53172 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

1 7 U.S.C. 1, et seq. (2006). 

2Public Law 111–203, § 748, 124 Stat. 1739 

(2010). 

3Proposed Rules for Implementing the 

Whistleblower Provisions of Section 23 of the 

Commodity Exchange Act, Release No. 3038–AD04, 

75 FR 75728 (Dec. 6, 2010). 

4The public comments the Commission received 

are available at http://comments.cftc.gov/ 

PublicComments/CommentList.aspx?id=916. 

5The form letters provide no specific comments 

or requested revisions regarding the Proposed 

Rules. These letters: express concern that the 

‘‘corporate lobby will have undue influence on the 

final rules to protect whistleblowers;’’ allege that 

‘‘[t]he SEC proposed rules completely undermine 

efforts to protect employees who risk their careers 

to expose fraud;’’ and opine that ‘‘the CTFC should 

not blindly follow any of the SEC’s 

recommendations and should instead write rules 

will encourage whistleblowers to report 

commodities fraud.’’ 

6See Securities Whistleblower Incentives and 

Protections, 76 FR 34300 (June 13, 2011) (to be 

codified at 17 CFR 240.21F–1 to 240.21F–17). 

Commission staff has consulted with SEC staff 

regarding drafting of rules to implement the 

Commission’s and SEC’s respective Dodd-Frank Act 

whistleblower provisions, Section 748 (Commodity 

Whistleblower Incentives and Protection) and 

Section 922 (Whistleblower Protection). To the 

extent that the Commission and SEC reached the 

same conclusions on common issues, the 

Commission endeavored harmonize its rule text 

with the SEC’s final rule text. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 165 

RIN 3038–AD04 

Whistleblower Incentives and 

Protection 

AGENCY: Commodity Futures Trading 

Commission (‘‘Commission’’). 

ACTION: Final rules. 

SUMMARY: The Commission is adopting 

Final Rules and new forms to 

implement Section 23 of the Commodity 

Exchange Act (‘‘CEA’’ or ‘‘Act’’) entitled 

‘‘Commodity Whistleblower Incentives 

and Protection.’’ The Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act, enacted on July 21, 2010 (‘‘DoddFrank Act’’), established a 

whistleblower program that requires 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 CEA that leads 

to the successful enforcement of a 

covered judicial or administrative 

action, or a related action. The DoddFrank Act also prohibits retaliation by 

employers against individuals who 

provide the Commission with 

information about possible CEA 

violations. 

DATES: Effective Date: These Final Rules 

will become effective upon October 24, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Edward Riccobene, Chief, Policy and 

Review, Division of Enforcement, 202– 

418–5327, ericcobene@cftc.gov, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1151 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: The 

Commission is adopting Final Rules 

165.1 through 165.19 and Appendix A, 

thereto, and new Forms TCR (‘‘Tip, 

Complaint or Referral’’) and WB–APP 

(‘‘Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act’’), under the CEA. 

I. Background and Summary 

Section 748 of the Dodd-Frank Act 

added new Section 23 to the CEA,1

entitled ‘‘Commodity Whistleblower 

Incentives and Protection.’’ 2 Section 23 

directs that the Commission 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 the 

successful enforcement of an action 

brought by the Commission that results 

in monetary sanctions exceeding 

$1,000,000, or the successful 

enforcement of a related action. Section 

23 also provides for the protection of 

whistleblowers against retaliation for 

reporting information to the 

Commission and assisting the 

Commission in its related investigations 

and enforcement actions. 

On December 6, 2010, the 

Commission proposed Part 165 of the 

Commission’s Regulations to implement 

new Section 23 (‘‘the Proposed Rules’’ 

or ‘‘Proposing Release’’).3 The rules 

contained in proposed Part 165 defined 

certain terms critical to the operation of 

the whistleblower program, outlined the 

procedures for applying for awards and 

the Commission’s procedures for 

making decisions on claims, and 

generally explained the scope of the 

whistleblower program to the public 

and to potential whistleblowers. 

The Final Rules include the specific 

procedures and forms that a potential 

whistleblower must follow and file to 

make a claim. The Final Rules also 

detail the standards that the 

Commission will use in determining 

whether an award is appropriate and, if 

one is appropriate, what the amount of 

an award should be. The Commission 

may exercise discretion in granting an 

award based on the significance of the 

information, degree of assistance 

provided in support of a covered 

judicial or administrative action, 

programmatic interest, considerations of 

public policy, and other criteria (other 

than the balance of the Commodity 

Futures Trading Commission Customer 

Protection Fund (‘‘Fund’’)). An award 

shall be denied to certain government 

employees and others who, for certain 

stated reasons, are ineligible to be 

whistleblowers. 

The Final Rules also provide that a 

whistleblower may appeal to the 

appropriate U.S. Circuit Court of 

Appeals the Commission’s award 

determination, including the 

determinations as to whom an award is 

made, the amount of an award, and the 

denial of an award. Finally, the Final 

Rules also provide guidance concerning 

anti-retaliation provisions of the DoddFrank Act. 

The Commission received more than 

635 comment letters.4 Over 600 of these 

comments, sent by or on behalf of 

different individuals and entities, were 

variations of the same form letter.5 The 

remaining 35 comments were submitted 

by individuals, whistleblower advocacy 

groups, public companies, corporate 

compliance personnel, law firms and 

individual lawyers, professional 

associations, and nonprofit 

organizations. The comments addressed 

a wide range of issues, including the 

interplay of the proposed Commission 

whistleblower program and company 

internal compliance processes, the 

proposed exclusion from award 

eligibility of certain categories of 

individuals or types of information, the 

availability of awards to culpable 

whistleblowers, the procedures for 

submitting information and making a 

claim for an award, and the application 

of the statutory anti-retaliation 

provision. 

As discussed in more detail below, 

the Commission has carefully 

considered the comments received on 

the Proposed Rules in formulating the 

Final Rules the Commission adopts 

today. The Commission has also 

considered the Securities and Exchange 

Commission’s (‘‘SEC[’s]’’) rulemaking to 

implement Section 922 of the DoddFrank Act, which establishes 

whistleblower protections and 

incentives with respect to violations of 

the securities laws.6 Where appropriate 

and consistent with the underlying 

statutory mandate in Section 23 of the 

CEA, the Commission has endeavored to 

harmonize its whistleblower rules with 

those of the SEC. The Commission has 

made a number of revisions and 

refinements to the Proposed Rules in 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53173 

7See 75 FR at 75730. 8See 75 FR at 75728. 

9See Rule 165.8. 

10See letter from National Society of Compliance 

Professionals (‘‘NSCP’’). 

order to achieve the goals of the 

statutory whistleblower program and 

advance effective enforcement of laws 

under the CEA. While the revisions of 

each Proposed Rule are described in 

more detail throughout this release, the 

four subjects highlighted below are 

among the most significant. 

Internal Compliance: A significant 

issue discussed in the Proposed Rules 

was the impact of the whistleblower 

program on company systems for 

internal reporting of potential 

misconduct.7 The Commission did not 

propose a requirement that a 

whistleblower must report his 

information internally to an entity to be 

eligible for an award, and commenters 

were sharply divided on the issues 

raised by this topic. Upon consideration 

of the comments, the Commission has 

determined that it is inappropriate to 

require whistleblowers to report 

violations internally to be eligible for an 

award. The Commission does, however, 

recognize that internal compliance and 

reporting systems ought to contribute to 

the goal of detecting, deterring and 

preventing misconduct, including CEA 

violations, and does not want to 

discourage employees from using such 

systems when they are in place. 

Accordingly, the Commission has 

tailored the Final Rules as follows: 

Æ With respect to the criteria for 

determining the amount of an award, the 

Final Rules provide that while the amount of 

an award is within the Commission’s 

discretion, the Commission will consider (i) 

a whistleblower’s report of information 

internally to an entity’s whistleblower, 

compliance or legal system as a factor that 

potentially can increase the amount of an 

award; and (ii) a whistleblower’s interference 

with such internal systems is a factor that can 

potentially decrease the amount of an award. 

Rule 165.9(b)(4), (c)(3). 

Æ A whistleblower may be eligible for an 

award for reporting original information to an 

entity’s internal compliance and reporting 

systems if the entity later reports information 

to the Commission that leads to a successful 

Commission action or related action. Under 

this provision, all of the information 

provided by the entity to the Commission 

will be attributed to the whistleblower, 

which means the whistleblower will get 

credit—and potentially a greater award—for 

any information provided by the entity to the 

Commission in addition to the original 

information reported by the whistleblower. 

Rule 165.2(i)(3). 

Procedures for Submitting 

Information and Claims: The Proposed 

Rules set forth a two-step process for 

submitting information, requiring the 

submission of two different forms. In 

response to comments that urged the 

Commission to streamline the 

procedures for submitting information, 

the Commission has adopted a simpler 

process by combining the two proposed 

forms into a single ‘‘Form TCR’’ to be 

submitted by a whistleblower, under 

penalty of perjury. With respect to the 

claims application process, the 

Commission has made one section of 

that form optional to make the process 

less burdensome. 

Aggregation of Smaller Actions to 

meet the $1,000,000 Threshold: The 

Proposed Rules stated that awards 

would be available only when the 

Commission has successfully brought a 

single judicial or administrative action 

in which it obtained monetary sanctions 

of more than $1,000,000. In response to 

comments, the Commission has 

provided in the Final Rules that, for 

purposes of making an award, the 

Commission will aggregate two or more 

smaller actions that arise from the same 

nucleus of operative facts. This will 

make whistleblower awards available in 

more cases. 

Exclusions from Award Eligibility for 

Certain Persons and Information: The 

Proposed Rules set forth a number of 

exclusions from eligibility for certain 

categories of persons and information. 

In response to comments suggesting that 

some of these exclusions were overly 

broad or unclear, the Commission has 

revised a number of these provisions. 

Most notably, the Final Rules provide 

greater clarity and specificity about the 

scope of the exclusions applicable to 

senior officials within an entity who 

learn information about misconduct in 

connection with the entity’s processes 

for identifying, reporting, and 

addressing possible violations of law. 

Internal Procedural and 

Organizational Issues: In the Proposing 

Release, the Commission noted that it 

would address ‘‘internal procedural and 

organizational issues’’ related to 

implementation of Section 23 in a future 

rulemaking.8 The Final Rules include 

revisions to reflect the Commission’s 

intent to delegate to a Whistleblower 

Office the authority to administer the 

Commission’s whistleblower program 

and to undertake and maintain customer 

education initiatives through an Office 

of Consumer Outreach. The Final Rules 

also provide that the Commission will 

exercise its authority to make 

whistleblower award determinations 

through a delegation of authority to a 

panel that shall be composed of 

representatives from three of the 

Commission’s Offices or Divisions. 

