``monetary sanctions'' are defined in Proposed Rule 165.2.

F. Proposed Rule 165.6--Whistleblowers Ineligible for an Award

    Subparagraph (a) of Proposed Rule 165.6 recites the categories of 
individuals who are statutorily ineligible for an award under Section 
23 of the CEA. These include persons who are, or were at the time they 
acquired the original information a member, officer, or employee of: 
the Commission; the Board of Governors of the Federal Reserve System; 
the Office of the Comptroller of the Currency; the Board of Directors 
of the Federal Deposit Insurance Corporation; the Director of the 
Office of Thrift Supervision; the National Credit Union Administration 
Board; the Securities and Exchange Commission; the Department of 
Justice; a registered entity; a registered futures association; a self-
regulatory organization; or a law enforcement organization. Further 
Proposed Rule 165.6(a)(2) makes clear that no award will be made to any 
whistleblower who is convicted of a criminal violation related to the 
judicial or administrative action for which the whistleblower otherwise 
could receive an award under Proposed Rule 165.7.
    In order to prevent evasion of these exclusions, subparagraph 
(a)(3) of the proposed rule also provides that persons who acquire 
information from ineligible individuals are ineligible for an award. 
Consistent with Section 23(m) of the CEA, also ineligible for an award 
is any whistleblower that, in his submission of information or an 
application for an award, other dealings with the Commission, or his 
dealings with another authority in connection with a related action: 
knowingly and willfully makes any false, fictitious, or fraudulent 
statement or representation, or uses any false writing or document, 
knowing that it contains any false, fictitious, or fraudulent statement 
or entry; or omits any material fact whose absence would make any other 
statement or representation made to the Commission or any other 
authority misleading.
    Subparagraph (b) of Proposed Rule 165.6 reiterates that a 
determination that a whistleblower is ineligible to receive an award 
for any reason does not deprive the individual of the anti-retaliation 
protections set forth in Section 23(h)(1) of the CEA.
    The Commission requests comment on the ineligibility criteria set 
forth in Proposed Rule 165.6(a). Are there other statuses or activities 
that should render an individual ineligible for a whistleblower award?

G. Proposed Rule 165.7--Procedures for Award Applications and 
Commission Award Determinations

    Proposed Rule 165.7 describes the steps a whistleblower would be 
required to follow in order to make an application for an award in 
relation to a Commission covered judicial or administrative action or 
related action. In addition, the rule describes the Commission's 
proposed claims review process.
    In regard to covered actions, the proposed process would begin with 
the publication of a ``Notice of a Covered Action'' (``Notice'') on the 
Commission's Web site. Whenever a covered judicial or administrative 
action brought by the Commission results in the imposition of monetary 
sanctions exceeding $1,000,000, the Commission will cause this Notice 
of a covered judicial or administrative action to be published on the 
Commission's Web site subsequent to the entry of a final judgment or 
order in the action that by itself, or collectively with other 
judgments or orders previously entered in the action, exceeds the 
$1,000,000 threshold. If the monetary sanctions are obtained without a 
judgment or order, the Notice would be published within thirty (30) 
days of the issuance of the settlement order that causes total monetary 
sanctions in the action to exceed $1,000,000. The Commission's proposed 
rule requires claimants to file their claim for an award within sixty 
(60) days of the date of the Notice.
    In regard to related actions, a claimant will be responsible for 
tracking the resolution of the related action. The Commission's 
proposed rule requires claimants to file their claim for an award in 
regard to a related action within sixty (60) days of the date of the 
monetary sanctions being imposed in the related action.
    A claimant's failure to file timely a request for a whistleblower 
award would bar that individual later seeking a recovery.\28\
---------------------------------------------------------------------------

    \28\ See, e.g., Yuen v. U.S., 825 F.2d 244 (9th Cir. 1987) 
(taxpayer barred from recovery due to failure to timely file a 
written request for refund).
---------------------------------------------------------------------------

    Subparagraph (b) of Proposed Rule 165.7 describes the procedure for 
making a claim for an award. Specifically, a claimant would be required 
to submit a claim for an award on proposed Form WB-APP (``Application 
for Award for Original Information Provided Pursuant to Section 23 of 
the Commodity Exchange Act''). Proposed Form WB-APP, and the 
instructions thereto, will elicit information concerning a 
whistleblower's eligibility to receive an

[[Page 75738]]

award at the time the whistleblower files his claim. The form will also 
provide an opportunity for the whistleblower to ``make his case'' for 
why he is entitled to an award by describing the information and 
assistance he has provided and its significance to the Commission's 
successful action.\29\
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    \29\ See discussion of Proposed 165.9 for a non-exhaustive list 
of factors the Commission preliminarily believes it will consider in 
determining award amounts.
---------------------------------------------------------------------------

    Subparagraph (b) of Proposed Rule 165.7 provides that a claim on 
Form WB-APP, including any attachments, must be received by the 
Commission within sixty (60) calendar days of the date of the Notice or 
sixty (60) calendar days of the date of the imposition of the monetary 
sanctions in the related action, depending upon which action the 
claimant is seeking an award, in order to be considered for an award.
    Subparagraph (c) includes award application procedures for a 
whistleblower who submitted original information to the Commission 
anonymously. Whistleblowers who submitted original information 
anonymously, but who are making a claim for a whistleblower award on a 
disclosed basis, are required to disclose their identity on the Form 
WB-APP and include with the Form WB-APP a signed and completed Form WB-
DEC. Whistleblowers who submitted information anonymously, and are 
making a claim for a whistleblower award on an anonymous basis, must be 
represented by counsel and must provide their counsel with a completed 
and signed Form WB-DEC by no later than the date upon which the counsel 
submits to the Commission the whistleblower's Form WB-APP. In addition, 
whistleblower's counsel must submit with the Form WB-APP a separate 
Form WB-DEC certifying that the counsel has verified your identity, has 
reviewed the whistleblower's Form WB-DEC form for completeness and 
accuracy, will retain the signed original of your Form WB-DEC in 
counsel's records, and will produce the whistleblower's Form WB-DEC 
upon request of the Commission's staff. Proposed Rule 165.7(c) makes 
explicit that regardless of whether they make an award application on a 
disclosed or anonymous basis, the whistleblower's identity must be 
verified in a form and manner that is acceptable to the Commission 
prior to the payment of any award.
    Subparagraph (d) of Proposed Rule 165.7 describes the Commission's 
claims review process. The claims review process would begin upon the 
later of once the time for filing any appeals of the Commission's 
judicial or administrative action and the related action(s) has 
expired, or where an appeal has been filed, after all appeals in the 
action or related action(s) have been concluded.
    Under the proposed process, the Commission would evaluate all 
timely whistleblower award claims submitted on Form WB-APP. In 
connection with this process, the Commission could require that 
claimants provide additional information relating to their eligibility 
for an award or satisfaction of any of the conditions for an award, as 
set forth in Proposed Rule 165.5(b). Following that evaluation, the 
Commission would send any claimant a Determination setting forth 
whether the claim is allowed or denied and, if allowed, setting forth 
the proposed award percentage amount.

H. Proposed Rule 165.8--Amount of Award

    If all conditions are met, Proposed Rule 165.8 provides that the 
whistleblower awards shall be in an aggregate amount equal to between 
10 and 30 percent, in total, of what has been collected of the monetary 
sanctions imposed in the Commission's action or related actions. This 
range is specified in Section 23(b)(1) of the CEA. Where multiple 
whistleblowers are entitled to an award, subparagraph (b) states that 
the Commission will independently determine the appropriate award 
percentage for each whistleblower, but total award payments, in the 
aggregate, will equal between 10 and 30 percent of the monetary 
sanctions collected either in the Commission's action or the related 
action (but not both the Commission's action and the related action).
    The Commission requests comment on whether the provision stating 
that the percentage amount of an award in a Commission covered judicial 
or administrative action may differ from the percentage awarded in a 
related action is appropriate?

I. Proposed Rule 165.9--Criteria for Determining Amount of Award

    Assuming that all of the conditions for making an award to a 
whistleblower have been satisfied, Proposed Rule 165.9 sets forth the 
criteria that the Commission would take into consideration in 
determining the amount of the award. Subparagraphs (a)(1) through (3) 
of the proposed rule recite three criteria that Section 23(c)(1)(B) of 
the CEA requires the Commission to consider, and subparagraph (a)(4) 
adds a fourth criterion based upon the discretion given to the 
Commission to consider ``additional relevant factors'' in determining 
the amount of an award.
    Subparagraph (a)(1) requires the Commission to consider the 
significance of the information provided by a whistleblower to the 
success of the Commission action or related action. Subparagraph (a)(2) 
requires the Commission to consider the degree of assistance provided 
by the whistleblower and any legal representative of the whistleblower 
in the Commission action or related action. Subparagraph (a)(3) 
requires the Commission to consider the programmatic interest of the 
Commission in deterring violations of the CEA by making awards to 
whistleblowers that provide information that led to successful 
enforcement of covered judicial or administrative actions or related 
actions. Subparagraph (a)(4) would permit the Commission to consider 
whether an award otherwise enhances the Commission's ability to enforce 
the CEA, protect customers, and encourage the submission of high 
quality information from whistleblowers.
    The Commission anticipates that the determination of award amounts 
pursuant to subparagraphs (a)(1)-(4) will involve highly individualized 
review of the circumstances surrounding each award. To allow for this, 
the Commission preliminarily believes that the four criteria afford the 
Commission broad discretion to weigh a multitude of considerations in 
determining the amount of any particular award. Depending upon the 
facts and circumstances of each case, some of the considerations may 
not be applicable or may deserve greater weight than others.
    The permissible considerations include, but are not limited to:
    <bullet> The character of the enforcement action including whether 
its subject matter is a Commission priority, whether the reported 
misconduct involves regulated entities or fiduciaries, the type of CEA 
violations, the age and duration of misconduct, the number of 
violations, and the isolated, repetitive, or ongoing nature of the 
violations;
    <bullet> The dangers to customers or others presented by the 
underlying violations involved in the enforcement action including the 
amount of harm or potential harm caused by the underlying violations, 
the type of harm resulting from or threatened by the underlying 
violations, and the number of individuals or entities harmed;

[[Page 75739]]

    <bullet> The timeliness, degree, reliability, and effectiveness of 
the whistleblower's assistance;
    <bullet> The time and resources conserved as a result of the 
whistleblower's assistance;
    <bullet> Whether the whistleblower encouraged or authorized others 
to assist the staff who might not have otherwise participated in the 
investigation or related action;
    <bullet> Any unique hardships experienced by the whistleblower as a 
result of his or her reporting and assisting in the enforcement action;
    <bullet> The degree to which the whistleblower took steps to 
prevent the violations from occurring or continuing;
    <bullet> The efforts undertaken by the whistleblower to remediate 
the harm caused by the violations including assisting the authorities 
in the recovery of the fruits and instrumentalities of the violations;
    <bullet> Whether the information provided by the whistleblower 
related to only a portion of the successful claims brought in the 
covered judicial or administrative action or related action; \30\ and
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    \30\ As described elsewhere in these rules, if the information 
provided by a whistleblower relates to only a portion of a 
successful covered judicial or administrative action or related 
action, the Commission proposes to look to the entirety of the 
action (including all defendants or respondents, all claims, and all 
monetary sanctions obtained) in determining whether the 
whistleblower is eligible for an award and the total dollar amount 
of sanctions on which the whistleblower's award will be based. 
However, under subparagraph (a) of Proposed Rule 165.9, the fact 
that the whistleblower's information related to only a portion of 
the overall action would be a factor in determining the amount of 
the whistleblower's award. Thus, if the whistleblower's information 
supported only a small part of a larger case, that would be a reason 
for making an award based upon a smaller percentage amount than 
otherwise would have been awarded.
---------------------------------------------------------------------------

    <bullet> The culpability of the whistleblower including whether the 
whistleblower acted with scienter, both generally and in relation to 
others who participated in the misconduct.