II. Description of the Rules 

A. Rule 165.1—General 

Proposed Rule 165.1 provided a 

general, straightforward description of 

Section 23 of the CEA, setting forth the 

purposes of the rules and stating that 

the Commission administers the 

whistleblower program. In addition, the 

Final 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. Rule 165.2—Definitions 

1. Action 

The term ‘‘action’’ 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.9 Proposed Rule 

165.2(a) defined the term ‘‘action’’ to 

mean a single captioned judicial or 

administrative proceeding. The 

Commission proposed to interpret the 

term ‘‘action’’ to include all claims 

against all defendants or respondents 

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. With 

respect to the definition of the term 

‘‘action,’’ one commenter stated that 

only those claims in multiple claim 

enforcement matters that result directly 

or indirectly from the whistleblower’s 

report should be included in an 

‘‘action’’ for which a whistleblower is 

eligible for an award.10 The commenter 

reasoned that the proposed definition 

would encourage the reporting of ‘‘fairly 

minor violations’’ which could cause 

the Commission to be ‘‘inundated with 

far more complaints on insignificant 

matters, thereby clogging a process that 

is already expected to be cumbersome’’ 

to the Commission. 

The Commission has considered, but 

disagrees with the rationale in support 

of these comments. In general, any 

violation, even those that may appear 

relatively minor (e.g., failure to provide 

pool participants with timely account 

statements in violation of Commission 

Regulation 4.22), may upon 

investigation be symptomatic of more 

significant violations (e.g., CPO fraud in 

violation of Sections 4b and 4o of the 


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53174 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

11See SEC Rule 240.21F–4(d) (providing a similar 

definition of ‘‘action’’). 

12See discussion regarding the Fund below in 

section II.B.6. 

13See Section 23(g)(3) of the CEA, 7 U.S.C. 

26(g)(3). 

14See letters from Securities Industry and 

Financial Markets Association and Futures Industry 

Association (‘‘SIFMA/FIA’’), American Institute of 

CPAs (‘‘AICPA’’), NSCP, American Bar 

Association—Business Law Section/Committee on 

Derivatives and Futures Law and the Committee on 

Federal Regulation of Securities (‘‘ABA’’) and 

Edison Electric Institute and National Rural Electric 

Cooperative Association (‘‘EEI’’). 

CEA). It would therefore not be in the 

public interest to discourage the 

reporting of any violations. Further, to 

the extent that reporting of relatively 

minor violations is a potential concern, 

the Final Rules require that the 

whistleblower’s information must have 

led to the successful enforcement of a 

covered judicial or administrative action 

(see Rules 165.2(e), (i), and 165.5(a)(3)). 

A minor violation by itself is unlikely to 

result in an enforcement action resulting 

in monetary sanctions exceeding 

$1,000,000. 

The Commission is making a slight 

amendment to Rule 165.2(a) as 

proposed. The Commission has 

discretion to bifurcate enforcement 

actions (e.g., one action against the 

entity and another against culpable 

individuals). Under the Proposed Rule, 

the bifurcation of a single enforcement 

action with aggregate sanctions in an 

amount greater than $1,000,000 could 

result in separate but related 

enforcement actions in which one or 

more of such actions had sanctions of 

less than $1,000,000. Under the 

Proposed Rule, therefore, the bifurcation 

of an enforcement action into two or 

more related actions could result in a 

reduced award for a whistleblower that 

provided the original information 

leading to the enforcement actions, or 

no reward at all. Consequently, the 

Commission is amending the definition 

of ‘‘action’’ in Rule 165.2(a) to include 

two or more proceedings that ‘‘arise out 

of the same nucleus of operative 

facts.’’ 11

2. Aggregate Amount 

Proposed Rule 165.2(b) defined the 

phrase ‘‘aggregate amount’’ to mean the 

total amount of an award granted to one 

or more whistleblowers pursuant to 

Proposed Rule 165.7 (Procedures for 

award applications and Commission 

award determinations). The term is 

relevant for purposes of determining the 

amount of an award pursuant to 

Proposed Rule 165.8 (‘‘Amount of 

award;’’ providing the Commission’s 

parameters for whistleblower awards). 

The Commission did not receive any 

comments on the definition of aggregate 

amount. The Commission is adopting 

Rule 165.2(b) as proposed. 

3. Analysis 

Under Section 23(a)(4) of the CEA, the 

‘‘original information’’ provided by a 

whistleblower may include information 

that is derived from the ‘‘independent 

knowledge’’ or ‘‘independent analysis’’ 

of a whistleblower. Proposed Rule 

165.2(c) defined 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. The 

Commission received no comment on 

the definition of ‘‘analysis.’’ However, 

the Commission did receive several 

comments on the definition of 

‘‘independent analysis,’’ which are more 

fully discussed in section II.B.7.a below. 

Because it received no comments to 

the contrary, the Commission is 

adopting Rule 165.2(c) as proposed. 

This definition recognizes that there are 

circumstances where individuals might 

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. 

4. Collected by the Commission 

Proposed Rule 165.2(d) defined 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 confirmed by 

the U.S. Department of the Treasury.12

Section 23(g)(3) of the CEA provides 

that the Fund will be financed through 

monetary sanctions ‘‘collected by the 

Commission * * * that is not otherwise 

distributed to victims of a violation of 

this Act or the rules or regulations 

thereunder underlying such action,’’ 

meaning that deposits into the Fund are 

based only upon what the Commission 

actually collects.13 The Commission 

generally collects civil monetary 

sanctions and disgorgement amounts in 

civil actions, or fines in administrative 

actions. A federal court or the 

Commission may award restitution to 

victims in civil and administrative 

actions, respectively, but the 

Commission does not ‘‘collect’’ 

restitution, i.e., restitution is not 

recorded as a receivable on the 

Commission’s books and records. 

Consequently, restitution amounts 

collected in a covered action or related 

action, in normal course, will not be 

deposited into the Fund. The 

Commission did not receive comments 

regarding the definition of ‘‘collected by 

the Commission.’’ The Commission is 

therefore adopting Rule 165.2(d) as 

proposed. 

5. Covered Judicial or Administrative 

Action 

Proposed Rule 165.2(e) defined the 

phrase ‘‘covered judicial or 

administrative action’’ to mean any 

judicial or administrative action brought 

by the Commission under the CEA, the 

successful resolution of which results in 

monetary sanctions exceeding 

$1,000,000. The Commission did not 

receive any comments on ‘‘covered 

judicial or administrative action,’’ and is 

adopting Rule 165.2(e) as proposed. 

6. Fund 

Proposed Rule 165.2(f) defined 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 Final 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. The 

Commission received no comments 

regarding the definition of ‘‘Fund.’’ The 

Commission is adopting Rule 165.2(f) as 

proposed. 

7. Independent Knowledge and 

Independent Analysis 

The phrases ‘‘independent 

knowledge’’ and ‘‘independent 

analysis’’ are relevant to the definition 

of ‘‘original information’’ in Proposed 

Rule 165.2(k), which provides that 

‘‘original information’’ may be derived 

from the ‘‘independent knowledge’’ or 

‘‘independent analysis’’ of a 

whistleblower. Commenters generally 

agreed with the Commission’s 

interpretation of independent 

knowledge and independent analysis.14

However, there were varied views as to 

what the Commission should or should 

not exclude from independent 

knowledge and independent analysis. 

a. Independent Analysis 

The Commission received one 

comment that addressed the definition 

of ‘‘independent analysis’’—‘‘the 

whistleblower’s own analysis whether 

done alone or in combination with 

others.’’ The commenter stated that the 

term ‘‘independent analysis’’ in 

Proposed Rule 165.2(h) should be 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53175 

15See letter from ABA. 

16 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. 

3730(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 § 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(j)(2), Public 

Law 111–148 124 Stat. 901 (Mar. 23, 2010). 

17This 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). 

restricted to an analysis of the 

whistleblower’s ‘‘independent 

knowledge’’ along with other objective 

facts such as commodity price or trading 

volume.15 The Commission has 

considered the comment in the context 

of ‘‘independent analysis’’ and has 

decided to adopt Rule 165.2(h) as 

proposed. Section 23(a)(4) of the CEA 

specifically provides that original 

information can be derived from either 

‘‘the independent knowledge or analysis 

of a whistleblower.’’ The Commission’s 

Proposed Rule adheres to this statutory 

limitation. 

b. Independent Knowledge 

i. Proposed Rule 

Proposed Rule 165.2(g) defined 

‘‘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’’ did not 

require that a whistleblower have direct, 

first-hand knowledge of potential 

violations.16 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. 

Proposed Rule 165.2(g) provided six 

circumstances in which an individual 

would not be considered to have 

‘‘independent knowledge.’’ The effect of 

those provisions would be to exclude 

individuals who obtain information 

under those circumstances from being 

eligible for whistleblower awards. 

The first exclusion is for information 

generally available to the public, 

including corporate filings and internet 

based information. (Proposed Rule 

165.2(g)(1).) 

The second and third exclusions 

address information that was obtained 

through a communication that is subject 

to the attorney-client privilege. 

(Proposed Rule 165.2(g)(2) and (3).) The 

second exclusion applies when a 

would-be whistleblower obtains the 

information in question through 

privileged attorney-client 

communications. The third exclusion 

applies when a would-be whistleblower 

obtains the information in question as a 

result of his or his firm’s legal 

representation of a client. Neither the 

second nor the third exclusion would 

apply in circumstances in which the 

disclosure of the information is 

authorized by the applicable federal or 

state attorney conduct rules. These 

authorized disclosures could include, 

for example, situations where the 

privilege has been waived, or where the 

privilege is not applicable because of a 

recognized exception such as the crimefraud exception to the attorney-client 

privilege. 

In regard to both the second and third 

exclusions, compliance with the CEA is 

promoted when individuals, corporate 

officers, Commission registrants and 

others consult with counsel about 

potential violations, and the attorneyclient 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 fourth 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.17

(Proposed Rule 165.2(g)(4).) 

Accordingly, under the fourth 

exclusion, officers, directors, and 

employees who learn of wrongdoing 

and are expected as part of their official 

duties to address the violations would 

not be permitted to use that knowledge 

to obtain a personal benefit by becoming 

whistleblowers. 

The fifth exclusion is closely related 

to the fourth, and applies any other time 

that information is obtained from or 

through an entity’s legal, compliance, 

internal audit, or similar functions or 

processes for identifying, reporting, and 

addressing potential non-compliance 

with applicable law. (Proposed Rule 

165.2(g)(5).) 

Compliance with the CEA is 

promoted when companies implement 

effective legal, internal audit, 

compliance, and similar functions. 

Thus, Section 23 should not create 

incentives for persons involved in such 

roles, as well as other similarly 

positioned persons who learn of 

wrongdoing at a company, to 

circumvent or undermine the proper 

operation of an entity’s internal 

processes for investigating and 

responding to violations of law. 

However, both of these exclusions cease 

to be applicable if the entity fails to 

disclose the information to the 

Commission within sixty (60) days of 

when it becomes aware of the violation 

or otherwise proceeds in bad faith, with 

the result that an individual may be 

deemed to have ‘‘independent 

knowledge,’’ and, therefore, depending 

on the other relevant factors, may 

qualify for a whistleblower award. The 

rationale for this provision is that if the 

entity fails to report information 

concerning the violation to the 

Commission within that time frame, it 

would be inconsistent with the 

purposes of Section 23 to deter 

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 sixth and final exclusion to 

‘‘independent knowledge’’ in the 

Proposed Rule applies if the would-be 

whistleblower obtains the information 

by means or in a manner that violates 


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53176 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

18See letter from ABA. 

19See letter from Project on Government 

Oversight (‘‘POGO’’) at 5–6 (noting the Bernard 

Madoff whistleblower, Harry Markopolos, as an 

example of whistleblowers who ‘‘perform original 

analysis based on publicly available sources.’’). 

20See letter from ABA. 

21See letter from SIFMA/FIA. 

22See letter from ABA. 

23See letter from The Financial Services 

Roundtable (‘‘FSR’’). 

24See letter from NSCP. 

25 Id. 

26See Rule 165.2(g)(3). 

27See letter from ABA. 28See letter from NSCP, ‘‘as long as the firm is 

moving toward appropriate resolution in light of the 

totality of the circumstances, a subjective definition 

of ‘reasonable time’ is appropriate.’’ 29See letter from EEI. 30See letter from AICPA. 31See letter from SIFMA/FIA. 32See letter from SIFMA/FIA. The Commission 

does not agree with this commenter. To exclude all 

persons somehow involved in an undefined 

‘‘internal control’’ function would create too broad 

an exclusion, thereby making an unnecessarily large 

number of employees ineligible to be 

whistleblowers. It was not the intent of Section 23 

to unreasonably limit the potential pool of 

whistleblowers. 

applicable federal or state criminal law. 

(Section 165.2(g)(6).) This exclusion is 

necessary to avoid the unintended effect 

of incentivizing criminal misconduct. 

ii. Comments and Final Rule 

Rule 165.2(g)(1)—Exception Concerning 

Public Sources 

The Commission received comments 

from two commenters regarding the 

public source exception to 

‘‘independent knowledge.’’ One 

commenter suggested that the public 

source exception (Section 165.2(g)(1)) is 

too broad and suggested that the 

Commission should restrict the 

definition of ‘‘independent knowledge’’ 

to first-hand knowledge. The 

commenter’s rationale was that such a 

restriction would be premised on the 

notion that oral information obtained 

from third parties is unreliable because 

it may be insincere or subject to flaws 

in memory or perception. This 

commenter also suggested that the 

public source exception incentivizes 

whistleblower reports based on rumors 

or ill-informed sources.18 Taking a 

contrary position, another commenter 

recommended that an ‘‘independent 

analysis’’ be allowed to draw on 

previously published sources.19 One 

commenter suggested that ‘‘independent 

analysis’’ should be restricted to an 

analysis of the whistleblower’s own 

‘‘independent knowledge’’ along with 

other objective facts like commodity 

price or trading volume.20

After considering comments received, 

the Commission has decided to adopt 

Rule 165.2(g)(1) as proposed. 

Rule 165.2(g)(2)—Exception Concerning 

Attorney-Client Privilege and Rule 

165.2(g)(3)—Outside Counsel 

One commenter asked the 

Commission to clarify that all of the 

exceptions contained in Proposed Rules 

165.2(g)(2) and (3) continue to apply 

after an individual has resigned from his 

or her law firm, that the provisions 

apply equally to in-house and outside 

counsel; and that the rules treat the 

duties of lawyers differently from those 

of non-lawyer experts, such as 

paralegals and others who work under 

the direction of lawyers.21 This 

commenter noted that lawyers gain 

knowledge about an entity that is 

protected by the attorney-client 

privilege and the work product 

doctrine,22 which the lawyers are not 

permitted to waive, and that lawyers 

have state-law ethical obligations to 

maintain client confidentiality that 

extend beyond privileged information. 

The commenter reasoned that if the 

Commission does not specify that the 

exceptions in Rules 165.2(g)(2) and (3) 

continue after a lawyer has left his or 

her firm, the lawyer is incentivized to 

quit. Another commenter recommended 

that Rule 165.2(g)(2) be amended to 

explicitly apply to both attorneys and 

clients.23 Similarly, another commenter 

suggested that the definitions of 

‘‘independent knowledge’’ and 

‘‘independent analysis’’ should exclude 

information obtained through a 

communication that is protected by the 

attorney-client privilege.24 The same 

commenter recommended that the 

exclusions for information obtained by 

a person with legal, compliance, audit, 

supervisory, or governance 

responsibilities should apply to any 

information obtained by such persons 

and not be limited to information being 

communicated ‘‘with a reasonable 

expectation that the [recipient] would 

take appropriate steps to cause the 

entity to remedy the violation. * * *’’ 25

After considering comments received, 

the Commission has decided to adopt 

Rule 165.2(g)(2) as proposed and Rule 

165.2(g)(3) with some modifications. 

The Commission has changed ‘‘[A]s a 

result of the legal representation of a 

client on whose behalf the 

whistleblower’s services, or the services 

of the whistleblower’s employer or firm, 

have been retained * * *’’ to ‘‘[I]n 

connection with the legal representation 

of a client on whose behalf the 

whistleblower, or the whistleblower’s 

employer or firm, have been providing 

services. * * *’’ 26 The Commission 

believes that these changes will prevent 

the use of confidential information not 

only by attorneys, but by secretaries, 

paralegals, consultants and others who 

work under the direction of attorneys 

and who may have access to 

confidential client information. 

Rule 165.2(g)(4), (5)—Exception 

Concerning Internal Legal, Compliance, 

Audit, and Supervisory Responsibilities 

Several commenters sought to expand 

the exclusions in Proposed Rule 

165.2(g)(4). One commenter suggested 

that the exclusions for information 

obtained by a person with legal, 

compliance, audit, supervisory, or 

governance responsibilities should 

apply to any information obtained by 

such persons, and not be limited to 

information that was communicated to 

the recipient ‘‘with a reasonable 

expectation that the [recipient] would 

take appropriate steps to cause the 

entity to remedy the violation * * *.’’ 27

Two other commenters said that the 60- 

day deadline for an entity to report 

information to the Commission, which 

if missed allows a whistleblower in this 

category to avoid the exclusions under 

Proposed Rules 165.2(g)(4) and (5), did 

not give the entity enough time to 

report. One suggested the deadline 

should be a ‘reasonable time’,28, and the 

other suggested that whistleblowers in 

this category should have to wait until 

an entity’s internal investigation is 

completed before reporting to the 

Commission.29 Another commenter 

requested that the exclusion apply to 

external auditors (accounting firms) 

who obtain information about an entity 

while performing a CEA-required 

engagement and that the exclusion 

applies to any engagement performed 

for an entity subject to the jurisdiction 

of the Commission whether or not the 

engagement is an audit.30 A commenter 

also suggested that lawyers should not 

be subject to the ‘‘good faith’’ or 

‘‘prompt reporting’’ exceptions in 

Proposed Rule 165.2(g)(4), and that the 

reference to lawyers in Proposed 

Rule165.2(g)(4) should therefore be 

deleted and treated separately in 

Proposed Rules 165.2(g)(2) and (3).31

The Commission also received a 

comment that stated that the exception 

should be broadened to include internal 

control functions more generally, 

including risk management, product 

management and personnel functions. 

This commenter reasoned that all 

internal control functions should be 

treated equally because all internal 

control functions play an important role 

in maintaining an entity’s control 

environment.32

The Commission has considered the 

comments received and revised the rule 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53177 

33See Rule 165.2(g)(7). 

34See SEC Rule 240.21F–4(b)(4)(iii)(D). 

35See 15 U.S.C. 78u–6(c)(2)(C). 

36See 15 U.S.C. 78j–1(b)(3); see also SEC Rule 

240.10A–1. 

37See letter from SIFMA/FIA (‘‘The rules should 

also not allow for an award based on information 

provided in violations of judicial or administrative 

orders.’’). 

38See letter from Taxpayers Against Fraud 

(‘‘TAF’’). 39See letter from SIFMA/FIA. 

40See letters from The National Whistleblowers 

Center (‘‘NWC’’) and TAF. 

41See letter from TAF. 

such that those recommendations that 

have been accepted, in whole or in part, 

are now reflected in Rule 165.2(g)(4), 

(5). The recommended exclusions have 

been revised and focused to promote the 

goal of ensuring that the persons most 

responsible for an entity’s conduct and 

compliance with law are not 

incentivized to promote their own selfinterest at the possible expense of the 

entity’s ability to detect, address, and 

self-report violations. Further, pursuant 

to the rules as adopted, such individuals 

would be permitted to become 

whistleblowers under certain 

circumstances, including when the 

whistleblower has a ‘‘reasonable basis to 

believe’’ that: (1) Reporting to the 

Commission is necessary to prevent 

conduct likely to cause substantial 

injury; (2) the entity is engaging in 

conduct that will impede an 

investigation of the misconduct; or (3) at 

least 120 days have elapsed since the 

whistleblower reported the information 

internally.33

The Commission declined to revise 

the rule to extend the exclusion to an 

employee of a public accounting firm. 

While the SEC includes such an 

exclusion in its rules,34 the SEC’s DoddFrank Act whistleblower provisions 

specifically requires this exclusion 35

and external auditors are under an 

existing obligation to report violations 

to the SEC under the Securities 

Exchange Act of 1934.36 Neither the 

Commission’s Dodd-Frank Act 

whistleblower provisions nor the CEA 

have similar exclusions or requirements. 

Rule 165.2(g)(6)—Exception Concerning 

Information Obtained in Violation of 

Law 

Commenters support the notion that a 

whistleblower who reports information 

he obtained in violation of the law 

should be ineligible for an award.37 One 

commenter, however, recommended 

that an award exclusion should be 

limited.38 This commenter reasoned 

that Rule 165.2(g)(6), as proposed, 

would have the effect of making the 

Commission ‘‘responsible for 

adjudicating—without any real due 

process afforded to the whistleblower— 

whether or not evidence-gathering 

techniques violated a law, and if so, 

whether or not the whistleblower was in 

fact guilty of violating said law (i.e. 

whether the state could prove, beyond 

[a] reasonable doubt, that the employee 

in fact violated each and every element 

of the criminal claim).’’ In addition, this 

commenter suggested that the 

Commission should revise the rule to 

more closely reflect the underlying 

statutory language. Another commenter 

proposed that the exclusion for 

information obtained in violation of the 

law should be extended to civil 

violations of laws or rules, and 

violations of a self-regulatory 

organization (‘‘SRO’’) rules.39

After considering the comments on 

Proposed Rule 165.2(g)(6), the 

Commission has decided to adopt the 

rule, as proposed, with one 

modification. Under the Final Rule, 

Rule 165.2(g)(5), whether a criminal 

violation occurred for purposes of the 

exclusion is now subject to the 

determination of a United States court. 

This revision is consistent with Section 

23(c)(2) of the CEA, which renders 

ineligible ‘‘any whistleblower who is 

convicted of a criminal violation related 

to the judicial or administrative action 

for which the whistleblower otherwise 

could receive’’ a whistleblower award. 

Expanding this exclusion beyond 

criminal violations and without the 

requirement for a United States court 

determination would be inconsistent 

with the statute and discourage 

whistleblowers through the creation of 

legal uncertainty. 