These considerations are not listed in order of importance nor are they 
intended to be all-inclusive or to require a specific determination in 
any particular case.
    Finally, subparagraph (b) to Proposed Rule 165.9 reiterates the 
statutory prohibition in Section 23(c)(2) of the CEA from taking into 
consideration the balance of the Fund when making an award 
determination.

J. Proposed Rule 165.10--Contents of Record for Award Determinations

    In order to promote transparency and consistency, and also to 
preserve a clear record for appellate review (under Proposed Rule 
165.13) of Commission award determinations (under Proposed Rule 165.7), 
Proposed Rule 165.10 sets forth the contents of record for award 
determinations relating to covered judicial or administrative actions 
or related actions. The record shall consist of: Required forms the 
whistleblower submits to the Commission, including related attachments; 
other documentation provided by the whistleblower to the Commission; 
the complaint, notice of hearing, answers and any amendments thereto; 
the final judgment, consent order, or administrative speaking order; 
the transcript of the related administrative hearing or civil 
injunctive proceeding, including any exhibits entered at the hearing or 
proceeding; any other documents that appear on the docket of the 
proceeding. The record shall also include any statements by litigation 
staff to the Commission regarding: The significance of the information 
provided by the whistleblower to the success of the covered judicial or 
administrative action or related action; the degree of assistance 
provided by the whistleblower and any legal representative of the 
whistleblower in a covered judicial or administrative action or related 
action; and any facts relating to a determination of whether the 
whistleblower provided original information, conducted an independent 
analysis, or possessed independent knowledge.
    However, Proposed Rule 165.10(b) explicitly states that the record 
upon which the award determination under Proposed Rule 165.7 shall be 
made shall not include any Commission pre-decisional or internal 
deliberative process materials related to the Commission or its staff's 
determination: To file or settle the covered judicial or administrative 
action; and/or whether, to whom and in what amount to make a 
whistleblower award. Further, the record upon which the award 
determination under Proposed Rule 165.7 shall be made shall not include 
any other entity's pre-decisional or internal deliberative process 
materials related to its or its staff's determination to file or settle 
a related action.
    The Commission requests comment on what other relevant items the 
Commission should consider as part of the record for its award 
determinations?

K. Proposed Rule 165.11--Awards Based Upon Related Actions

    Proposed Rule 165.11 explains that the Commission, or its delegate, 
may grant an award based on amounts collected in certain related 
actions rather than the amount collected in a covered judicial or 
administrative action. Proposed Rule 165.11 sets forth the requirements 
for a related action or related actions to serve as the basis of a 
whistleblower award. Regardless of whether the Commission's award 
determination will be based upon the Commission's covered judicial or 
administrative action or a related action or actions, Proposed Rule 
165.7 sets forth the procedures for whistleblower award applications 
and Commission award determinations.

L. Proposed Rule 165.12--Payment of Awards From the Fund, Financing 
Customer Education Initiatives, and Deposits and Credits to the Fund; 
and Proposed Rule 165.15--Delegations of Authority

    Proposed Rules 165.12 and 165.15 set forth certain internal 
Commission procedures. Specifically, paragraph (a) of Proposed Rule 
165.12, consistent with Section 23(g)(2) of the CEA, requires the 
Commission to pay whistleblower awards from the Fund. Importantly, 
Proposed Rule 165.12(b)(2) makes clear that if there is an insufficient 
amount in the Fund to satisfy a whistleblower award made pursuant to 
Proposed Rule 165.7, the Commission shall deposit into the Fund 
monetary sanctions that are actually collected by the Commission in an 
amount equal to the unsatisfied portion of the award from any judicial 
or administrative action based on the information provided by any 
whistleblower.
    Proposed Rule 165.15 includes the Commission's delegations to the 
Executive Director to take certain actions to carry out this Part 165 
of the Rules and the requirements of Section 23(h) of CEA. Among the 
delegations to the Executive Director in Proposed Rule 165.15(a) is the 
authority to make deposits into the Fund.
    Proposed Rule 165.12 also includes the Commission's financing of 
customer education initiatives. Proposed Rule 165.12(c) provides that 
the Commission shall undertake and maintain customer education 
initiatives. The initiatives shall be designed to help customers 
protect themselves against fraud or other violations of the CEA, or 
rules or regulations thereunder. The Commission shall fund the customer 
education initiatives, and may utilize funds deposited into the Fund 
during any fiscal year in which the beginning (October 1) balance of 
the Fund is greater than $10,000,000. The Commission shall budget on an 
annual basis the amount used to finance customer education initiatives, 
taking

[[Page 75740]]

into consideration the balance of the Fund.
    The Commission limited its discretion to finance customer education 
initiatives to fiscal years in which the beginning (October 1) balance 
of the Fund is greater than $10,000,000 in order to limit the 
possibility that spending on customer education initiatives may 
inadvertently result in the Commission operating the Fund in a deficit 
and thereby delay award payments to whistleblowers.
    The Commission requests comment on whether this limitation is 
appropriate, or would other limitations better effectuate this purpose? 
Is the $10 million Fund balance trigger too high or too low, and, if 
so, what would be a better trigger amount?

M. Proposed Rule 165.13--Appeals

    Section 23(f) of the CEA provides for rights of appeal of Final 
Orders of the Commission with respect to whistleblower award 
determinations.\31\ Subparagraph (a) of Proposed Rule 165.13 tracks 
this provision and describes claimants' rights to appeal. Claimants may 
appeal any Commission final award determination, including whether, to 
whom, or in what amount to make whistleblower awards, to an appropriate 
court of appeals within thirty (30) days after the Commission's Final 
Order of determination.
---------------------------------------------------------------------------

    \31\ 7 U.S.C. 26(f).
---------------------------------------------------------------------------

    Subparagraph (b) of Proposed Rule 165.13 designates the materials 
that shall be included in the record on any appeal. They include: The 
Contents of Record for Award Determination, as set forth in Proposed 
Rule 165.9; any Final Order of the Commission, as set forth in Rule 
165.7(e).

N. Proposed Rule 165.14--Procedures Applicable to the Payment of Awards

    Proposed Rule 165.14 addresses the timing for payment of an award 
to a whistleblower. Any award made pursuant to the rules would be paid 
from the Fund established by Section 23(g) of the CEA.\32\ Subparagraph 
(a) provides that a recipient of a whistleblower award will be entitled 
to payment on the award only to the extent that a monetary sanction is 
collected in the covered judicial or administrative action or in a 
related action upon which the award is based. This requirement is 
derived from Section 23(b)(1) of the CEA,\33\ which provides that an 
award is based upon the monetary sanctions collected in the covered 
judicial or administrative action or related action.
---------------------------------------------------------------------------

    \32\ 7 U.S.C. 26(g).
    \33\ 7 U.S.C. 26(b)(1).
---------------------------------------------------------------------------

    Subparagraph (b) states that any payment of an award for a monetary 
sanction collected in a covered judicial or administrative action shall 
be made within a reasonable period of time following the later of 
either the completion of the appeals process for all whistleblower 
award claims arising from the covered judicial or administrative 
action, or the date on which the monetary sanction is collected. 
Likewise, the payment of an award for a monetary sanction collected in 
a related action shall be made within a reasonable period of time 
following the later of either the completion of the appeals process for 
all whistleblower award claims arising from the related action, or the 
date on which the monetary sanction is collected. This provision is 
intended to cover situations where a single action results in multiple 
whistleblowers claims. Under this scenario, if one whistleblower 
appeals a Final Order of the Commission relating to a whistleblower 
award determination, the Commission would not pay any awards in the 
action until that whistleblower's appeal has been concluded, because 
the disposition of that appeal could require the Commission to 
reconsider its determination and thereby affect all payments for that 
covered judicial or administrative action or related action.
    Subparagraph (c) of Proposed Rule 165.14 describes how the 
Commission will address situations where there are insufficient amounts 
available in the Fund to pay an award to a whistleblower or 
whistleblowers within a reasonable period of time of when payment 
should otherwise be made. In this situation, the whistleblower or 
whistleblowers will be paid when amounts become available in the Fund, 
subject to the terms set forth in proposed subparagraph (c). Under 
proposed subparagraph (c), where multiple whistleblowers are owed 
payments from the Fund based on awards that do not arise from the same 
Notice or resolution of a related action, priority in making payment on 
these awards would be determined based upon the date that the Final 
Order of the Commission is made. If two or more of these Final Orders 
of the Commission are entered on the same date, those whistleblowers 
owed payments will be paid on a pro rata basis until sufficient amounts 
become available in the Fund to pay their entire payments. Under 
proposed subparagraph (c)(2), where multiple whistleblowers are owed 
payments from the Fund based on awards that arise from the same Notice 
or resolution of a related action, they would share the same payment 
priority and would be paid on a pro rata basis until sufficient amounts 
become available in the Fund to pay their entire payments.

O. Proposed Rule 165.16--No Immunity and Proposed Rule 165.17--Awards 
to Whistleblowers Who Engage in Culpable Conduct

    Proposed Rule 165.16 provides notice that the provisions of Section 
23 of the CEA do not provide immunity to individuals who provide 
information to the Commission relating to a violation of the CEA. 
Whistleblowers who have not participated in misconduct will of course 
not need immunity. However, some whistleblowers who provide original 
information that significantly aids in detecting and prosecuting 
sophisticated manipulation or fraud schemes may themselves be 
participants in the scheme who would be subject to Commission 
enforcement actions. While these individuals, if they provide valuable 
assistance to a successful action, will remain eligible for a 
whistleblower award, they will not be immune from prosecution. Rather, 
the Commission will analyze the unique facts and circumstances of each 
case in accordance with its Enforcement Advisory, ``Cooperation Factors 
in Enforcement Division Sanction Recommendations'' to determine 
whether, how much, and in what manner to credit cooperation by 
whistleblowers who have participated in misconduct.
    The options available to the Commission and its staff for 
facilitating and rewarding cooperation ranges from taking no 
enforcement action to pursuing charges and sanctions in connection with 
enforcement actions.
    Whistleblowers with potential civil liability or criminal liability 
for CEA violations that they report to the Commission remain eligible 
for an award. However, pursuant to Section 23(c)(2)(B) of the CEA,\34\ 
if a whistleblower is convicted of a criminal violation related to the 
judicial or administrative action, they are not eligible for an award. 
Furthermore, if a defendant or respondent in a Commission or related 
action is ordered to pay monetary sanctions in a civil enforcement 
action, this proposed rule states that the Commission will not count 
the amount of such monetary sanctions toward the $1,000,000 threshold 
in considering an award payment to such a defendant or respondent in 
relation to a covered

[[Page 75741]]

judicial or administrative action, and will not add that amount to the 
total monetary sanctions collected in the action for purposes of 
calculating any payment to the culpable individual. The rationale for 
this limitation is to prevent wrongdoers from financially benefiting 
from their own misconduct, and ensures equitable treatment of culpable 
and non-culpable whistleblowers. For example, without such a 
prohibition, a whistleblower that was the leader or organizer of a 
fraudulent scheme involving multiple defendants that resulted in total 
monetary sanctions of $1,250,000 would exceed the $1,000,000 minimum 
threshold required for making an award, even though he personally was 
ordered to pay $750,000 of those monetary sanctions and, under similar 
circumstances, a non-culpable whistleblower would be deemed ineligible 
for an award if they reported a CEA or Commission regulation violation 
that resulted in monetary sanctions of less than $1,000,000. The 
proposed rule would prevent such inequitable treatment.
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    \34\ 7 U.S.C. 26(c)(2)(B).
---------------------------------------------------------------------------

P. Proposed Rule 165.18--Staff Communications With Whistleblowers From 
Represented Entities

    Proposed Rule 165.18 clarifies the staff's authority to communicate 
directly with whistleblowers who are directors, officers, members, 
agents, or employees of an entity that has counsel, and who have 
initiated communication with the Commission relating to a potential CEA 
violation. The proposed rule makes clear that the staff is authorized 
to communicate directly with these individuals without first seeking 
the consent of the entity's counsel.
    Section 23 of the CEA evinces a strong Congressional policy to 
facilitate the disclosure of information to the Commission relating to 
potential CEA violations and to preserve the confidentiality of those 
who do so.\35\ This Congressional policy would be significantly 
impaired were the Commission required to seek the consent of an 
entity's counsel before speaking with a whistleblower who contacts us 
and who is a director, officer, member, agent, or employee of the 
entity. For this reason, Section 23 of the CEA authorizes the 
Commission to communicate directly with these individuals without first 
obtaining the consent of the entity's counsel.
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    \35\ See Section 23 (b)-(d) & (h) of the CEA, 7 U.S.C 26(b)-(d) 
& (h).
---------------------------------------------------------------------------