8. Information That Led to Successful 

Enforcement Action 

a. Proposed Rule 

As proposed, Rule 165.2(i) explained 

when the Commission would consider 

original information to have led to a 

successful enforcement action. The 

Proposed Rule distinguished between 

information regarding conduct not 

previously under investigation or 

examination and information regarding 

conduct already under investigation or 

examination. 

For information regarding conduct not 

previously under investigation or 

examination, the Proposed Rule 

established a two-part test for 

determining whether the information 

led to successful enforcement. First, the 

information must have caused the 

Commission staff to commence an 

investigation or examination, reopen an 

investigation that had been closed, or to 

inquire into new and different conduct 

as part of an existing examination or 

investigation. Second, the information 

must have ‘‘significantly contributed’’ to 

the success of an enforcement action 

filed by the Commission. 

For information regarding conduct 

already under investigation or 

examination, the Proposed Rule 

established a higher hurdle. To establish 

that information led to a successful 

enforcement action, a whistleblower 

would need to demonstrate that the 

information: (1) Would not have 

otherwise been obtained; and (2) was 

essential to the success of the action. 

b. Comments 

The Commission received two 

comments regarding Proposed Rule 

165.2(i). Both commenters suggested 

revising Proposed Rule 165.2(i) to lower 

the hurdles to proving that a 

whistleblower’s information led to a 

successful enforcement action.40 One 

commenter opined that the Commission 

imposes additional, non-statutory 

hurdles to the meaning of ‘‘led to the 

successful enforcement.’’ This 

commenter also asserted that the 

‘‘significantly contributed to the success 

of the action’’ element of the definition 

improperly broadens the Commission’s 

discretion to deny awards beyond 

congressional intent and suggested that 

the ‘‘significantly contributed’’ element 

be stricken from the rule.41

c. Final Rule 

The Commission has considered the 

comments received regarding the 

definition of ‘‘information that led to 

successful enforcement’’ and has 

decided to adopt Rule 165.2(i) with 

some changes. Although the 

Commission has retained the 

‘‘significantly contributed’’ element of 

the rule, the Commission has added 

alternative standards to evaluate 

whether a whistleblower has provided 

original information that led to a 

successful enforcement action. The 

Commission continues to believe that it 

is not the intent of Section 23 to 

authorize whistleblower awards for any 

and all tips. Instead, implicit in the 

requirement contained in Section 23(b) 

that a whistleblower’s information ‘‘led 

to successful enforcement’’ is the 

additional expectation that the 

information, because of its high quality, 

reliability, and specificity, has a 

meaningful nexus to the Commission’s 

ability to successfully complete its 

investigation, and to either obtain a 

settlement or prevail in a litigated 

proceeding. 


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53178 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

42The SEC final rules take a similar approach to 

their comparable definitional provision. See SEC 

Rule 240.21F–4(c) (‘‘information that leads to 

successful enforcement’’). 

43 7 U.S.C. 26(a)(4). 

44Section 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 [Dodd-Frank Act].’’ 45See Rule 165.3. 

In addition, to further incentivize 

internal reporting of violations, the 

Commission has added a new paragraph 

(3) to this rule, which states that original 

information reported through an entity’s 

internal processes that leads to a 

successful enforcement action will be 

treated as information provided by the 

whistleblower instead of provided by 

the entity.42

9. Monetary Sanctions 

Proposed Rule 165.2(j) defined the 

phrase ‘‘monetary sanctions’’ when used 

with respect to any judicial or 

administrative action, or related 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 a ‘‘covered judicial or 

administrative action’’ in Proposed Rule 

165.2(e) and to the amount of a 

whistleblower award under Proposed 

Rule 165.8. The Commission received 

no comments on the definition of 

‘‘monetary sanctions.’’ The Commission 

is adopting the rule as proposed. 

10. Original Information and Original 

Source 

a. Proposed Rules 

Proposed Rule 165.2(k) tracked the 

definition of ‘‘original information’’ set 

forth in Section 23(a)(4) of the CEA.43

‘‘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 the 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.44

Consistent with Congress’s intent, 

Proposed Rule 165.2(k)(4) also required 

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). 

Proposed Rule 165.2(l) defined the 

term ‘‘original source,’’ a term found 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, a 

whistleblower would be an original 

source if he first provided information 

to another authority, such as the 

Department of Justice, an SRO, or 

another organization that is identified in 

the Proposed Rule, which then referred 

the information to the Commission. 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). 

Similarly, a whistleblower would not 

lose original source status solely 

because he shared his information with 

another person who filed a 

whistleblower claim with the 

Commission prior to the original source 

filing a claim for whistleblower status, 

as long as the other applicable factors 

are satisfied. 

Proposed Rule 165.3 (‘‘Procedures for 

submitting original information’’) 

required a whistleblower to submit two 

forms, a Form TCR (‘‘Tip, Complaint or 

Referral’’) and a Form WB–APP 

(‘‘Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act’’), which included the ‘‘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.45 A whistleblower who 

either provides information to another 

authority first, or who shares his 

independent knowledge or analysis 

with another who is also claiming to be 

a whistleblower, would have followed 

these same procedures and submitted 

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), the 

whistleblower must have submitted 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 submitted his claim 

to the Commission. 

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 extended 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 legal, compliance, audit, 

supervisory and similar functions, or 

who were informed about potential 

violations with the expectation that they 

would 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 entities have effective 

programs for identifying, correcting, and 

self-reporting unlawful conduct by their 

officers or employees. The objective of 

this provision is to support, not 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53179 

46 31 U.S.C. 3730(e)(4)(B), Public Law 111–148 

§ 10104(j)(2), 124 Stat. 901 (Mar. 23. 2010). 

47See letter from ABA. 

48See letter from Investment Company Institute 

(‘‘ICI’’). 

49See letter from TAF. 50See letter from FSR. 

undermine, the effective functioning of 

entity compliance and related systems 

by allowing employees to take their 

concerns about potential violations to 

appropriate entity officials while still 

preserving their rights under the 

Commission’s whistleblower program. 

Proposed Rule 165.2(l)(3) addressed 

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 on the 

definition of ‘‘original source’’ that 

Congress included in the False Claims 

Act through amendments.46

b. Comments 

The Commission received three 

comments regarding the definition of 

‘‘original information’’ in Proposed Rule 

165.2(k). One commenter believes that 

the enumerated exclusions from the 

definition of ‘‘original information’’ are 

not sufficiently broad. As an example, 

this commenter posits that the 

definition would not clearly exclude 

information a whistleblower receives as 

a result of an investigation by an 

exchange, SRO, or a foreign regulator, or 

information received in connection with 

internal investigations or civil or 

criminal proceedings in which the 

information has already been made 

known to the entity. Therefore, this 

commenter suggests broadly excluding 

from the definition all information 

deriving from an allegation made in any 

investigative or enforcement activity or 

proceeding, and all information elicited 

during, or deriving from, any such 

proceeding or other matter.47

Another commenter had two concerns 

about the definition. The first concern 

was that a whistleblower could be 

rewarded for reporting something that 

an entity has already corrected. 

Therefore, the commenter proposed that 

for information to be considered original 

information, it should be ‘‘information 

relating to a violation that has not been 

addressed by the entity that is alleged to 

have violated the CEA.’’ The other 

concern was that the Proposed Rules do 

not specifically address original 

information involving violations that are 

time-barred by the applicable statute of 

limitations, or situations in which there 

is uncertainty regarding the applicable 

statute of limitations.48

Another commenter focused on the 

definition of ‘‘original source’’ and 

suggested that it often takes longer than 

90 days for a whistleblower to realize 

that an entity intends to ignore the 

whistleblower’s efforts to report under 

an internal compliance program. 

Therefore that commenter posited that 

the time for a whistleblower to report 

internally should be extended.49

c. Final Rules 

The Commission has considered the 

comments received regarding the 

definition of ‘‘original information’’ and 

has decided to adopt Rule 165.2(k) as 

proposed. The Commission does not 

agree with the commenter who 

suggested that it would be improper for 

a whistleblower to receive an award for 

a violation that an entity has corrected. 

A whistleblower is entitled to an award 

of not less than 10 percent and not more 

than 30 percent of monetary sanctions 

collected, regardless of whether the 

violation was self-corrected. In addition, 

the Commission does not believe it is 

necessary or appropriate to limit the 

definition of original information based 

upon the age of the information. 

The Commission has considered the 

comments received regarding ‘‘original 

source’’ and has decided to adopt Rule 

165.2(l) with a change. The change is 

that the Commission has extended the 

time that an otherwise excluded 

whistleblower has to report information 

to the Commission after he reported to 

an entity that did not self report. 

Paragraph (2) of Rule 165.2(l) now gives 

such whistleblower 120 days instead of 

90 days to regain ‘‘original source’’ 

status, which will provide 

whistleblowers with additional time to 

recognize whether an entity has 

reported the violation to the 

Commission. 

The Commission believes that several 

provisions in the Final Rules will 

ordinarily operate to exclude 

whistleblowers whose only source of 

original information is an existing 

investigation or proceeding. Information 

that is exclusively derived from a 

governmental investigation is expressly 

excluded from the definition of 

‘‘original information’’ under Rule 

165.2(k)(3). A whistleblower who learns 

about possible violations only through a 

company’s internal investigation will 

ordinarily be excluded from claiming 

‘‘independent knowledge’’ by operation 

of either the exclusions from 

‘‘independent knowledge’’ set forth in 

Rule 165.2(g)(2), (3), (4), (5) (relating to 

attorneys and other persons who may be 

involved in the conduct of internal 

investigations). To the extent that 

information about an investigation or 

proceeding is publicly available, it is 

excluded from consideration as 

‘‘independent knowledge’’ under Rule 

165.2(g)(1). 

11. Related Action 

The phrase ‘‘related action’’ in 

Proposed Rule 165.2(m), 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) (i.e., the Department of Justice, 

an appropriate department/agency of 

the Federal Government, a registered 

entity, registered futures association or 

SRO, or a State criminal or appropriate 

civil agency) 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. The 

Commission received one comment 

regarding ‘‘related action.’’ The 

commenter expressed concern that a 

whistleblower could potentially receive 

an award from both the Commission 

and the SEC by providing the same 

information to each agency. This same 

commenter noted that the SEC will not 

make an award for a related action and 

these rules should contain similar 

provisions.50 After consideration of the 

comment, the Commission has decided 

to adopt the rule as proposed. There are 

statutory differences between Section 

23(h)(2)(C) of the CEA and Section 

21F(h)(2)(D)(i) of the Securities 

Exchange Act of 1934 that prevent 

complete harmonization between the 

two agencies with regard to the term 

‘‘related action.’’ For example, the list 

entities whose actions can qualify as 

‘‘related actions’’ do not match under 

the Commission and SEC Dodd-Frank 

Act provisions. Compare 7 U.S.C. 

26(a)(5) (designating the Department of 

Justice, an appropriate department/ 

agency of the Federal Government, a 

registered entity, registered futures 

association or SRO, a State criminal or 

appropriate civil agency, and a foreign 

futures authority); with 15 U.S.C. 78u– 

6(a)(5) (designating) the Attorney 

General of the United States, an 


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53180 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

51 7 U.S.C. 26(b)(1). 