    The Commission believes that expressly clarifying this authority in 
the proposed rule would promote whistleblowers' willingness to disclose 
potential CEA violations to the Commission by reducing or eliminating 
any concerns that whistleblowers might have that the Commission is 
required to request consent of the entity's counsel and, in doing so, 
might disclose their identity. The Commission also believes that this 
proposed rule is appropriate to clarify that, in accordance with 
American Bar Association Model Rule 4.2, the staff is authorized by law 
to make these communications.\36\ Under this provision, for example, 
the Commission could meet or otherwise communicate with the 
whistleblower privately, without the knowledge or presence of counsel 
or other representative of the entity.
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    \36\ American Bar Association Model Rule 4.2 provides as 
follows: ``In representing a client, a lawyer shall not communicate 
about the subject of the representation with a person the lawyer 
knows to be represented by another lawyer in the matter, unless the 
lawyer has the consent of the other lawyer or is authorized to do so 
by law or a court order.'' Model Rules of Prof'l Conduct R. 4.2 
(emphasis added).
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Q. Proposed Rule 165.19--Nonenforceability of Certain Provisions 
Waiving Rights and Remedies or Requiring Arbitration of Disputes

    Consistent with Congressional intent to protect whistleblowers from 
retaliation as reflected in Section 23(h) of the CEA, Proposed Rule 
165.19 provides that the rights and remedies provided for in this Part 
165 of the Commission's regulations may not be waived by any agreement, 
policy, form, or condition of employment including by a predispute 
arbitration agreement. No predispute arbitration agreement shall be 
valid or enforceable, if the agreement requires arbitration of a 
dispute arising under this Part.

R. Proposed Appendix A--Guidance With Respect to the Protection of 
Whistleblowers Against Retaliation

    The Commission has included a Proposed Appendix A (``Guidance With 
Respect To The Protection of Whistleblowers Against Retaliation'') to 
better inform the public regarding the protections against retaliation 
from employers provided for whistleblowers in Section 23 of the CEA. 
Specifically, the Proposed Appendix A informs the public that Section 
23(h)(1) of CEA provides whistleblowers with certain protections 
against retaliation, including: A Federal cause of action against the 
employer, which must be filed in the appropriate United States district 
court within two (2) years of the employer's retaliatory act; and 
potential relief for prevailing whistleblowers, including 
reinstatement, back pay, and compensation for other expenses, including 
reasonable attorney's fees. For ease of reference, the Proposed 
Appendix also includes a verbatim copy of the full Section 23(h)(1) of 
the CEA.

III. Request for Comment

    The Commission requests comment on all aspects of the proposed 
rules.

IV. Administrative Compliance

A. Cost-Benefit Analysis

    Section 15(a) of the CEA \37\ requires the Commission to consider 
the costs and benefits of its actions before promulgating a regulation 
under the CEA. By its terms, section 15(a) does not require the 
Commission to quantify the costs and benefits of a rule or to determine 
whether the benefits of the regulation outweigh its costs; rather, it 
requires that the Commission ``consider'' the costs and benefits of its 
actions. Section 15(a) further specifies that the costs and benefits 
shall be evaluated in light of five broad areas of market and public 
concern: (1) Protection of market participants and the public; (2) 
efficiency, competitiveness and financial integrity of futures markets; 
(3) price discovery; (4) sound risk management practices; and (5) other 
public interest considerations. The Commission may in its discretion 
give greater weight to any one of the five enumerated areas and could 
in its discretion determine that, notwithstanding its costs, a 
particular rule is necessary or appropriate to protect the public 
interest or to effectuate any of the provisions or accomplish any of 
the purposes of the CEA.
---------------------------------------------------------------------------

    \37\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    With respect to benefits, the proposed rules would enhance the 
Commission's capacity to ensure fair and equitable markets. The 
Commission has determined that market participants and the public will 
benefit substantially from prevention and deterrence of violations of 
the CEA and Commission regulations, which will be buttressed by the 
whistleblower incentives and protections under Section 23 of the CEA 
and Proposed Part 165 of the regulations.
    With respect to costs, the procedures set forth in the Proposed 
Rules may impose certain costs on prospective whistleblowers. As an 
initial matter, the procedures require potential whistleblowers to 
complete certain forms to establish eligibility for an award under the 
whistleblower program. As noted above, the Commission recognizes that 
it will take time and effort on the part of

[[Page 75742]]

whistleblowers to complete and submit the required forms. In addition, 
any whistleblower wishing to submit one of the required forms in hard 
copy will need to arrange for delivery and pay the postage or other 
delivery costs. In these Proposed Rules, the Commission has attempted 
to mitigate the potential for burden or confusion in the procedures, 
but such costs cannot be eliminated.
    The Commission invites public comment on its cost-benefit 
considerations. Commenters are also invited to submit any data or other 
information that they may have quantifying or qualifying the costs and 
benefits of the proposed rules with their comment letters.

B. Anti-Trust Considerations

    Section 15(b) of the CEA, 7 U.S.C. 19(b), requires the Commission 
to consider the public interests protected by the antitrust laws and to 
take actions involving the least anti-competitive means of achieving 
the objectives of the CEA. The Commission believes that the proposed 
rules will have a positive effect on competition by improving the 
fairness and efficiency of the markets through improving detection and 
remediation of potential violations of the CEA and Commission 
regulations.

C. Paperwork Reduction Act

    This regulation requires that a whistleblower seeking an award 
submit whistleblower information and file claims for an award 
determination. An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid control number. The Office of Management and 
Budget (``OMB'') has not yet assigned a control number to the new 
collection. Proposed Commission Regulation 165 would result in new 
collection of information requirements within the meaning of the 
Paperwork Reduction Act (``PRA'').\38\ The Commission therefore is 
submitting this proposal to OMB for review in accordance with 44 U.S.C. 
3507(d) and 5 CFR 1320.11. The title for this collection of information 
is ``Regulation 165--Proposed Rules for Implementing Whistleblower 
Provisions of Section 23 of the Commodity Exchange Act.'' OMB control 
number 3038-NEW. If adopted, responses to this new collection of 
information would be mandatory.
---------------------------------------------------------------------------

    \38\ 44 U.S.C. 3501 et.seq.
---------------------------------------------------------------------------

    The Commission will protect proprietary information according to 
the Freedom of Information Act and 17 CFR part 145, ``Commission 
Records and Information.'' In addition, section 8(a)(1) of the Act 
strictly prohibits the Commission, unless specifically authorized by 
the Act, from making public ``data and information that would 
separately disclose the business transactions or market positions of 
any person and trade secrets or names of customers.'' The Commission is 
also required to protect certain information contained in a government 
system of records according to the Privacy Act of 1974, 5 U.S.C. 552a.
1. Information Provided by Reporting Persons
    The Proposed Rules 165.3 (Procedures for Submitting Original 
Information), 165.4 (Confidentiality), and 165.7 (Procedures for Award 
Applications and Commission Award Determinations) require that all 
individuals wishing to be eligible for an award under the Commission's 
whistleblower program must complete the following standard forms: Forms 
TCR (``Tip, Complaint or Referral''), WB-DEC (``Declaration Concerning 
Original Information Provided Pursuant to Section 23 of the Commodity 
Exchange Act,'' signed under penalty of perjury), and WB-APP 
(``Application for Award for Original Information Provided Pursuant to 
Section 23 of the Commodity Exchange Act''). The Commission estimates 
that there will be numerous individuals, approximately 160 per fiscal 
year, who may wish to file such forms. The Commission estimated the 
number of individuals based upon the current number of tips, complaints 
and referrals received by the Commission's Division of Enforcement and 
news articles regarding the whistleblower protections that indicate the 
SEC and Commission should expect to receive a high volume of claims. 
The proposed collection is estimated to involve approximately: 2 burden 
hours per Form TCR; 0.5 burden hours per Form WB-DEC; and 10 burden 
hours per Form WB-APP. The Commission expects that this will result in 
a total cost of 12.5 burden hours per individual seeking to be 
considered for an award under the Commission's whistleblower program, 
for an annual aggregate 2,000 burden hours per fiscal year. The 
Commission invites public comment on the accuracy of its estimate 
regarding the collection requirements that would result from the 
proposed regulations.
2. Information Collection Comments
    The Commission invites the public and other federal agencies to 
comment on any aspect of the reporting and recordkeeping burdens 
discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission 
solicits comments in order to: (i) Evaluate whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information will 
have practical utility; (ii) evaluate the accuracy of the Commission's 
estimate of the burden of the proposed collection of information; (iii) 
determine whether there are ways to enhance the quality, utility, and 
clarity of the information to be collected; and (iv) minimize the 
burden of the collection of information on those who are to respond, 
including through the use of automated collection techniques or other 
forms of information technology.
    Comments may be submitted directly to the Office of Information and 
Regulatory Affairs, by fax at (202) 395-6566 or by e-mail at 
<a href="/cdn-cgi/l/email-protection#4b0402190a383e2926223838222425380b242629652e243b652c243d"><span class="__cf_email__" data-cfemail="8ec1c7dccffdfbece3e7fdfde7e1e0fdcee1e3eca0ebe1fea0e9e1f8">[email protected]</span></a>. Please provide the Commission with a copy 
of submitted comments so that they can be summarized and addressed in 
the final rule. Refer to the ``Addresses'' section of this notice of 
proposed rulemaking for comment submission instructions to the 
Commission. A copy of the supporting statements for the collections of 
information discussed above may be obtained by visiting RegInfo.gov. 
OMB is required to make a decision concerning the collection of 
information between 30 and 60 days after publication of this release. 
Consequently, a comment to OMB is most assured of being fully effective 
if received by OMB (and the Commission) within 30 days after 
publication of this notice of proposed rulemaking.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') \39\ requires that 
agencies consider whether the rules they propose will have a 
significant economic impact on a substantial number of small entities 
and, if so, provide a regulatory flexibility analysis respecting the 
impact.\40\ The rules proposed by the Commission will not have a 
significant economic impact on a substantial number of small entities. 
As explained above, because only individuals are eligible for 
participation in the Commission's whistleblower program under Section 
23 of the CEA and Proposed Part 165 of the regulations, the proposed 
rules will not have a significant impact on small entities. 
Accordingly, the Chairman, on behalf of the Commission, hereby 
certifies, pursuant to 5 U.S.C. 605(b), that the proposed rules will 
not have a

[[Page 75743]]

significant impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \39\ 5 U.S.C. 601.
    \40\ Id.
---------------------------------------------------------------------------

    Section 603(a) of the Regulatory Flexibility Act \41\ requires the 
Commission to undertake an initial regulatory flexibility analysis of 
the proposed rule on small entities unless the Chairman certifies that 
the rule, if adopted, would not have a significant economic impact on a 
substantial number of small entities.\42\ The Proposed Rules apply only 
to an individual, or individuals acting jointly, who provide 
information to the Commission relating to the violation of the CEA or 
Commission regulations. Companies and other entities are not eligible 
to participate in the Program as whistleblowers. Consequently, the 
persons that would be subject to the proposed rule are not ``small 
entities'' for purposes of the Regulatory Flexibility Act. Accordingly, 
the Chairman, on behalf of the Commission, hereby certifies pursuant to 
5 U.S.C. 605(b) that the proposed rules will not have a significant 
economic impact on a substantial number of small entities. A copy of 
the certification is attached as an appendix to this document.
---------------------------------------------------------------------------

    \41\ 5 U.S.C. 603(a).
    \42\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

List of Subjects in 17 CFR Part 165

    Whistleblower rules.