52See letter from NWC. 

53See letter from TAF. As an example, this 

commenter posits that: 

[A] request by a public employee pension fund 

for basic information concerning Forex currency 

trades on its account could preclude a ‘‘voluntary’’ 

submission of whistleblower allegations that the 

Forex currency broker engaged in large-scale 

mischarging, even if those allegations were not 

publicly known. In this instance the information 

requested is ‘‘relevant’’ to the whistleblower’s 

allegations, even if the requesting agency is 

completely unaware of those allegations. 

54 Id. 

55See letter from SIFMA/FIA. 

56See letters from ABA and NSCP. 

57See letters from SIFMA/FIA (urging 

elimination of the exception that would permit an 

employee to make a voluntary submission if the 

employer did not produce the documents or 

information in a timely manner) and NSCP 

(employee should be regarded as having received a 

request to an employer if there is a reasonable 

likelihood that the employee would have been 

contacted by the employer in responding to the 

request). 

58Section 23(c)(2) of the CEA sets forth four 

categories of individuals who are ineligible for 

whistleblower awards. These include: employees of 

the Commission and of certain other authorities; 

persons who were convicted of a criminal violation 

in relation to the action for which they would 

otherwise be eligible for an award; persons who 

submit information to the Commission that is based 

on the facts underlying the covered action 

submitted previously by another whistleblower; 

and any whistleblower who fails to submit 

information to the Commission in such form as the 

Commission may require by rule or regulation. 

59See letters from NWC; Stuart D. Meissner, LLC; 

National Coordinating Committee for 

Multiemployer Plans (‘‘NCCMP’’); DC Bar; and 

Daniel J. Hurson. 

appropriate regulatory agency, an SRO, 

or a state attorney general in a criminal 

case). 

12. Successful Resolution or Successful 

Enforcement 

Proposed Rule 165.2(n) defined the 

phrase ‘‘successful resolution,’’ when 

used with respect to any judicial or 

administrative action brought by the 

Commission under the CEA, to include 

any settlement of such action or final 

judgment in favor of the Commission. 

The phrase shall also have the same 

meaning as ‘‘successful enforcement.’’ 

This phrase is relevant to the definition 

of the term ‘‘covered judicial or 

administrative action’’ as set forth in 

Rule 165.2(e). The Commission received 

no comments on the term ‘‘successful 

resolution’’ or ‘‘successful enforcement’’ 

and is adopting the rule as proposed. 

13. Voluntary Submission or 

Voluntarily Submitted 

a. Proposed Rule 

Under Section 23(b)(1) of the CEA,51

whistleblowers are eligible for awards 

only when they ‘‘voluntarily’’ provide 

original information about CEA 

violations to the Commission. Proposed 

Rule 165.2(o) defined a submission as 

made ‘‘voluntarily’’ if a whistleblower 

provided the Commission with 

information before receiving any 

request, inquiry, or demand from the 

Commission, Congress, any other 

federal, state or local authority, the 

Department of Justice, a registered 

entity, a registered futures association or 

any SRO about a matter to which the 

information in the whistleblower’s 

submission was relevant. The Proposed 

Rule covered both formal and informal 

requests. Thus, under the Proposed 

Rule, a whistleblower’s submission 

would not be considered ‘‘voluntary’’ if 

the whistleblower was contacted by the 

Commission or one of the other 

authorities first, whether or not the 

whistleblower’s response was 

compelled by subpoena or other 

applicable law. 

As the Commission’s Proposing 

Release explained, this approach was 

intended to create a strong incentive for 

whistleblowers to come forward early 

with information about possible 

violations of the CEA, rather than wait 

to be approached by investigators. For 

the same reasons, Proposed Rule 

165.2(o) provided that a whistleblower’s 

submission of documents or information 

would not be deemed ‘‘voluntary’’ if the 

documents or information were within 

the scope of a prior request, inquiry, or 

demand to the whistleblower’s 

employer, unless the employer failed to 

make production to the requesting 

authority in a timely manner. 

Proposed Rule 165.2(o) also provided 

that a submission would not be 

considered ‘‘voluntary’’ if the 

whistleblower was under a pre-existing 

legal or contractual duty to report the 

violations of the CEA to the Commission 

or to one of the other designated 

authorities. 

b. Comments 

Commenters had diverse perspectives 

on the Commission’s proposal to require 

that whistleblowers come forward 

before they receive either a formal or 

informal request or demand from the 

Commission, or one of the other 

designated authorities, about any matter 

relevant to their submission. Some 

commenters asserted that the 

Commission’s Proposed Rule was too 

restrictive. For example, one commenter 

urged that all information provided by 

a whistleblower should be treated as 

‘‘voluntary’’ until the whistleblower is 

testifying under compulsion of a 

subpoena.52 Another commenter 

expressed concern that the 

Commission’s Proposed Rule could 

have the effect of barring whistleblowers 

in cases in which a whistleblower’s 

information is arguably ‘‘relevant’’ to a 

general informational request from an 

authority, even though the authority is 

not pursuing the issue that the 

whistleblower might report.53 This 

commenter also suggested that rather 

than create an exclusion based on 

whether the information is ‘‘relevant’’ to 

a request, Rule 165.2(o) should be 

revised to bar individuals whose 

allegations are the subject of 

investigation by the public entities 

identified in the rule.54

Other commenters posited that the 

Commission’s Proposed Rule did not go 

far enough in precluding whistleblower 

submissions from being treated as 

‘‘voluntary.’’ A commenter urged that 

the Commission’s rules should preclude 

an individual from making a 

‘‘voluntary’’ submission after an 

individual has been contacted for 

information during the course of an 

entity’s internal investigation or internal 

review.55 In response to one specific 

request for comment, other commenters 

advocated that the Commission not treat 

a submission as ‘‘voluntary’’ if the 

whistleblower was aware of a 

governmental or internal investigation 

at the time of the submission, whether 

or not the whistleblower received a 

request from the Commission or one of 

the other authorities.56

The Commission also requested 

comment regarding whether a 

whistleblower’s submission should be 

deemed to be ‘‘voluntary’’ if the 

information submitted was within the 

scope of a previous request to the 

whistleblower’s employer. Some 

commenters responded that they 

supported the exclusion and suggested 

that it be expanded in various ways.57

The Commission received varying 

comments regarding its Proposed Rule 

to exclude whistleblowers from the 

definition of ‘‘voluntarily’’ if they are 

under a pre-existing legal or contractual 

duty to report the violations to the 

Commission or another authority. Some 

commenters opposed the exclusion on 

the ground that Section 23(c)(2) of the 

CEA sets forth a specific list of persons 

whom Congress deemed to be ineligible 

for awards, some as a result of their preexisting duties.58 These commenters 

suggested that the Commission was 

expanding these exclusions in a manner 

that was inconsistent with 

Congressional intent and the purposes 

of Section 23.59

Other commenters favored the ‘‘legal 

duty’’ exclusion and recommended that 

it be clarified and extended. In 

particular, these commenters suggested 

that the exclusion should be applied to 


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60See letters from NSCP and FSR. 

61Cf. 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) (rejecting 

argument that information provided beyond that 

required by subpoena is voluntary for purposes of 

False Claims Act); 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). 

62As is further discussed below, individuals who 

wait to make their submission until after a request 

is directed to their employer will not face an easy 

path to an award. The Commission expects to 

scrutinize all of the attendant circumstances 

carefully in determining whether such submissions 

‘‘significantly contributed’’ to a successful 

enforcement action under Rule 165.2(n) in view of 

the previous request to the employer on the same 

or related subject matter. 

63See discussion below in Part II.I. 

64See Rule 165.9. 65 7 U.S.C. 26(a)(7). 

various categories of individuals in the 

corporate context. Several commenters 

urged that the Commission should not 

consider submissions to be ‘‘voluntary’’ 

in circumstances in which an employee 

or an outside service provider has a 

duty to report misconduct to an entity.60

c. Final Rule 

After considering the comments, the 

Commission has decided to adopt Rule 

165.2(o) without modifications. The 

Commission believes that a requirement 

that a whistleblower come forward 

before being contacted by Government 

investigations is both good policy and 

consistent with existing case law.61

As adopted, Final Rule 165.2(o) 

provides that a submission of original 

information is deemed to have been 

made ‘‘voluntarily’’ if the whistleblower 

makes his or her submission before a 

request, inquiry, or demand that relates 

to the subject matter of the submission 

is directed to the whistleblower or 

anyone representing the whistleblower 

(such as an attorney): (i) By the 

Commission; (ii) Congress; (iii) any 

other federal or state authority; (iv) the 

Department of Justice; (v) a registered 

entity; (vi) a registered futures 

association; or (vii) an SRO. 

The Commission believes that a 

whistleblower award should not be 

available to an individual who makes a 

submission after first being questioned 

about a matter (or otherwise requested 

to provide information) by Commission 

staff acting pursuant to any of its 

investigative or regulatory authorities. 

Only an investigative request made by 

one of the other designated authorities 

will trigger application of the rule, 

except that a request made in 

connection with an examination or 

inspection, as well as an investigative 

request, by an SRO will also render a 

whistleblower’s subsequent submission 

relating to the same subject matter not 

‘‘voluntary.’’ In the context of a request 

made to an employer, an employeewhistleblower will be considered to 

have received a request if the 

documents or information the 

whistleblower provides to the 

Commission are within the scope of the 

request to the employer. This provision 

recognizes the important relationship 

that frequently exists between 

examinations and enforcement 

investigations, as well as the 

Commission’s regulatory oversight of 

SROs. For example, if an entity’s 

employee were interviewed by 

examiners, the employee could not later 

make a ‘‘voluntary’’ submission related 

to the subject matter of the interview.62

As adopted, the Commission’s rule 

retains the provision that a submission 

will not be considered ‘‘voluntary’’ if 

the whistleblower is under a preexisting legal or contractual duty to 

report the information to the 

Commission or to any of the other 

authorities designated in the rule. As 

adopted, Rule 165.2(o) provides that a 

whistleblower cannot ‘‘voluntarily’’ 

submit information if the whistleblower 

is required to report his ‘‘original 

information’’ to the Commission 

pursuant to a pre-existing legal duty, a 

contractual duty that is owed to the 

Commission or to one of the other 

authorities set forth above, or a duty that 

arises out of a judicial or administrative 

order. 

For similar reasons, the Commission 

declines to accept the suggestion of 

some commenters that a whistleblower 

report should not be treated as 

‘‘voluntary’’ if it was made after the 

whistleblower had been contacted for 

information in the course of an internal 

investigation. Elsewhere in the 

Commission’s final Rules, the 

Commission has attempted to create 

strong incentives for employees to 

continue to utilize their employers’ 

internal compliance and other processes 

for receiving and addressing reports of 

possible violations of law.63 If a 

whistleblower took any steps to 

undermine the integrity of such systems 

or processes, the Commission will 

consider that conduct as a factor that 

may decrease the amount of any 

award.64 However, a principal purpose 

of Section 23 is to promote effective 

enforcement of the commodity laws by 

providing incentives for persons with 

knowledge of misconduct to come 

forward and share their information 

with the Commission. Although the 

Commission acknowledges that internal 

investigations can be an important 

component of corporate compliance, 

and although there are existing 

incentives for companies to self-report 

violations, providing information to 

persons conducting an internal 

investigation, or simply being contacted 

by them, may not, without more, 

achieve the statutory purpose of getting 

high-quality, original information about 

violations of the CEA directly to 

Commission staff. 