    In consideration of the foregoing and pursuant to the authority 
contained in the Commodity Exchange Act, in particular, Sections 2, 3, 
8a(5) and 26 thereof, the Commodity Futures Trading Commission proposes 
to add a new 17 CFR part 165 to read as follows:

PART 165--WHISTLEBLOWER RULES

Sec.
165.1 General.
165.2 Definitions.
165.3 Procedures for submitting original information.
165.4 Confidentiality.
165.5 Prerequisites to the consideration of an award.
165.6 Whistleblowers ineligible for an award.
165.7 Procedures for award applications and commission award 
determinations.
165.8 Amount of award.
165.9 Criteria for determining amount of award.
165.10 Contents of record for award determination.
165.11 Awards based upon related actions.
165.12 Payment of awards from the fund, financing of customer 
education initiatives, and deposits and credits to the fund.
165.13 Appeals.
165.14 Procedures applicable to the payment of awards.
165.15 Delegations of authority.
165.16 No immunity.
165.17 Awards to whistleblowers who engage in culpable conduct.
165.18 Staff communications with whistleblowers from represented 
entities.
165.19 Nonenforceability of certain provisions waiving rights and 
remedies or requiring arbitration of disputes.
Appendix A to Part 165--Guidance With Respect to the Protection of 
Whistleblowers Against Retaliation

    Authority: 7 U.S.C. 2, 3, 12a(5) and 26, as amended by Title VII 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Pub. L. 111-203, 124 Stat. 1376 (June 16, 2010).


Sec.  165.1  General.

    Section 23 of the Commodity Exchange Act, entitled ``Commodity 
Whistleblower Incentives and Protection,'' requires the Commission to 
pay awards, subject to certain limitations and conditions, to 
whistleblowers who voluntarily provide the Commission with original 
information about violations of the Commodity Exchange Act. This part 
165 describes the whistleblower program that the Commission intends to 
establish to implement the provisions of Section 23, and explain the 
procedures you will need to follow in order to be eligible for an 
award. Whistleblowers should read these procedures carefully, because 
the failure to take certain required steps within the time frames 
described in this part may serve as disqualification from receiving an 
award. Unless expressly provided for in this part, no person is 
authorized to make any offer or promise, or otherwise to bind the 
Commission with respect to the payment of any award or the amount 
thereof.


Sec.  165.2  Definitions.

    (a) Action. The term ``action'' means a single captioned judicial 
or administrative proceeding.
    (b) Aggregate Amount. The phrase ``aggregate amount'' means the 
total amount of an award granted to one or more whistleblowers pursuant 
to Sec.  165.8.
    (c) Analysis. The term ``analysis'' means your examination and 
evaluation of information that may be generally available, but which 
reveals information that is not generally known or available to the 
public.
    (d) Collected by the Commission. The phrase ``collected by the 
Commission'' refers to any funds received, and confirmed by the 
Treasury, in satisfaction of part or all of a civil monetary penalty, 
disgorgement obligation, or fine owed to the Commission.
    (e) Covered Judicial or Administrative action. The phrase ``covered 
judicial or administrative action'' means any judicial or 
administrative action brought by the Commission under the Commodity 
Exchange Act whose successful resolution results in monetary sanctions 
exceeding $1,000,000.
    (f) Fund. The term ``Fund'' means the Commodity Futures Trading 
Commission Customer Protection Fund.
    (g) Independent Knowledge. The phrase ``independent knowledge'' 
means factual information in your possession that is not generally 
known or available to the public. You may gain independent knowledge 
from your experiences, communications and observations in your personal 
business or social interactions. The Commission will not consider your 
information to be derived from your independent knowledge if you 
obtained the information:
    (1) From sources generally available to the public such as 
corporate filings and the media, including the Internet;
    (2) Through a communication that was subject to the attorney-client 
privilege, unless the disclosure is otherwise permitted by the 
applicable federal or state attorney conduct rules;
    (3) As a result of the legal representation of a client on whose 
behalf your services, or the services of your employer or firm, have 
been retained, and you seek to use the information to make a 
whistleblower submission for your own benefit, unless disclosure is 
authorized by the applicable federal or state attorney conduct rules;
    (4) Because you were a person with legal, compliance, audit, 
supervisory, or governance responsibilities for an entity, and the 
information was communicated to you with the reasonable expectation 
that you would take appropriate steps to cause the entity to remedy the 
violation, unless the entity subsequently failed to disclose the 
information to the Commission within sixty (60) days or otherwise 
proceeded in bad faith;
    (5) Otherwise from or through an entity's legal, compliance, audit 
or other similar functions or processes for identifying, reporting and 
addressing potential non-compliance with law, unless the entity failed 
to disclose the information to the Commission within sixty (60) days or 
otherwise proceeded in bad faith; or
    (6) By a means or in a manner that violates applicable federal or 
state criminal law.
    (h) Independent Analysis. The phrase ``independent analysis'' means 
your own

[[Page 75744]]

analysis, whether done alone or in combination with others.
    (i) Information That Led to Successful Enforcement. The Commission 
will consider that you provided original information that led to the 
successful enforcement of a judicial or administrative action, or 
related action, in the following circumstances:
    (1) If you gave the Commission original information that caused the 
staff to open an investigation, reopen an investigation that the 
Commission had closed, or to inquire concerning new or different 
conduct as part of a current investigation, and your information 
significantly contributed to the success of the action; or
    (2) If you gave the Commission original information about conduct 
that was already under investigation by the Commission, Congress, any 
other federal, state, or local authority, any self-regulatory 
organization, or the Public Company Accounting Oversight Board (except 
in cases where you were an original source of this information as 
defined in paragraph (i)(1) of this section), and your information 
would not otherwise have been obtained and was essential to the success 
of the action.
    (j) Monetary Sanctions. The phrase ``monetary sanctions,'' when 
used with respect to any judicial or administrative, or related action, 
action means--
    (1) Any monies, including penalties, disgorgement, restitution, and 
interest ordered to be paid; and
    (2) Any monies deposited into a disgorgement fund or other fund 
pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
7246(b)), as a result of such action or any settlement of such action.
    (k) Original Information. (1) The phrase ``original information'' 
means information that--
    (i) Is derived from the independent knowledge or independent 
analysis of a whistleblower;
    (ii) Is not already known to the Commission from any other source, 
unless the whistleblower is the original source of the information;
    (iii) Is not exclusively derived from an allegation made in a 
judicial or administrative hearing, in a governmental report, hearing, 
audit, or investigation, or from the news media, unless the 
whistleblower is a source of the information; and
    (iv) Is submitted to the Commission for the first time after July 
21, 2010 (the date of enactment of the Wall Street Transparency and 
Accountability Act of 2010).
    (2) Original information shall not lose its status as original 
information solely because the whistleblower submitted such information 
prior to the [EFFECTIVE DATE OF THE FINAL RULE], provided such 
information was submitted after July 21, 2010, the date of enactment of 
the Wall Street Transparency and Accountability Act of 2010. In order 
to be eligible for an award, a whistleblower who submits original 
information to the Commission after July 21, 2010, but prior to 
[EFFECTIVE DATE OF THE FINAL RULE], must comply with the procedure set 
forth in Sec.  165.3(d).
    (l) Original Source. You must satisfy your status as the original 
source of information to the Commission's satisfaction.
    (1) Information obtained from another source. The Commission will 
consider you to be an ``original source'' of the same information that 
the Commission obtains from another source if the information you 
provide satisfies the definition of original information and the other 
source obtained the information from you or your representative.
    (i) In order to be considered an original source of information 
that the Commission receives from Congress, any other federal state or 
local authority, or any self-regulatory organization, you must have 
voluntarily given such authorities the information within the meaning 
of this part In determining whether you are the original source of 
information, the Commission may seek assistance and confirmation from 
one of the other entities or authorities described above.
    (ii) In the event that you claim to be the original source of 
information that an authority or another entity, other than as set 
forth in paragraph (l)(1)(i) of this section, provided to the 
Commission, the Commission may seek assistance and confirmation from 
such authority or other entity.
    (2) Information first provided to another authority or person. If 
you provide information to Congress, any other federal, state, or local 
authority, any self-regulatory organization, the Public Company 
Accounting Oversight Board, or to any of any of the persons described 
in paragraphs (g)(3) and (4) of this section, and you, within 90 days, 
make a submission to the Commission pursuant to Sec.  165.3, as you 
must do in order for you to be eligible to be considered for an award, 
then, for purposes of evaluating your claim to an award under Sec.  
165.7, the Commission will consider that you provided information as of 
the date of your original disclosure, report, or submission to one of 
these other authorities or persons. You must establish your status as 
the original source of such information, as well as the effective date 
of any prior disclosure, report, or submission, to the Commission's 
satisfaction. The Commission may seek assistance and confirmation from 
the other authority or person in making this determination.
    (3) Information already known by the Commission. If the Commission 
already knows some information about a matter from other sources at the 
time you make your submission, and you are not an original source of 
that information, as described above, the Commission will consider you 
an ``original source'' of any information you separately provide that 
otherwise satisfies the definition of original information and 
materially adds to the information that the Commission already 
possesses.
    (m) Related Action. The phrase ``related action,'' when used with 
respect to any judicial or administrative action brought by the 
Commission under the Commodity Exchange Act, means any judicial or 
administrative action brought by an entity listed in Sec.  165.11(a) 
that is based upon the original information voluntarily submitted by a 
whistleblower to the Commission pursuant to Sec.  165.3 that led to the 
successful resolution of the Commission action.
    (n) Successful Resolution. The phrase ``successful resolution,'' 
when used with respect to any judicial or administrative action brought 
by the Commission under the Commodity Exchange Act, includes any 
settlement of such action or final judgment in favor of the Commission. 
It shall also have the same meaning as ``successful enforcement.''
    (o) Voluntary Submission or Voluntarily Submitted. The phrase 
``voluntary submission'' or ``voluntarily submitted'' within the 
context of submission of original information to the Commission under 
this part, shall mean the provision of information made prior to any 
request from the Commission, Congress, any other federal or state 
authority, the Department of Justice, a registered entity, a registered 
futures association, or a self-regulatory organization to you or anyone 
representing you (such as an attorney) about a matter to which the 
information in the whistleblower's submission is relevant. If the 
Commission or any of these other authorities make a request, inquiry, 
or demand to you or your representative first, your submission will not 
be considered voluntary, and you will not be eligible for an award, 
even if your response is not compelled by subpoena or other applicable 
law. For purposes of this paragraph, you will be considered

[[Page 75745]]

to have received a request, inquiry or demand if documents or 
information from you are within the scope of a request, inquiry, or 
demand that your employer receives, unless, after receiving the 
documents or information from you, your employer fails to provide your 
documents or information to the requesting authority in a timely 
manner.
    In addition, your submission will not be considered voluntary if 
you are under a pre-existing legal or contractual duty to report the 
violations that are the subject of your original information to the 
Commission, Congress, any other federal or state authority, the 
Department of Justice, a registered entity, a registered futures 
association, or a self-regulatory organization.
    (p) Whistleblower(s). (1) The term ``whistleblower'' or 
``whistleblowers'' means any individual, or two (2) or more individuals 
acting jointly, who provides information relating to a potential 
violation of the Commodity Exchange Act to the Commission, in a manner 
established by Sec.  165.3.
    (2) The retaliation protections afforded to whistleblowers by the 
provisions of Section 23(h) of the Commodity Exchange Act apply 
irrespective of whether a whistleblower satisfies the procedures and 
conditions to qualify for an award under this Part 165. Moreover, for 
purposes of the anti-retaliation provision of paragraph (h)(1)(A)(i) of 
Section 23, the requirement that a whistleblower provide ``information 
to the Commission in accordance'' with Section 23 is satisfied if an 
individual provides information to the Commission that relates to a 
potential violation of the Commodity Exchange Act.


Sec.  165.3  Procedures for submitting original information.

    A whistleblower's submission of information to the Commission will 
be a two-step process.
    (a) First, you will need to submit your information to the 
Commission. You may submit your information:
    (1) By completing and submitting a Form TCR online and submitting 
it electronically through the Commission's Web site at [insert link] 
or;
    (2) By completing the Form TCR and mailing or faxing the form to 
the Commission, Three Lafayette Centre, 1155 21st Street, NW., 
Washington, DC 20581, Fax (202) XXX-XXXX.
    (b) In addition to submitting a Form TCR, you will also need to 
complete and provide to the Commission a Form WB-DEC, ``Declaration 
Concerning Original Information Provided Pursuant to Section 23 of the 
Commodity Exchange Act,'' signed under penalty of perjury. Your Form 
WB-DEC must be submitted as follows:
    (1) If you submit a Form TCR electronically, your Form WB-DEC must 
be submitted either:
    (i) Electronically (in accordance with the instructions set forth 
on the Commission's Web site); or
    (ii) By mailing or faxing the signed form to the Commission. Your 
Form WB-DEC must be received by the Commission within thirty (30) days 
of the Commission's receipt of your Form TCR.
    (2) If you submit a Form TCR either by mail or fax, your Form WB-
DEC must be submitted by mail or fax at the same time as the Form TCR.
    (c) Notwithstanding paragraph (b), if you submitted your original 
information to the Commission anonymously, then your identity must be 
disclosed to the Commission and verified in a form and manner 
acceptable to the Commission consistent with the procedure set forth in 
Sec.  165.7(c) prior to the Commission's payment of any award.
    (d) If you submitted original information in writing to the 
Commission after July 21, 2010 (the date of enactment of the Wall 
Street Transparency and Accountability Act of 2010) but before the 
effective date of these rules, you will be eligible for an award only 
if:
    (1) In the event that you provided the original information to the 
Commission in a format or manner other than that described in paragraph 
(a) of this section, you submit a completed Form TCR and Form WB-DEC 
within one hundred twenty (120) days of [EFFECTIVE DATE OF THE FINAL 
RULE] and otherwise follow the procedures set forth above in paragraphs 
(a) and (b) of this section; or
    (2) In the event that you provided the original information to the 
Commission in a Form TCR in the manner described in paragraph (a) of 
this section, you submit a Form WB-DEC within one hundred twenty (120) 
days of the effective date of this section in the manner set forth 
above in paragraph (b) of this section.


Sec.  165.4  Confidentiality.

    (a) In General. Section 23(h)(2) of the Commodity Exchange Act 
requires that the Commission not disclose information that could 
reasonably be expected to reveal the identity of a whistleblower, 
except that the Commission may disclose such information in the 
following circumstances:
    (1) When disclosure is required to a defendant or respondent in 
connection with a public proceeding that the Commission institutes or 
in another public proceeding that is filed by an authority to which the 
Commission provides the information, as described below;
    (2) When the Commission determines that it is necessary to 
accomplish the purposes of the Commodity Exchange Act and to protect 
customers, it may provide whistleblower information to: The Department 
of Justice; an appropriate department or agency of the Federal 
Government, acting within the scope of its jurisdiction; a registered 
entity, registered futures association, a self regulatory organization; 
a state attorney general in connection with a criminal investigation; 
any appropriate state department or agency, acting within the scope of 
its jurisdiction; or a foreign futures authority.
    (3) The Commission may make disclosures in accordance with the 
Privacy Act of 1974 (5 U.S.C. 552a).
    (b) Anonymous Whistleblowers. A whistleblower may anonymously 
submit information to the Commission, however, the whistleblower must 
follow the procedures in Sec.  165.3(c) for submitting original 
information anonymously. Such whistleblower who anonymously submits 
information to the Commission must also follow the procedures in Sec.  
165.7(c) in submitting to the Commission an application for a 
whistleblower award.


Sec.  165.5  Prerequisites to the consideration of an award.

    (a) Subject to the eligibility requirements described in this part 
165, the Commission will pay an award to one or more whistleblowers 
who:
    (1) Provide a voluntary submission to the Commission;
    (2) That contains original information; and
    (3) That leads to the successful resolution of a covered Commission 
judicial or administrative action or successful enforcement of a 
related action; and
    (b) In order to be eligible, the whistleblower must:
    (1) Have given the Commission original information in the form and 
manner that the Commission requires in Sec.  165.3 and be the original 
source of information;
    (2) Provide the Commission, upon its staff's request, certain 
additional information, including: Explanations and other assistance, 
in the manner and form that staff may request, in order that the staff 
may evaluate the use of the information submitted; all additional 
information in the whistleblower's possession that is related to the 
subject matter of the whistleblower's

[[Page 75746]]

submission; and testimony or other evidence acceptable to the staff 
relating to the whistleblower's eligibility for an award; and
    (3) If requested by Commission staff, enter into a confidentiality 
agreement in a form acceptable to the Commission, including a provision 
that a violation of the confidentiality agreement may lead to the 
whistleblower's ineligibility to receive an award.


Sec.  165.6  Whistleblowers ineligible for an award.

    (a) No award under Sec.  165.7 shall be made:
    (1) To any whistleblower who is, or was at the time, the 
whistleblower who acquired the original information submitted to the 
Commission, a member, officer, or employee of: The Commission; the 
Board of Governors of the Federal Reserve System; the Office of the 
Comptroller of the Currency; the Board of Directors of the Federal 
Deposit Insurance Corporation; the Director of the Office of Thrift 
Supervision; the National Credit Union Administration Board; the 
Securities and Exchange Commission; the Department of Justice; a 
registered entity; a registered futures association; a self-regulatory 
organization; or a law enforcement organization;
    (2) To any whistleblower who is convicted of a criminal violation 
related to the judicial or administrative action for which the 
whistleblower otherwise could receive an award under this section;
    (3) To any whistleblower who submits information to the Commission 
that is based on the facts underlying the covered judicial or 
administrative action submitted previously by another whistleblower;
    (4) To any whistleblower who acquired the information you gave the 
Commission from any of the individuals described in paragraphs (a)(1), 
(2), or (3) of this section; or
    (5) To any whistleblower who, in the whistleblower's submission, 
the whistleblower's other dealings with the Commission, or the 
whistleblower's dealings with another authority in connection with a 
related action, knowingly and willfully makes any false, fictitious, or 
fraudulent statement or representation, or use any false writing or 
document, knowing that it contains any false, fictitious, or fraudulent 
statement or entry, or omitted any material fact, where in the absence 
of such fact, other statements or representations made by the 
whistleblower would be misleading.
    (b) Notwithstanding a whistleblowers ineligibility for an award for 
any reason set forth in paragraph (a) of this section, the 
whistleblower will remain eligible for the anti-retaliation protections 
set forth in Section 23(h) of the Commodity Exchange Act.


Sec.  165.7  Procedures for award applications and commission award 
determinations.

    (a) Whenever a Commission judicial or administrative action results 
in monetary sanctions totaling more than $1,000,000 (i.e., a covered 
judicial or administrative action) the Commission will cause to be 
published on the Commission's Web site a ``Notice of Covered Action.'' 
Such Notice of Covered Action will be published subsequent to the entry 
of a final judgment or order that alone, or collectively with other 
judgments or orders previously entered in the Commission covered 
administrative or judicial action, exceeds $1,000,000 in monetary 
sanctions. A whistleblower claimant will have sixty (60) calendar days 
from the date of the Notice of Covered Action to file a claim for an 
award based on that action, or the claim will be barred.
    (b) To file a claim for a whistleblower award, you must file Form 
WB-APP, ``Application for Award for Original Information Provided 
Pursuant to Section 23 of the Commodity Exchange Act.'' You must sign 
this form as the claimant and submit it to the Commission by mail or 
fax to Commodity Futures Trading Commission, Three Lafayette Centre, 
1155 21st Street, NW., Washington, DC 20581, Fax (202) XXX-XXXX.
    The Form WB-APP, including any attachments, must be received by the 
Commission within sixty (60) calendar days of the date of the Notice of 
Covered Action or sixty (60) calendar days following the date of a 
final judgment in a related action in order to be considered for an 
award.
    (c) If you provided your original information to the Commission 
anonymously pursuant to Sec. Sec.  165.3 and 165.4 and:
    (1) You are making your claim for a whistleblower award on a 
disclosed basis, you must disclose your identity on the Form WB-APP and 
include with your Form WB-APP a signed and completed Form WB-DEC. Your 
identity must be verified in a form and manner that is acceptable to 
the Commission prior to the payment of any award; or
    (2) You are making your claim for a whistleblower award on an 
anonymous basis, you must be represented by counsel. You must provide 
your counsel with a completed and signed Form WB-DEC by no later than 
the date upon which your counsel submits to the Commission the Form WB-
APP. In addition, your counsel must submit with the Form WB-APP a 
separate Form WB-DEC completed and signed by counsel certifying that 
counsel has verified your identity, has reviewed the whistleblower's 
Form WB-DEC for completeness and accuracy, and will retain the signed 
original of whistleblower's Form WB-DEC in counsel's records. Upon 
request of the Commission staff, whistleblower's counsel must produce 
to the Commission the whistleblower's WB-DEC and the whistleblower's 
identity must be verified in a form and manner that is acceptable to 
the Commission prior to the payment of any award.
    (d) Once the time for filing any appeals of the Commission's 
judicial or administrative action and all related actions has expired, 
or where an appeal has been filed, after all appeals in the judicial, 
administrative and related actions have been concluded, the Commission 
will evaluate all timely whistleblower award claims submitted on Form 
WB-APP in accordance with the criteria set forth in this part 165. In 
connection with this process, the Commission may require that you 
provide additional information relating to your eligibility for an 
award or satisfaction of any of the conditions for an award, as set 
forth in Sec.  165.5(b). Following that evaluation, the Commission will 
send you a Determination setting forth whether the claim is allowed or 
denied and, if allowed, setting forth the award percentage amount.
    (e) The Commission's Office of the Secretariat will provide you 
with the Final Order of the Commission.


Sec.  165.8  Amount of award.

    If all of the conditions are met for a whistleblower award in 
connection with a covered judicial or administrative action or a 
related action, the Commission will then decide the amount of the award 
pursuant to the procedure set forth in Sec.  165.7.
    (a) Whistleblower awards shall be in an aggregate amount equal to--
    (1) Not less than 10 percent, in total, of what has been collected 
of the monetary sanctions imposed in the covered judicial or 
administrative action or related actions; and
    (2) Not more than 30 percent, in total, of what has been collected 
of the monetary sanctions imposed in the covered judicial or 
administrative action or related actions.
    (b) If the Commission makes awards to more than one whistleblower 
in connection with the same action or

[[Page 75747]]

related action, the Commission will determine an individual percentage 
award for each whistleblower, but in no event will the total amount 
awarded to all whistleblowers as a group be less than 10 percent or 
greater than 30 percent of the amount the Commission or the other 
authorities collect.


Sec.  165.9  Criteria for determining amount of award.

    The determination of the amount of an award shall be in the 
discretion of the Commission. The Commission may exercise this 
discretion directly or through delegated authority pursuant to Sec.  
165.15.
    (a) In determining the amount, the Commission shall take into 
consideration--
    (1) The significance of the information provided by the 
whistleblower to the success of the covered judicial or administrative 
action or related action;
    (2) The degree of assistance provided by the whistleblower and any 
legal representative of the whistleblower in a covered judicial or 
administrative action or related action;
    (3) The programmatic interest of the Commission in deterring 
violations of the Commodity Exchange Act by making awards to 
whistleblowers who provide information that leads to the successful 
enforcement of such laws; and
    (4) Whether the award otherwise enhances the Commission's ability 
to enforce the CEA, protect customers, and encourage the submission of 
high quality information from whistleblowers.
    (b) The Commission shall not take into consideration the balance of 
the Fund in determining the amount of an award.


Sec.  165.10  Contents of record for award determination.