14. Whistleblower(s) 

a. Proposed Rule 

The term ‘‘whistleblower’’ is defined 

in Section 23(a)(7) of the CEA.65

Consistent with this language, Proposed 

Rule 165.2(p) defined a whistleblower 

as an individual who, alone or jointly 

with others, provides information to the 

Commission relating to a potential 

violation of the CEA. An entity or other 

non-natural person 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. 

Further, Proposed Rule 165.2(p) (and 

Proposed Rule 165.6(b)) would 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 delineated 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. 

b. Comments 

The Commission received several 

comments regarding the definition of 

whistleblower. Two commenters urged 


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53182 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

66See letters from SIFMA/FIA and ABA. 

67See letter from SIFMA/FIA. 

68See letter from ABA. 

69See letters from Association of Corporate 

Counsel (‘‘ACC’’) and FSR. 

70See letter from POGO. 

71See letter from NCCMP. 

72 7 U.S.C. 26(h)(1)(A). 

73See Section 23(m) of the CEA, 7 U.S.C. 26(m). 

Such false statements also could be a violation of 

Section 9(a)(3) of the CEA, 7 U.S.C. 13(a)(3), and 

could potentially be a violation of Section 6(c)(2) 

of the CEA, 7 U.S.C. 9, 15. Therefore, a 

whistleblower who provides information to the 

Commission in violation of these sections would 

not be entitled to retaliation protection because his 

provision of information to the Commission would 

be in violation of law. See 7 U.S.C. 26(h)(1)(A). 

that the term whistleblower should 

include only individuals who provide 

information about potential violations of 

the commodities laws ‘‘by another 

person.’’ 66 The Commission also 

received several comments regarding 

the anti-retaliation provision of the 

definition. One commenter asserted that 

the anti-retaliation provisions of 

Proposed Rules 165.2(p) and 165.6(b) 

could be interpreted to protect 

individuals who have violated criminal 

laws, and urged that the Commission 

clarify that companies are permitted ‘‘to 

take adverse personnel actions against 

whistleblowers for any appropriate 

reason other than their whistleblower 

status.’’ This same commenter suggested 

that the rules also should be clarified to 

state that filing a whistleblower report 

does not protect an individual from 

discipline or termination if the 

individual was involved in, was 

responsible for, or lied about the 

misconduct described in the report.67

Another commenter was concerned 

about the potential for abuse by 

employees who might make frivolous 

whistleblower claims solely to avail 

themselves of the anti-retaliation 

provisions of Part 165 or to seek a 

chance to receive a potentially large 

award. This commenter believed that 

the Commission should impose 

additional requirements on persons 

entitled to whistleblower status and 

suggested that Proposed Rule 165.2(p) 

be revised to specify that the antiretaliation provision apply to a person 

who provides information: That is 

material to the claimed violation of the 

CEA; that has a basis in fact or 

knowledge (which must be articulated) 

rather than speculation; that is not 

based on information that is either 

publicly disseminated or which the 

employee should reasonably know is 

already known to the entity’s board of 

directors or chief compliance officer, or 

to a court or the Commission or another 

governmental entity; and the provision 

of which does not result in the violation 

of a professional obligation, including 

the obligation to maintain such 

information in confidence. This 

commenter also suggested that the 

Commission deliver to an employee 

who has met the requisite criteria of a 

‘‘whistleblower’’ a letter or statement 

indicating such status by reason of the 

information the employee provided.68

This commenter also contended that the 

information regarding ‘‘a potential 

violation’’ language in Proposed Rule 

165.2(p) could be read to refer to future 

acts or omissions. As a result, the 

commenter encouraged the Commission 

to use ‘‘another phrase (such as ‘claimed 

violation’) and to add a definition of the 

term to further minimize the 

ambiguity.’’ The commenter posited that 

the definition of the term should be 

further clarified to indicate that it does 

not include matters that are clearly stale 

(e.g., an alleged violation that occurred 

ten years ago). Two other commenters 

recommended that the rule exclude any 

individuals who engaged in the 

underlying misconduct from eligibility 

as a whistleblower.69 One commenter 

supported anti-retaliation protection of 

whistleblowers even if they do not 

qualify for an award.70 Another 

commenter suggested that the 

Commission should find that any entity 

that retaliates against a whistleblower 

commits ‘‘a separate and independent 

violation’’ of the commodity futures 

laws subjecting the entity to the 

maximum penalties for such violation 

provided for under the law, up to and 

including a delisting of the entity.71

c. Final Rule 

Upon consideration of the comments 

received, the Commission has decided 

to adopt Rule 165.2(p) as proposed. The 

anti-retaliation provisions reflect 

Congress’s intent to implement antiretaliation protections for 

whistleblowers who provide original 

information to the Commission. These 

anti-retaliation protections do not 

provide blanket immunity to 

whistleblowers from adverse 

employment actions by their employers; 

whistleblowers are protected only to the 

extent that the employer took the 

adverse employment action because ‘‘of 

any lawful act done by the 

whistleblower’’ in providing 

information to the Commission or in 

assisting the Commission in any related 

investigation or enforcement action.72

With respect to the commenter concern 

regarding potential bad faith reporting, 

Congress placed a procedural safeguard 

in the statute that advises 

whistleblowers that they can be 

prosecuted for making false statements 

to the Commission under 18 U.S.C. 

1001.73 This procedural safeguard will 

reduce the risk of meritless referrals. 

Moreover, whistleblowers are 

incentivized to provide referrals only if 

they believe those referrals have merit 

since they can only get an award if their 

referral leads to a successful 

enforcement action (see Rules 165.2(i) 

and 165.9.). Also as indicated above, 

several commenters addressed issues 

relating to eligibility and culpability of 

a whistleblower. Those issues are 

addressed in Rules 165.6 and 165.17, 

respectively. 

The Commission does not have the 

statutory authority to conclude that any 

entity that retaliates against a 

whistleblower commits a separate and 

independent violation of the CEA. 

Section 23(h)(1)(B)(i) clearly states that 

only an individual who alleges 

retaliation in violation of being a 

whistleblower may bring such a cause of 

action. 

Regarding Rule 165.2(p)(2), the 

Commission has made a slight 

modification. Pursuant to the change, in 

order to be considered a whistleblower 

for purposes of the anti-retaliation 

protections afforded by Section 

23(h)(1)(A)(i) of the CEA, the 

whistleblower must possess a 

reasonable belief that the information 

the whistleblower provides relates to a 

possible violation of the CEA. 

C. Rule 165.3—Procedures for 

Submitting Original Information 

1. Proposed Rule 

The Commission proposed 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 numerous tips from potential 

whistleblowers. Forms will also better 

enable the Commission to find common 

threads among tips and otherwise make 

better use of the information provided, 

and assist with the review of requests 

for payment under the whistleblower 

provisions. The purpose of requiring a 

sworn declaration is to help deter the 


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74See letter from NWC. 

75See letters from NSCP, ABA, and NCCMP. 

76See letter from ABA. 

77Form WB–APP and the award application 

process are discussed below in section II.G. 

78 7 U.S.C. 26(h)(2). 

submission of false and misleading tips 

and the resulting inefficient use of the 

Commission’s resources. The 

requirement would also mitigate the 

potential harm to companies and 

individuals resulting from 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. 

a. Form TCR and Instructions 

Subparagraph (a) of Proposed Rule 

165.3 required the submission of 

information to the Commission on 

proposed Form TCR. The Form TCR, 

‘‘Tip, Complaint or Referral,’’ and the 

instructions thereto, were 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. 

b. Form WB–DEC and Instructions 

In addition to Form TCR, the 

Commission proposed 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 made any false, fictitious, 

or fraudulent statements or 

representations, or used any false 

writing or document knowing that the 

writing or document contained 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 required 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 the Commission’s 

payment of any award. 

The Commission proposed 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 Web site, 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 Web site or, 

alternatively, by mailing or faxing the 

form to the Commission. 

c. Perfecting Whistleblower Status for 

Submissions Made Before Effectiveness 

of the Rules 

As previously discussed, Section 

748(k) of the Dodd-Frank Act stated that 

information submitted to the 

Commission by a whistleblower after 

the date of enactment, but before the 

effective date of the Proposed Rules, 

retained 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) provided a 

mechanism by which whistleblowers 

who fall into this category could perfect 

their status as whistleblowers once the 

Final Rules are adopted. Subparagraph 

(d)(1) required 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 

Final Rules and to otherwise follow the 

procedures set forth in subparagraphs 

(a) and (b) of Proposed Rule 165.3. If a 

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 Final Rules in the manner set 

forth in subparagraph (b) of Proposed 

Rule 165.3. 

2. Comments 

The Commission received several 

comments regarding Proposed Rule 

165.3. A commenter advised the 

Commission that the rules as currently 

proposed are not ‘‘user friendly’’ and 

modifications must be made to both 

procedures and forms to facilitate 

disclosures, and to do so would 

minimize the risks that otherwise 

qualified applicants will be denied 

based on a technicality.74 Several 

commenters referenced Proposed Rule 

165.3 while advocating internal 

reporting.75 They suggested that a 

whistleblower who reports internally 

prior to reporting to the Commission 

should be given one year to file an 

application; and that 90 days to file 

Forms TCR and WB–DEC may not be 

sufficient time for a firm to assess a 

complex situation, and, therefore, the 

deadline should be a minimum of 90 

days or such longer time as is 

reasonable. 

Another commenter suggested that, if 

documents are delivered directly to the 

Commission, then the representations 

on a Form TCR should be subject to 

penalty of perjury, similar to Form WB– 

DEC. This commenter also suggested 

that attorneys who assist clients in 

submitting anonymous claims should be 

required to review the client’s 

information and certify to the 

Commission that the client can show 

‘‘particularized facts suggesting a 

reasonable probability that a violation 

has actually occurred or is occurring.’’ 

This Commenter also stated that the 90- 

day deadline should be eliminated, but 

that if it is not eliminated the deadline 

should be at least 180 days.76

3. Final Rule 

After consideration of the comments 

received on Proposed Rule 165.3, the 

Commission has decided to adopt the 

rule with changes. In response to 

comments calling for the streamlining of 

process, and in the interest of 

harmonization with the SEC, the 

Commission has incorporated the 

substance of Form WB–DEC into both 

the Form TCR and WB–APP.77 The 

forms will be changed to advise 

potential whistleblowers (and their 

attorneys) that the forms must be 

completed under oath and subject to the 

penalty of perjury. Also, changes have 

been made to Rule 165.3 regarding the 

incorporation of the WB–DEC form into 

both the Form-TCR and Form WB–APP. 