    (a) The following items constitute the record upon which the award 
determination under Sec.  165.7 shall be made:
    (1) The whistleblower's Form TCR, ``Tip, Complaint or Referral,'' 
and Form WB-DEC, ``Declaration Concerning Original Information Provided 
Pursuant to Section 23 of the Commodity Exchange Act,'' including 
related attachments, and other documentation provided by the 
whistleblower to the Commission;
    (2) The whistleblower's Form WB-APP, ``Application for Award for 
Original Information Provided Pursuant to Section 23 of the Commodity 
Exchange Act,'' and related attachments
    (3) The complaint, notice of hearing, answers and any amendments 
thereto;
    (4) The final judgment, consent order, or administrative speaking 
order;
    (5) The transcript of the related administrative hearing or civil 
injunctive proceeding, including any exhibits entered at the hearing or 
proceeding;
    (6) Any other documents that appear on the docket of the 
proceeding; and
    (7) Any statements by the Commission litigation staff, or the 
litigation staff involved in prosecuting the related action, to the 
Commission regarding: The significance of the information provided by 
the whistleblower to the success of the covered judicial or 
administrative action or related action; and/or the degree of 
assistance provided by the whistleblower and any legal representative 
of the whistleblower in a covered judicial or administrative action or 
related action.
    (b) The record upon which the award determination under Sec.  165.7 
shall be made shall not include any Commission pre-decisional or 
internal deliberative process materials related to the Commission or 
its staff's determination: To file or settle the related covered 
judicial or administrative action; and/or whether, to whom and in what 
amount to make a whistleblower award. Further, the record upon which 
the award determination under Sec.  165.7 shall be made shall not 
include any other entity's pre-decisional or internal deliberative 
process materials related to its or its staff's determination to file 
or settle a related action.


Sec.  165.11  Awards based upon related actions.

    Provided that a whistleblower or whistleblowers comply with the 
requirements in Sec. Sec.  165.3, 165.5 and 165.7, pursuant to Sec.  
165.8, the Commission or its delegate may grant an award based on the 
amount of monetary sanctions collected in a ``related action'' or 
``related actions,'' rather than the amount collected in a covered 
judicial or administrative action, where--
    (a) A ``related action'' is a judicial or administrative action 
that is brought by:
    (1) The Department of Justice;
    (2) An appropriate department or agency of the Federal Government, 
acting within the scope of its jurisdiction;
    (3) A registered entity, registered futures association, or self-
regulatory organization; or
    (4) A State criminal or appropriate civil agency; and
    (b) The ``related action'' is based on the same original 
information that the whistleblower voluntarily submitted to the 
Commission and led to a successful resolution of the Commission's 
judicial or administrative action.


Sec.  165.12  Payment of awards from the fund, financing of customer 
education initiatives, and deposits and credits to the fund.

    (a) The Commission shall pay awards to whistleblowers from the 
Fund.
    (b) The Commission shall deposit into or credit to the Fund:
    (1) Any monetary sanctions collected by the Commission in any 
covered judicial or administrative action that is not otherwise 
distributed or ordered to be distributed, to victims of a violation of 
the Commodity Exchange Act underlying such action, unless the balance 
of the Fund at the time the monetary sanctions are collected exceeds 
$100,000,000. In the event the Fund's value exceeds $100,000,000, any 
monetary sanctions collected by the Commission in a covered judicial or 
administrative action that is not otherwise distributed or ordered to 
be distributed to victims of violations of the Commodity Exchange Act 
the Commissions rules and regulations thereunder underlying such 
action, shall be deposited into the general fund of the U.S. Treasury.
    (2) In the event that the amounts deposited into or credited to the 
Fund under paragraph (b)(1) of this section are not sufficient to 
satisfy an award made pursuant to 165.7, then, pursuant to Section 
23(g)(3)(B) of the Commodity Exchange Act;
    (i) An amount equal to the unsatisfied portion of the award;
    (ii) Shall be deposited into or credited to the Fund;
    (iii) From any monetary sanction collected by the Commission, in 
any judicial or administrative action brought by the Commission under 
the Commodity Exchange Act, regardless of whether it qualifies as an 
``covered judicial or administrative action''; provided, such judicial 
or administrative action is based on information provided by a 
whistleblower.
    (c) The Commission shall undertake and maintain customer education 
initiatives. The initiatives shall be designed to help customers 
protect themselves against fraud or other violations of the Act, or the 
Commissions rules or regulations thereunder. The Commission shall fund 
the customer education initiatives, and may utilize funds deposited 
into the Fund during any fiscal year in which the beginning (October 1) 
balance of the Fund is greater than $10,000,000. The Commission shall 
budget on an annual basis the amount used to finance customer education 
initiatives, taking

[[Page 75748]]

into consideration the balance of the Fund.


Sec.  165.13  Appeals.

    (a) Any Final Order of the Commission relating to a whistleblower 
award determination, including whether, to whom, or in what amount to 
make whistleblower awards, may be appealed to the appropriate court of 
appeals of the United States not more than thirty (30) days after the 
Final Order of the Commission is issued.
    (b) The record on appeal shall consist of:
    (1) The Contents of Record for Award Determination, as set forth in 
Sec.  165.9;
    (2) The Final Order of the Commission, as set forth in Sec.  165.7.


Sec.  165.14  Procedures applicable to the payment of awards.

    (a) A recipient of a whistleblower award is entitled to payment on 
the award only to the extent that the monetary sanction upon which the 
award is based is collected in the Commission judicial or 
administrative action or in a related action;
    (b) Payment of a whistleblower award for a monetary sanction 
collected in a Commission action or related action shall be made within 
a reasonable time following the later of:
    (1) The date on which the monetary sanction is collected; or
    (2) The completion of the appeals process for all whistleblower 
award claims arising from:
    (i) The Notice of Covered Action, in the case of any payment of an 
award for a monetary sanction collected in a covered judicial or 
administrative action; or
    (ii) The related action, in the case of any payment of an award for 
a monetary sanction collected in a related action.
    (c) If there are insufficient amounts available in the Fund to pay 
the entire amount of an award payment within a reasonable period of 
time from the time for payment specified by paragraph (b) of this 
section, then subject to the following terms, the balance of the 
payment shall be paid when amounts become available in the Fund, as 
follows:
    (1) Where multiple whistleblowers are owed payments from the Fund 
based on awards that do not arise from the same Notice of Covered 
Action (or related action), priority in making these payments will be 
determined based upon the date that the Final Order of the Commission 
is made. If two or more of these Final Orders of the Commission are 
entered on the same date, those whistleblowers owed payments will be 
paid on a pro rata basis until sufficient amounts become available in 
the Fund to pay their entire payments.
    (2) Where multiple whistleblowers are owed payments from the Fund 
based on awards that arise from the same Notice of Covered Action (or 
related action), they will share the same payment priority and will be 
paid on a pro rata basis until sufficient amounts become available in 
the Fund to pay their entire payments.


Sec.  165.15  Delegations of authority.

    (a) Delegation of Authority to the Executive Director. The 
Commission hereby delegates, until such time as the Commission orders 
otherwise, to the Executive Director or to any Commission employee 
under the Executive Director's supervision as he or she may designate, 
the authority to take the following actions to carry out this Part 165 
and the requirements of Section 23(h) of Commodity Exchange Act.
    (1) Delegated authority to deposit collected monetary sanctions 
into the Fund and the payment of awards therefrom shall be with the 
concurrence of the General Counsel and the Director of the Division of 
Enforcement or of their respective designees.
    (2) [Reserved]
    (b) [Reserved]


Sec.  165.16  No immunity.

    The Commodity Whistleblower Incentives and Protections provisions 
set forth in Section 23(h) of Commodity Exchange Act and this Part 165 
do not provide individuals who provide information to the Commission 
with immunity from prosecution. The fact that you may become a 
whistleblower and assist in Commission investigations and enforcement 
actions does not preclude the Commission from bringing an action 
against you based upon your own conduct in connection with violations 
of the Commodity Exchange Act and the Commission's regulations. If such 
an action is determined to be appropriate, however, the Commission's 
Division of Enforcement will take your cooperation into consideration 
in accordance with its sanction recommendations to the Commission.


Sec.  165.17  Awards to whistleblowers who engage in culpable conduct.

    In determining whether the required $1,000,000 threshold has been 
satisfied (this threshold is further explained in Sec.  165.7) for 
purposes of making any award, the Commission will not take into account 
any monetary sanctions that the whistleblower is ordered to pay, or 
that are ordered against any entity whose liability is based primarily 
on conduct that the whistleblower principally directed, planned, or 
initiated. Similarly, if the Commission determines that a whistleblower 
is eligible for an award, any amounts that the whistleblower or such an 
entity pay in sanctions as a result of the action or related actions 
will not be included within the calculation of the amounts collected 
for purposes of making payments pursuant to Sec.  165.14.


Sec.  165.18  Staff communications with whistleblowers from represented 
entities.

    If you are a whistleblower who is a director, officer, member, 
agent, or employee of an entity that has counsel, and you have 
initiated communication with the Commission relating to a potential 
violation of the Commodity Exchange Act, the Commission's staff is 
authorized to communicate directly with you regarding the subject of 
your communication without seeking the consent of the entity's counsel.


Sec.  165.19  Nonenforceability of certain provisions waiving rights 
and remedies or requiring arbitration of disputes.

    The rights and remedies provided for in this Part 165 of the 
Commission's regulations may not be waived by any agreement, policy, 
form, or condition of employment including by a predispute arbitration 
agreement. No predispute arbitration agreement shall be valid or 
enforceable if the agreement requires arbitration of a dispute arising 
under this Part.

Appendix A to Part 165--Guidance With Respect to the Protection of 
Whistleblowers Against Retaliation

    Section 23(h)(1) of the Commodity Exchange Act prohibits 
employers from engaging in retaliation against whistleblowers. This 
provision provides whistleblowers with certain protections against 
retaliation, including: A federal cause of action against the 
employer, which must be filed in the appropriate United States 
district court within two (2) years of the employer's retaliatory 
act; and potential relief for prevailing whistleblowers, including 
reinstatement, back pay, and compensation for other expenses, 
including reasonable attorney's fees. Specifically, Section 23(h)(1) 
of Commodity Exchange Act provides:
    (A) In General.--No employer may discharge, demote, suspend, 
threaten, harass, directly or indirectly, or in any other manner 
discriminate against, a whistleblower in the terms and conditions of 
employment because of any lawful act done by the whistleblower--
    (i) In providing information to the Commission in accordance 
with subsection (b); or
    (ii) In assisting in any investigation or judicial or 
administrative action of the Commission based upon or related to 
such information.

[[Page 75749]]

    (B) Enforcement. (i) Cause of Action.--An individual who alleges 
discharge or other discrimination in violation of subparagraph (A) 
may bring an action under this subsection in the appropriate 
district court of the United States for the relief provided in 
subparagraph (C), unless the individual who is alleging discharge or 
other discrimination in violation of subparagraph (A) is an employee 
of the Federal Government, in which case the individual shall only 
bring an action under section 1221 of title 5, United States Code.
    (ii) Subpoenas.--A subpoena requiring the attendance of a 
witness at a trial or hearing conducted under this subsection may be 
served at any place in the United States.
    (iii) Statute of Limitations.--An action under this subsection 
may not be brought more than 2 years after the date on which the 
violation reported in subparagraph (A) is committed.
    (C) Relief.--Relief for an individual prevailing in an action 
brought under subparagraph (B) shall include--
    (i) Reinstatement with the same seniority status that the 
individual would have had, but for the discrimination;
    (ii) The amount of back pay otherwise owed to the individual, 
with interest; and
    (iii) Compensation for any special damages sustained as a result 
of the discharge or discrimination, including litigation costs, 
expert witness fees, and reasonable attorney's fees.
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BILLING CODE 6351-01-C

Privacy Act of Statement

    The Privacy Act requires that the Commodity Futures Trading 
Commission (CFTC) inform individuals of the following when asking 
for information. This form may be used by anyone wishing to provide 
the CFTC with information concerning a violation of the Commodity 
Exchange Act or the Commission's regulations. If you are submitting 
this information for the Commission's whistleblower award program 
pursuant to Section 23 of the Commodity Exchange Act, the 
information provided will enable the Commission to determine your 
eligibility for payment of an award. This information may be 
disclosed to Federal, state, local, or foreign agencies responsible 
for investigating, prosecuting, enforcing, or implementing laws, 
rules, or regulations implicated by the information consistent with 
the confidentiality requirements set forth therein. Furnishing the 
information is voluntary, but a decision not to do so may result in 
you not being eligible for award consideration.
    Questions concerning this form may be directed to the Commodity 
Futures Trading Commission, Three Lafayette Centre, 1151 21st 
Street, NW., Washington, DC 20581.