D. Rule 165.4—Confidentiality 

1. Proposed Rule 

Proposed Rule 165.4 summarized the 

confidentiality requirements set forth in 

Section 23(h)(2) of the CEA 78 with 


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53184 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

79Section 23(h)(2)(A) provides that the 

Commission shall not disclose any information, 

including that provided by 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 in subparagraph (C). 

80See U.S. Const. Amend. VI. 

81See 7 U.S.C. 26(d)(1). Under the statute, 

however, an anonymous whistleblower seeking an 

award is required to be represented by counsel. 7 

U.S.C. 26(d)(2). 

82See letter from NWC. 

83For example, the Commission is adding a 

question to our whistleblower submission form that 

asks whistleblowers to tell us if they are giving us 

any particular documents or other information in 

their submission that they believe could reasonably 

be expected to reveal their identity. 

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.79 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 market participants. 

Subparagraph (a)(1) of the Proposed 

Rule authorized 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 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 a criminal 

defendant’s constitutional right to be 

confronted by the witnesses against 

him.80 Subparagraph (a)(2) would 

authorize disclosure to: The Department 

of Justice; another appropriate 

department or agency of the Federal 

Government acting within the scope of 

its jurisdiction; a registered entity, 

registered futures association, or SRO; 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. 

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 

the Commission’s payment of any 

award. 

The purpose of this requirement is to 

prevent fraudulent submissions and 

facilitate communication and assistance 

between the whistleblower and the 

Commission’s staff. A whistleblower 

may be represented by counsel— 

whether submitting information 

anonymously or not.81 The Commission 

emphasizes that anonymous 

whistleblowers have the same rights and 

responsibilities as other whistleblowers 

under Section 23 of the CEA and the 

Final Rules, unless expressly exempted. 

2. Comments 

The Commission received one 

comment regarding Proposed Rule 

165.4. The commenter stated that the 

Commission has no authority to compel 

an attorney to reveal the identity of an 

anonymous whistleblower, and that, in 

cases where the Commission knows the 

whistleblower’s identity, the rules 

should require the Commission to notify 

the whistleblower, and provide the 

whistleblower an opportunity to seek a 

protective order, whenever the 

whistleblower’s identity may be subject 

to disclosure.82

3. Final Rule 

The Commission is adopting Rule 

165.4 as proposed. The rule tracks the 

provisions of the statute and identifies 

those instances where the Commission, 

in furtherance of its regulatory 

responsibilities, may provide 

information to certain delineated 

recipients. 

The Commission plans to work 

closely with whistleblowers, and their 

attorneys if they are represented, in an 

effort to take appropriate steps to 

maintain their confidentiality, 

consistent with the requirements of 

Section 23(h)(2).83 At the same time, 

however, Congress expressly authorized 

the Commission to disclose 

whistleblower-identifying information 

subject to the limitations and conditions 

set forth in Section 23(h)(2)(C) of the 

CEA. Accordingly, the Commission does 

not believe it would be consistent with 

either Congress’s intent or the proper 

exercise of the Commission’s 

enforcement responsibilities to require 

by rule that Commission staff notify a 

whistleblower prior to any authorized 

disclosure, and provide the 

whistleblower with an opportunity to 

seek a protective order. 

E. Rule 165.5—Prerequisites to the 

Consideration of an Award 

1. Proposed Rule 

Proposed Rule 165.5 summarized 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 or 

SRO; 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, so that the staff may 

evaluate the use of the information 


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84See letter from NWC. 

85See, e.g., Rule 11.3, 17 CFR 11.3 (2011) 

(providing, in general, that ‘‘[a]ll information and 

documents obtained during the course of an 

investigation, whether or not obtained pursuant to 

subpoena, and all investigative proceedings shall be 

treated as non-public by the Commission and its 

staff * * *.’’). 

86See, e.g., Appendix A to Part 11 of the 

Commission’s Rules (‘‘Informal Procedure Relating 

to the Recommendation of Enforcement 

Proceedings;’’ providing that the Commission’s 

Division of Enforcement, ‘‘in its discretion, may 

inform persons who may be named in a proposed 

enforcement proceeding of the nature of the 

allegations pertaining to them.’’). 

87See letters from NSCP, EEI, ICI, ABA, and FSR. 

88See letter from SIFMA/FIA. 

89See letter from SIFMA/FIA. 

90See letter from U.S. Chamber of Commerce. 

91See letter from U.S. Chamber of Commerce. 

92See letter from SIFMA/FIA. 

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. 

2. Comments 

The Commission received comment 

on Proposed Rule 165.5 from one 

commenter.84 This commenter argued 

that the Dodd-Frank Act does not 

require or authorize a rule that requires 

a whistleblower to sign a confidentiality 

or non-disclosure agreement. This 

commenter reasoned that if a 

whistleblower files a claim and refuses 

to sign such an agreement it could 

impact the Commission’s willingness to 

share information with the 

whistleblower during the investigation, 

or even to go forward with an 

enforcement action. Also, this 

commenter suggested that a 

whistleblower should be able to object 

to the actions of the Commission if the 

whistleblower believes the Commission 

is improperly handling an investigation, 

without fear of being disqualified from 

an award. Finally, this commenter 

argued that a whistleblower should not 

be required to sign a confidentiality 

agreement in case the whistleblower has 

clients who need to know about the 

whistleblower’s underlying concerns. 

For example, if a whistleblower had 

clients that had funds in a company 

operating a Ponzi scheme, it would not 

be beneficial to the clients for the 

whistleblower to not tell the clients 

about the scheme. 

3. Final Rule 

After considering these comments, the 

Commission is adopting the rule as 

proposed. The rule tracks and 

summarizes the general prerequisites for 

a whistleblower to be considered for an 

award under Section 23(b)(1) of the 

CEA. In addition, the Commission does 

not share information regarding 

investigations or enforcement actions 

with individuals who provide tips.85

Requiring a whistleblower to sign a 

confidentiality agreement will serve to 

ensure that the entity being investigated 

is not made aware of the investigation 

prematurely. The Commission also has 

discretion in how it handles 

investigations and enforcement 

actions.86

F. Rule 165.6—Whistleblowers Ineligible 

for an Award 

1. Proposed Rule 

Subparagraph (a) of Proposed Rule 

165.6 specified 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 SEC; the 

Department of Justice; a registered 

entity; a registered futures association; 

an SRO; or a law enforcement 

organization. Further, Proposed Rule 

165.6(a)(2) made 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)(4) of the 

Proposed Rule also provided that 

persons who acquire information from 

ineligible individuals are ineligible for 

an award. Consistent with Section 23(m) 

of the CEA, a whistleblower is ineligible 

if in his submission of information or 

application for an award, in his other 

dealings with the Commission, or in his 

dealings with another authority in 

connection with a related action he: 

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 the absence of which 

would make any other statement or 

representation made to the Commission 

or any other authority misleading. 

Subparagraph (b) of Proposed Rule 

165.6 reiterated that a determination 

that a whistleblower is ineligible to 

receive an award for any reason does 

not deprive the individual of the antiretaliation protections set forth in 

Section 23(h)(1) of the CEA. 

2. Comments 

The Commission has received 

comments recommending that the 

Commission expand the list of persons 

ineligible to receive an award to 

individuals who fail to first report 

violations internally before reporting 

violations to the Commission.87 Some 

commenters have suggested that the 

only exception to a requirement of 

mandatory internal reporting for award 

eligibility should be when the 

whistleblower can prove that the 

employer’s internal compliance system 

is inadequate.88 One commenter 

proposed that for an employer’s internal 

compliance system to be effective it 

would have to provide for: (1) A 

complaint-reporting hotline; (2) a 

designated officer (such as the chief 

compliance officer), who is responsible 

for overseeing investigations of 

complaints, and who has access to 

senior executive officers with authority 

to respond to well-founded complaints; 

and (3) protection to an individual 

against retaliation for submitting a 

complaint.89 Another commenter 

similarly suggests that a whistleblower 

who fails to report internally should 

only be eligible to receive an award if 

he can demonstrate that the company’s 

internal reporting program fails to 

comply with a federal standard (if 

applicable) or is inadequate (if there is 

no Federal standard).90 This commenter 

further suggests that the Commission 

should afford an entity a reasonable 

opportunity (of at least 180 days) to 

address the alleged violation.91

Commenters also suggest that a 

whistleblower who prematurely reports 

to the Commission be eligible for an 

award, but only at the lower end of the 

permissible range.92 Commenters also 

urge the Commission to deem ineligible 

for a whistleblower award individuals 

who: (1) Violate entity rules requiring 

that misconduct be reported internally; 

(2) falsely certify that they are not aware 


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93See letter from SIFMA/FIA. 94See letter from SIFMA/FIA. 

95See letter from ABA. 

96See letter from U.S. Chamber of Commerce. 

97See letter from Hunton & Williams LLP on 

behalf of Working Group of Commercial Energy 

Firms (‘‘Working Group’’) at 2. 

98See letter from FSR. 

99See letter from U.S. Chamber of Commerce. 

100See letter from FSR. 

101See also discussion below in Part II.S. 

102See Rule 165.6(a)(6), (7). 

103See, e.g., Yuen v. United States, 825 F.2d 244 

(9th Cir. 1987) (taxpayer barred from recovery due 

to failure to timely file a written request for refund). 

104See discussion of Proposed Rule 165.9 for a 

non-exhaustive list of factors the Commission 

preliminarily believes it will consider in 

determining award amounts. 

of any misconduct; (3) refuse to 

cooperate with an entity’s internal 

investigation; and (4) provide inaccurate 

or incomplete information or otherwise 

hinder an internal investigation.93 This 

commenter further suggests that a 

whistleblower who reports violations to 

an SRO should have the same eligibility 

for an award as a whistleblower who 

reports to the Commission.94 Another 

commenter commented that persons 

who have engaged in culpable conduct 

should not be eligible for awards.95 This 

commenter suggested that Rule 

165.6(a)(2) provide that a person will 

not be eligible for an award ‘‘if he or she 

(or an entity whose liability is based 

substantially on conduct that the 

whistleblower directed, planned or 

initiated) has been convicted of a 

criminal violation (including entering 

into a plea agreement or entering a plea 

of nolo contendere), or enters into a 

cooperation, deferred prosecution, or 

non-prosecution agreement in 

connection with, a proceeding brought 

by the Commission, an SRO, or other 

regulator or government entity, which 

proceeding is related to a Commission 

action or a related action for which the 

whistleblower could otherwise receive 

an award.’’ One commenter also 

suggested that the Commission should 

exclude wrong-doers who have 

participated in or facilitated the 

violation of the CEA from award 

eligibility.96 Another commenter 

suggested that culpable individuals, 

including in-house lawyers, and other 

compliance personnel should not be 

eligible for whistleblower awards.97 The 

Commission also received comment that 

the Commission follow the SEC’s 

approach and exclude the spouses, 

parents, children or siblings of members 

of the agency to avoid the appearance of 

impropriety.98

The Commission also received a 

number of other miscellaneous 

comments. One commenter suggested 

that the exclusion should apply to the 

information, and not just persons, by 

suggesting the Commission exclude 

from award eligibility information 

reported after an employer has initiated 

an investigation.99 The Commission also 

received a comment suggesting that the 

Rule require use of internal procedures 

as a condition for receiving an award, 

because such a condition would not 

impinge on a whistleblower’s right to 

contact the Commission or affect the 

anti-retaliation provisions.100 This 

commenter also suggested that the 

Commission revise the rule to include 

potential exclusions of foreign persons. 