Submission Procedures

    <bullet> After completing this From TCR, please send it to the 
Commission: electronically via the Commission's Web site; by mail to 
the Commodity Futures Trading Commission, Three Lafayette Centre, 
1151 21st Street, NW., Washington, DC 20581; or by facsimile to 
(202) XXX-XXXX.
    <bullet> You have the right to submit information anonymously.
    <bullet> If you are submitting information for the Commission's 
whistleblower award program, you must submit your information using 
this Form TCR. In addition to submitting your information by this 
method, you must also submit a declaration on From WB-DEC. The Form 
WB-DEC can be printed out from the Commission's Web site or obtained 
from the Commission, and it must be manually signed by you under 
penalty of perjury.

Instructions for Completing Form TCR

Section A: Information About You
    Questions 1-3: Please provide the following information about 
yourself:

    [cir] Last name, first name, and middle initial;

[[Page 75752]]

    [cir] Complete address, including city, state and zip code;
    [cir] Telephone number and, if available, an alternative number 
where you can be reached;
    [cir] Your e-mail address (to facilitate communications, the 
Commission strongly encourages you to provide your e-mail address); 
and
    [cir] Your preferred method of communication.

    Question 4: Describes your occupation, for example which of the 
following provides the best description:

    [cir] Accountant, attorney, auditor, broker-dealer, compliance 
officer, financial representative, foreign officer, fund manager, 
investment advisor, commodity trading adviser, investor, customer, 
company officer or senior manager, trader, floor broker, government 
official (federal, state, or local), law enforcement personnel 
(federal, state, or local), or other (specific).

Section B: Information About Your Attorney. Complete This Section 
Only If Your Are Represented By An Attorney In This Matter.
    Questions 1-4: Provide the following information about the 
attorney representing you in this matter:

    [cir] Attorney's name;
    [cir] Firm name;
    [cir] Complete address, including city, state and zip code;
    [cir] Telephone number and fax number; and
    [cir] E-mail address.

Section C: Tell Us About The Individual And/Or Entity You Have A 
Complaint Against. If your complaint relates to more than two 
individuals and/or entities, you may attach additional sheets.
    Question 1: Choose the following that best describes the 
individual or entity to which your complaint relates:

    [cir] For Individuals: accountant, analyst, associated person, 
attorney, auditor, broker, commodity trading advisor, commodity pool 
operator, compliance officer, employee, executing broker, executive 
officer or director, financial planner, floor broker, floor trader, 
trader, unknown, or other (specify).
    [cir] For Entities: bank, commodity trading advisor, commodity 
pool operator, commodity pool, futures commission merchant, hedge 
fund, introducing broker, major swap participant, retail foreign 
exchange dealer, swap dealer, unknown, or other (specify).

    Questions 2-4: For each subject, provide the following 
information, if known:

    [cir] Full name;
    [cir] Complete address, including city, state and zip code;
    [cir] Telephone number;
    [cir] E-mail address; and
    [cir] Internet address, if applicable.

Section C: Tell Us About Your Complaint.
    Question 1: State the date (mm/dd/yyyy) that the alleged conduct 
began.
    Question 2: Choose the option that you believe best describes 
the nature of your complaint. If you are alleging more than one 
violation, please list all that you believe may apply. Use 
additional sheets, if necessary.

    [cir] Theft/misappropriation;
    [cir] Misrepresentation/omission (false/misleading marketing/
sales literature; inaccurate, misleading or non-disclosure by 
commodity pool operator, commodity trading advisor, futures 
commission merchant, introducing broker, retail foreign currency 
dealer, swap dealer, or their associated person(s); false/material 
misstatements in any report or statement;
    [cir] Ponzi/pyramid scheme;
    [cir] Off-exchange foreign currency, commodity, or precious 
metal fraud;
    [cir] Registration violations (including unregistered commodity 
pool operator, commodity trading advisor, futures commission 
merchant, introducing broker, retail foreign currency dealer, swap 
dealer, or their associated person(s));
    [cir] Trading (after hours trading; algorithmic trading; 
disruptive trading; front running; insider trading; manipulation/
attempted manipulation of commodity prices; market timing; 
inaccurate quotes/pricing information; program trading; trading 
suspensions; volatility);
    [cir] Fees/mark-ups/commissions (excessive, unnecessary or 
unearned administrative, commission or sales fees; failure to 
disclose fees; insufficient notice of change in fees; excessive or 
otherwise improper spreads or fills);
    [cir] Sales and advisory practices (background information on 
past violations/integrity; breach of fiduciary duty/responsibility; 
churning/excessive trading; cold calling; conflict of interest; a 
bout of authority in discretionary trading; failure to respond to 
client, customer or participant; guarantee against loss; promise to 
profit; high pressure sales techniques; instructions by client, 
customer or participant not followed; investment objectives not 
followed; solicitation methods (non-cold calling, seminars);
    [cir] Customer accounts (unauthorized trading); identity theft 
affecting account; inaccurate valuation of Net Asset Value; or
    [cir] Other (analyst complaints; market maker activities; 
employer/employee disputes; specify other).

    Question 3: Indicate whether you were in the past, or are 
currently, an officer, director, employee, consultant, or contractor 
of the entity to which your complaint relates.
    Question 4a: Indicate whether you have taken any prior action 
regarding your complaint, including whether you reported the 
violation to the entity, including the compliance office, 
whistleblower hotline or ombudsman; complained to the Commission, 
another regulator, a law enforcement agency, or any other agency or 
organization; initiated legal action, mediation or arbitration, or 
initiated any other action.
    Question 4b: If you answered ``yes'' to question 4a, provide 
details, including the date on which you took the action(s) 
described, the name of the person or entity to whom you directed any 
report or complaint and the contact information for the person or 
entity, if known, and the complete case name, case number, and forum 
of any legal action you have taken. Use additional sheets, if 
necessary.
    Question 5: State in detail all the facts pertinent to your 
complaint. Attach additional sheets, if necessary.
    Question 6: Describe all supporting materials in your 
possession, custody or control, and the availability and location of 
additional supporting materials not in your possession, custody or 
control. Attach additional sheets, if necessary.
    Question 7: Describe how you obtained the information that 
supports your allegation. If any information was obtained from a 
public source, identify the source with as much particularity as 
possible. Attach additional sheets, if necessary.
    Question 8: Please provide any additional information you think 
may be relevant.
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[[Page 75755]]


BILLING CODE 6351-01-C

Privacy Act Statement

    This notice is given under the Privacy Act of 1974. The Privacy 
Act requires that the Commodity Futures Trading Commission (CFTC) 
inform individuals of the following when asking for information. The 
information provided will enable the Commission to determine your 
eligibility for payment of an award pursuant to Section 23 of the 
Commodity Exchange Act. This information may be disclosed to 
Federal, state, local, or foreign agencies responsible for 
investigating, prosecuting, enforcing, or implementing rules, or 
regulations implicated buy the information consistent with the 
confidentiality requirements set forth in Section 23 of the 
Commodity Exchange Act and part 165 of the Commissions regulations 
hereunder. Furnishing the information is voluntary, but a decision 
not to do so may result in you not being eligible for award 
consideration.
    Questions concerning this form may be directed to the Commodity 
Futures Trading, Three Lafayette Centre, 1151 21st Street, NW., 
Washington, DC 20581.

General Information

    Submitting information for the CFTC's whistleblower award 
program is a two-step process. First, you must provide us with your 
information by competing a Form TCR (``Tip, Complaint, or 
Referral''), instructions set forth on the form, and sending it to 
the Commission: electronically via the Commission's website; by mail 
to the Commodity Futures Trading Commission, Three Lafayette Centre, 
1151 21st Street, NW., Washington, DC 20581; or by facsimile to 
(202) XXX-XXXX.
    <bullet> Submitting your information to the Commission is the 
first step. If you want to be considered for a whistleblower award, 
you must also submit this Form WB-DEC and it must be manually signed 
under penalty of perjury.
    <bullet> If you submitted your information electronically 
through the Commission's website, the Commission must receive your 
completed Form WB-DEC within 30 days of your submission. If you did 
not submit your information electronically but instead are 
submitting your information on Form TCR, you must submit your 
declaration on Form WB-DEC at the same time that you submit your 
Form TCR.
    Follow the instructions set forth below for submitting this Form 
WB-DEC.
    <bullet> If you follow these steps, and the information you 
submit leads to the successful enforcement of a CFTC judicial or 
administrative action, or a related action, you will have an 
opportunity at a later date to submit a claim for an award. That is 
a separate process and is described in our whistleblower rules, 
which are available on the Commission's Web site [insert link].
    <bullet> You have the right to submit information anonymously. 
If you are doing so, please skip Part I of these instructions and 
proceed directly to Part II. Otherwise, please begin by following 
the instructions in Part I.

Part I: Instructions for Filers who are Disclosing Their Identity

    You are required to complete Sections A, C, D, and E of this 
form. If you are represented by an attorney in this matter, you must 
also complete Section B. Specific instructions for answering these 
questions can be found in Part IV below.
    If you previously submitted your complaint electronically 
through the Commission's website, you may submit this Form WB-DEC to 
us in any of the following ways:
    [cir] By mailing or delivering the signed form to the Commodity 
Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street, NW., Washington, DC 20581-XXXX; or
    [cir] By faxing the signed form to (202) XXX-XXXX; or
    [cir] By scanning and emailing the form in PDF format to [insert 
e-mail address].
    Please note that the Commission must receive your Form WB-DEC 
within thirty (30) days of when you submitted your information to us 
through the Commission's website.
    If you did not previously submit your complaint electronically 
through the CFTC's website, but instead intend to send us a Form 
TCR, then you must submit your completed Form TCR and your 
declaration on this Form WB-DEC together. You may do so in one of 
two ways:
    <bullet> By mailing or delivering the Form TCR and the signed 
Form WB-DEC to the Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581-XXXX; 
or
    <bullet> By faxing the Form TCR and the signed Form WB-DEC form 
to (202) XXX-XXXX.

Part II: Instructions for Anonymous Filers

    If you are submitting information anonymously, you may be 
represented by an attorney in this matter. If you are applying for a 
whistleblower award, you must be represented by an attorney in 
connection with such application.
    In order for you to be eligible for a whistleblower award, your 
attorney must retain your signed original of Form WB-DEC in his or 
her records, and submit both your Form WB-APP (if you filled one out 
instead of submitting your complaint to us electronically) and a 
Form WB-DEC completed by the attorney declaration to the Commission. 
You are encouraged to confirm that your attorney followed these 
steps.

Part III: Instructions for Attorneys Representing Anonymous 
Whistleblowers

    Obtain a completed and signed original of Form WB-DEC from your 
client. You must retain this signed original in your records because 
it may be required at a later date upon request of CFTC staff and 
prior to the payment a whistleblower award.
    You must prepare your own Form WB-DEC, completing only Sections 
B, C and F. Specific instructions for answering these questions can 
be found in Part IV below.
    You must submit your client's application on Form WB-APP and 
your attorney declaration on this Form WB-DEC together. You may do 
so in one of two ways:
    [cir] By mailing or delivering the Form WB-APP and the signed 
Form WB-DEC to the Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581-XXXX; 
or
    [cir] By faxing the Form WB-APP and the signed Form WB-DEC to 
(202) XXX-XXXX.

Part IV: Instructions for Completing Form WB-DEC

Section A: Submitter's Information

Questions 1-3: Provide the following information about yourself:
    <bullet> First and last name, and middle initial;
    <bullet> Complete address, including city, state and zip code;
    <bullet> Telephone number and, if available, an alternate number 
where you can be reached; and
    <bullet> E-mail address.

Section B: Information about Your Attorney. Complete this section 
only if you are represented by an attorney in this matter. You must 
be represented by an attorney, and this section must be completed, 
if you intend to apply for a whistleblower award anonymously.

Questions 1-4: Provide the following information about the attorney 
representing you in this matter:
    <bullet> Attorney's name;
    <bullet> Firm name;
    <bullet> Complete address, including city, state and zip code;
    <bullet> Telephone number and fax number; and
    <bullet> E-mail address.

Section C: Tip/Complaint Details

Question 1: Indicate the manner in which the information was 
submitted to the Commission.
Question 2a: Provide the date on which the TCR was submitted to the 
Commission.
Question 2b: Provide the name of the individual or entity to which 
your complaint relates.
Question 3a: Indicate whether the submitter or counsel have had any 
communication(s) with the Commission concerning this manner.
Question 3b: If you answered ``yes'' to question 3a, provide the 
name of the SEC staff member with whom the submitter or counsel 
communicated.
Question 4a: Indicate whether the submitted or counsel have provided 
the information being submitted to the CFTC to any other agency or 
organization.
Question 4b: If you answered ``yes'' to question 4a, provide 
details, including the name of the agency or organization, the date 
on which you provided your information to the agency or organization 
and any other relevant details.
Question 4c: Provide a name and contact information for your point 
of contact at the other agency or organization, if known.

Section D: Eligibility Requirements

Question 1: State whether you are currently, or were at the time you 
acquired the original information that you submitted to the CFTC a 
member, officer, or employee of the Department of Justice the 
Securities and Exchange Commission; the Comptroller of the

[[Page 75756]]

Currency, the Board of Governors of the Federal Reserve System, the 
Federal Deposit Insurance Corporation, the Office of Thrift 
Supervision; National Credit Union Administration Board, registered 
entity, a registered futures association, a self-regulatory 
organization or; any law enforcement organization.
Question 2: State whether you provided the information submitted to 
the CFTC pursuant to a cooperation agreement with the Commission or 
with any other agency or organization.
Question 3: State whether you are a spouse, parent, child or sibling 
of a member or employee of the Commission, or whether you reside in 
the same household as a member or employee of the Commission.
Question 4: State whether you acquired the information you are 
providing to the CFTC from any individual described in Question 1 
through 3 of this Section.
Question 5: If you answered ``yes'' to questions 1 though 4, please 
provide details.
Question 5a: State whether you provided the information identified 
submitted to the CFTC before you (or anyone representing you) 
received any request, inquiry or demand from the CFTC, Congress, or 
any other federal, state or local authority, or any self regulatory 
organization about a matter to which the information your submission 
was relevant.
Question 5b: If you answered ``no'' to questions 5a, please provide 
details. Use additional sheets if necessary.
Question 6a: State whether you are the subject or target of a 
criminal investigation or have been convicted of a criminal 
violation in connection with the information upon which your 
application for award is based.
Question 6b: If you answered ``yes'' to question 9a, please provide 
details, including the name of the agency or organization that 
conducted the investigation or initiated the action against you, the 
name and telephone number of your point of contact at the agency or 
organization, if available and the investigation/case name and 
number, if applicable. Use additional sheets, if necessary. If you 
previously provided this information on Form WB-DEC, you may leave 
this question blank, unless your response has changed since the time 
you submitted your Form WB-DEC.

Section E: Declaration

    To be completed and signed by person submitting the information

Section F: Counsel Certification

    To be completed and signed by attorney for an anonymous person 
submitting information

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BILLING CODE 6351-01-P

Privacy Act Statement

    This notice is given under the Privacy Act of 1974. The Privacy 
Act requires that the Commodity Futures Trading Commission (CFTC or 
Commission) inform individuals of the following when asking for 
information. The information provided will enable the Commission to 
determine your eligibility for payment of an award pursuant to 
Section 23 of the Commodity Exchange Act. This information may be 
disclosed to Federal, state, local, or foreign agencies responsible 
for investigating, prosecuting, enforcing, or implementing the laws, 
rules, or regulations implicated by the information consistent with 
the confidentiality requirements set forth in Section 23 of the 
Commodity Exchange Act and part 165 of the Commissions regulations 
thereunder. Furnishing the information is voluntary, but a decision 
not to do so may result in you not being eligible for award 
consideration.
    Questions concerning this form may be directed to the Commodity 
Futures Trading Commission, Three Lafayette Centre, 1151 21st 
Street, NW., Washington, DC 20581.

General

    This form should be used by persons making a claim for a 
whistleblower award in connection with information provided to the 
CFTC or to another agency in a related action. In order to be deemed 
eligible for an award, you must meet all the requirements set forth 
in Section 23 of the Commodities Exchange Act and the rules 
hereunder.
    You must sign the Form WB-APP as the claimant. If you provided 
your information to the CFTC anonymously, you must now disclose your 
identity on this form and your identity must be verified in a form 
and manner that is acceptable to the CFTC prior to the payment of 
any award.
    <bullet> If you are filing your claim in connection with 
information that you provided to the CFTC, then Form WB-APP and any 
attachments thereto, must be received by the CFTC within sixty (60) 
days of the date of the Notice of Covered Action or the date of a 
final judgment in a related action to which the claim relates.
    <bullet> If you are filing your claim in connection with 
information you provided to another agency in a related action, then 
your Form WB-APP, and any attachments there to, must be received by 
the CFTC within sixty (60) days of the date of a final judgment in 
the related action to which the claim relates.
    You must submit your Form WB-APP to us in one of the following 
two ways:
    <bullet> By mailing or delivering the signed form to the 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 
21st Street, NW., Washington, DC 20581; or
    <bullet> By faxing the signed form to (202) XXX-XXXX.

Instructions for Completing Form WB-APP

Section A: Applicant's Information

Questions 1-3: Provide the following information about yourself:
    <bullet> First and last name, and middle initial;
    <bullet> Complete address, including city, state and zip code;
    <bullet> Telephone number and, if available, an alternate number 
where you can be reached; and
    <bullet> E-mail address

Section B: Attorney's Information. If you are represented by an 
attorney in this matter, provide the information requested. If you 
are not representing an attorney in this matter, leave this Section 
blank.

Questions 1-4: Provide the following information about the attorney 
representing you in this matter:
    <bullet> Attorney's name;
    <bullet> Firm name;
    <bullet> Complete address, including city, state and zip code;
    <bullet> Telephone number and fax number; and
    <bullet> E-mail address.

Section C: Tip/Complaint Details

Question 1: Indicate the manner in which your original information 
was submitted to the CFTC.
Question 2a: Provide the date on which you submitted your TCR (Tip, 
Complaint or Referral) information to the CFTC.
Question 2b: Provide the name of the individual(s) or entity(s) to 
which your complaint related.

Section D: Notice of Covered Action

    The process for making a claim for a whistleblower award begins 
with the publication of a ``Notice of a Covered Action'' on the 
Commission's Web site. This notice is published whenever a judicial 
or administrative action brought by the Commission results in the 
imposition of monetary sanctions exceeding $1,000,000. The Notice is 
published on the Commission's Web site subsequent to the entry of a 
final

[[Page 75760]]

judgment or order in the action that by itself, or collectively with 
other judgments or orders previously entered in the action, exceeds 
the $1,000,000 threshold.

Question 1: Provide the date of the Notice of Covered Action to 
which this claim relates.
Question 2: Provide the notice number of the Notice of Covered 
Action.
Question 3a: Provide the case name referenced in Notice of Covered 
Action.
Question 3b: Provide the case number referenced in Notice of Covered 
Action.

Section E: Claims Pertaining to Related Actions

Question 1: Provide the name of the agency or organization to which 
you provided your information.
Question 2: Provide the name and contact information for your point 
of contact at the agency or organization, if known.
Question 3a: Provide the date on which that you provided your 
information to the agency or organization referenced in question E1.
Question 3b: Provide the date on which the agency or organization 
referenced in question E1 filed the related action that was based 
upon the information you provided.
Question 4a: Provide the case name of the related action.
Question 4b: Provide the case number of the related action.

Section F: Eligibility Requirements

Question 1: State whether you are currently, or were at the time you 
acquired the original information that you submitted to the CFTC a 
member, officer, or employee of the Department of Justice, the 
Securities and Exchange Commission, the Comptroller of the Currency, 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Office of Thrift Supervision, 
National Credit Union Administration Board, registered entity, a 
registered futures association, a self-regulatory organization or; 
any law enforcement organization.
Question 2: State whether you provided the information submitted to 
the CFTC pursuant to a cooperation agreement with the Commission or 
with any other agency or organization.
Question 3: State whether you are a spouse, parent, child or sibling 
of a member or employee of the Commission, or whether you reside in 
the same household as a member or employee of the Commission.
Question 4: State whether you acquired the information you are 
providing to the CFTC from any individual described in Question 1 
through 3 of this Section.
Question 5: If you answered ``yes'' to questions 1 though 4, please 
provide details.
Question 5a: State whether you provided the information identified 
submitted to the CFTC before you (or anyone representing you) 
received any request, inquiry or demand from the CFTC, Congress, or 
any other federal, state or local authority, or any self regulatory 
organization about a matter to which the information your submission 
was relevant.
Question 5b: If you answered ``no'' to questions 5a, please provide 
details. Use additional sheets if necessary.
Question 6a: State whether you are the subject or target of a 
criminal investigation or have been convicted of a criminal 
violation in connection with the information upon which your 
application for award is based.
Question 6b: If you answered ``yes'' to question 9a, please provide 
details, including the name of the agency or organization that 
conducted the investigation or initiated the action against you, the 
name and telephone number of your point of contact at the agency or 
organization, if available and the investigation/case name and 
number, if applicable. Use additional sheets, if necessary. If you 
previously provided this information on Form WB-DEC, you may leave 
this question blank, unless your response has changed since the time 
you submitted your Form WB-DEC.

Section G: Entitlement to Award

    Use this section to explain the basis for your belief that you 
are entitled to an award in connection with your submission of 
information to us or to another agency in connection with a related 
action. Specifically address how you believe you voluntarily 
provided the Commission with original information that led to the 
successful enforcement of a judicial or administrative action filed 
by the Commission, or a related action. Refer to Sec.  165.11 of 
this part for further information concerning the relevant award 
criteria. You may attach additional sheets, if necessary.
    Section 23(c)(1)(B) of the CEA requires the Commission to 
consider, and subparagraph (a)(1) through (4) provides that in 
determining the amount of an award, the Commission will evaluate the 
following factors: (a) The significance of the information provided 
by a whistleblower to the success of the Commission action or 
related action; (b) the degree of assistance provided by the 
whistleblower and any legal representative of the whistleblower in 
the Commission action or related action; (c) the programmatic 
interest of the Commission in deterring violations of the securities 
laws by making awards to whistleblowers who provide information that 
leads to the successful enforcement of such laws; and (d) whether 
the award otherwise enhances the Commission's ability to enforce the 
Commodity Exchange Act, protect customers, and encourage the 
submission of high quality information from whistleblowers. Address 
these factors in your response as well.

Section G: Declaration

    This section must be signed by the claimant.

    By the Commission.
    Dated: November 10, 2010.
David Stawick,
Secretary.

Statement of Chairman Gary Gensler

Proposed Rules for Implementing the Whistleblower Provisions of Section 
23 of the Commodity Exchange Act

    I support the proposed rulemaking to establish a program for 
whistleblowers as mandated by the Dodd-Frank Act. Congress enacted 
these provisions to incentivize whistleblowers to come forward with new 
information about potential fraud in the financial markets. The 
proposed rulemaking authorizes the Commission to provide a monetary 
award to whistleblowers when their original information results in a 
successful enforcement action. The rule also provides that moneys 
recovered will fund new customer education initiatives to protect the 
public. The proposed rules encourage persons with knowledge to come 
forward and assist the Commission in identifying, investigating and 
prosecuting potential violations of the Commodity Exchange Act.

[FR Doc. 2010-29022 Filed 12-3-10; 8:45 am]
BILLING CODE 6351-01-P


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