3. Final Rule 

The Commission has considered each 

of the comments received, and has 

decided to adopt the rule with minor 

changes. With respect to the specific 

internal reporting issue, after 

considering the comments received, the 

Commission has concluded not to 

amend the rule to make ineligible any 

whistleblowers who do not participate 

in internal corporate compliance 

programs.101 The Commission will, 

however, provide whistleblowers with 

incentives to report internally. The 

Commission has decided to adopt Rule 

165.6 with a minor change to make 

ineligible members or officers of any 

foreign regulatory authority or law 

enforcement organization, extrapolating 

from Section 23(c)(2)(i) and (vi) of the 

Dodd-Frank Act the category making 

appropriate regulatory agencies and law 

enforcement organizations ineligible.102

The Commission has also made explicit 

in Rule 165.6(a)(8) the ineligibility of 

any whistleblower who acquired the 

original information the whistleblower 

gave the Commission from any other 

person with the intent to evade any 

provision of the Final Rules. 

G. Rule 165.7—Procedures for Award 

Applications and Commission Award 

Determinations 

1. Proposed Rule 

Proposed Rule 165.7 described 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 described 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 

a Notice 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. The 

Commission’s Proposed Rule required 

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 

would be responsible for tracking the 

resolution of the related action. The 

Commission’s Proposed Rule required 

claimants to file their claim for an 

award in regard to a related action 

within sixty (60) days after monetary 

sanctions were imposed in the related 

action. A claimant’s failure to timely file 

a request for a whistleblower award 

would bar that individual from later 

seeking a recovery.103

Subparagraph (b) of Proposed Rule 

165.7 described 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, would elicit 

information concerning a 

whistleblower’s eligibility to receive an 

award at the time the whistleblower 

filed his claim. The form would 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.104

Subparagraph (b) of Proposed Rule 

165.7 provided 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, the trigger date depending upon 

which action is the basis for the 

claimant’s award request. 

Subparagraph (c) included award 

application procedures for a 

whistleblower who submitted original 

information to the Commission 

anonymously. Whistleblowers who 

submitted original information 

anonymously, but who make 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 


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105See letter from NWC. 

106See letter from NWC. 

107See letter from NWC. 

108See letters from NWC, POGO; see also SEC 

OIG ‘‘Assessment of the SEC’s Bounty Program,’’ 

Mar. 29, 2010, Report No. 474. 

109See letter from POGO. 

110See letter from TAF. 

111See letter from NCCMP. 

signed and completed Form WB–DEC. 

Whistleblowers who submitted 

information anonymously, and make 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 

the whistleblower’s identity, has 

reviewed the whistleblower’s Form 

WB–DEC for completeness and 

accuracy, will retain the signed original 

of the whistleblower’s 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) made explicit 

that regardless of whether the 

whistleblower made 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 described the Commission’s 

claims review process. The claims 

review process would begin upon the 

expiration of the time for filing any 

appeals of the Commission’s judicial or 

administrative action and the related 

action(s), 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. 

2. Comments 

One commenter stated that Proposed 

Rule 165.7 is unworkable, and that 

whistleblowers cannot be expected to 

follow the Commission’s Web site and 

understand that a published sanction on 

the web site is related to the information 

provided by the whistleblower.105 This 

commenter also suggested that when the 

Commission believes it will obtain a 

sanction, discussions should be 

initiated with the whistleblower to 

negotiate the proper percentage of 

award because to do so would reduce 

administrative costs, facilitate 

cooperation between the Commission 

and the whistleblower, and expedite the 

payment of awards.106 This commenter 

supported this assertion by referencing 

the qui tam procedure under the False 

Claims Act.107 Commenters suggested 

that the Commission add or revise rules 

to incorporate recommendations made 

by the SEC Office of the Inspector 

General (‘‘OIG’’) in its audit of the SEC’s 

previous whistleblower award 

program.108 One commenter suggested 

that the Commission examine ways to 

notify whistleblowers of the status of 

their award without releasing 

confidential information during the 

course of an investigation.109 Another 

commenter stated that Proposed Rule 

165.7 unduly burdens and creates 

hurdles for whistleblowers by requiring 

that they notify the Commission of their 

claim for an award. This commenter 

argued that because the Commission 

handles enforcement actions and knows 

which individuals made submissions, 

the Commission should notify potential 

claimants that their claim to an award, 

if any, has ripened.110

Similarly, another commenter 

suggested that the Commission should 

streamline the whistleblower 

application process by adopting a 

process similar to the whistleblower 

process adopted by the IRS, which 

another commenter claims is more userfriendly and efficient. This commenter 

contended that it is an onerous 

condition to require a whistleblower to 

track on the Commission’s Web site the 

disposition of the covered action and 

that the 60-day period is too narrow a 

window to allow a whistleblower to 

complete an application for an 

award.111

3. Final Rule 

After considering the comments 

received, the Commission has decided 

to adopt Rule 165.7 with changes. First, 

the Commission has decided to increase 

the period for claimants to file their 

claim for an award from sixty (60) days 

to ninety (90) days. This additional time 

should provide claimants with a better 

opportunity to review the Commission’s 

Web site and file an application 

following the publication of a Notice. In 

the Commission’s view, this 90-day 

period strikes an appropriate balance 

between competing whistleblower 

interests—allowing all potential 

whistleblowers a reasonable 

opportunity to periodically review the 

Commission’s Web site and to file an 

application, on the one hand, while 

providing finality to the application 

period so that the Commission can 

begin the process of assessing any 

applications and making a timely award 

to any qualifying whistleblowers, on the 

other hand. 

Second, in light of comments that the 

Commission simplify the WB–APP 

form, the Commission has made 

optional Section G (‘‘Entitlement to 

Award) of the form, which provides 

whistleblowers with the opportunity to 

‘‘[e]xplain the basis for the 

whistleblower’s belief that the 

whistleblower is entitled to an award’’ 

and to ‘‘[p]rovide any additional 

information the whistleblower think 

may be relevant in light of the criteria 

for determining the amount of an 

award.’’ As commenters stated, when a 

whistleblower has worked closely with 

the staff on a matter, requiring that 

whistleblower to furnish a submission 

explaining the degree and value of his 

or her assistance may be unnecessary. 

At the same time, such a 

whistleblower—or other claimants who 

have not worked as closely with the 

staff and wish to advocate the value of 

their assistance—should have the 

opportunity to do so. The Commission 

has determined not to make any further 

modifications to the form, however, 

because the remaining information that 

the Commission requests is in its view 

necessary to provide a sufficient record 

for a full and fair consideration of the 

claimant’s application (and, if a petition 

for review is filed, so that the court of 

appeals has a sufficient record to 

conduct a review). 

The Commission has decided not to 

eliminate the Notice or to otherwise 

model the procedures after those 

employed in the qui tam context. The 

qui tam context is substantially different 

from the Commission’s situation 

because qui tam actions necessarily 

involve one or more known individuals 

with whom the Department of Justice 

will have worked. By contrast, in 

enforcement actions that the 

Commission institutes and litigates 

(based in part on information and 

assistance from one or more 

whistleblowers), there may be one 

whistleblower with whom the 

Commission has worked closely, but 

there may be other claimants who have 


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53188 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

112The SEC takes the same approach to this issue. 

See SEC Rule 240.21F–10(a). 

113See letter from Senator Carl Levin. 

114See letter from Senator Carl Levin. 

115See discussion below, in Part II.S., regarding 

Internal Reporting and Harmonization. 

a potential basis for award eligibility as 

well. The Commission’s procedures 

must provide due process to all 

potential claimants and accordingly 

cannot be restricted by the 

happenstance that some claimants 

worked more closely with staff. For that 

reason, the Commission believes the 

‘‘Notice of Covered Action’’ procedure 

provides the best mechanism to provide 

notice to all whistleblower claimants 

who may have contributed to the 

action’s success.112

H. Rule 165.8—Amount of Award 

1. Proposed Rule 

If all conditions are met, Proposed 

Rule 165.8 provided 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) 

stated 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 a related 

action (but not both the Commission’s 

action and the related action). 

2. Comments 

The Commission received one 

comment on this Proposed Rule. The 

commenter, a United States Senator, 

suggested that the Commission place 

reasonable monetary limits on awards to 

protect against inappropriate monetary 

incentives while still encouraging 

potential whistleblowers to come 

forward. This commenter also suggested 

that the Commission place reasonable 

limits on amounts of funds that can be 

awarded to any single whistleblower in 

any one matter.113 This commenter 

further suggested that the Commission 

provide financial incentives to 

whistleblowers who report to their 

employers’ internal compliance 

programs, which will give the company 

an earlier opportunity to address 

potential problems and prevent further 

harm.114

3. Final Rule 

After considering the comment 

received, the Commission is adopting 

Rule 165.8 as proposed because it 

follows the statutory requirements. 

Paragraph (b) of Section 23 of the CEA 

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 in the 

Commission’s action or any related 

action. The Commission’s Final Rule 

tracks this provision. Thus, for example, 

one whistleblower could receive an 

award of 25 percent of the collected 

sanctions, and another could receive an 

award of 5 percent, but they could not 

each receive an award of 30 percent. As 

the Commission noted in the Proposed 

Rule, because the Commission 

anticipates that the timing of award 

determinations and the value of a 

whistleblower’s contribution could be 

different for the Commission’s action 

and for related actions, the Rule would 

provide that the percentage awarded in 

connection with a Commission action 

may differ from the percentage awarded 

in related actions. But, in any case, the 

amounts would, in total, fall within the 

statutory range of 10 to 30 percent. As 

to the suggestion that the Commission 

use its discretion to avoid giving 

excessive awards, the Commission notes 

that the statute requires that the 

Commission give an award of a 

minimum of 10 percent of the amount 

collected regardless of the overall size of 

the resultant award, and the 

Commission does not have discretion to 

reduce that statutory minimum.115

I. Rule 165.9—Criteria for Determining 

Amount of Award 

1. Proposed Rule 

Assuming that all of the conditions 

for making an award to a whistleblower 

have been satisfied, Proposed Rule 

165.9 set 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 

recited 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 

believed 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 Commission 

considerations include, but are not 

limited to: 

• 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; 

• 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; 

• The timeliness, degree, reliability, 

and effectiveness of the whistleblower’s 

assistance; 

• The time and resources conserved 

as a result of the whistleblower’s 

assistance; 

• Whether the whistleblower 

encouraged or authorized others to 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53189 

116As 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. Under subparagraph (a) of Proposed Rule 

165.9, the fact that a 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 

action, that would be a reason for making an award 

based upon a smaller percentage amount than 

otherwise would have been awarded. 

117See letter from ABA. 

118See letter from Senator Carl Levin. 119Rule 165.9(a)(5). 

assist the staff who might not have 

otherwise participated in the 

investigation or related action; 

• Any unique hardships experienced 

by the whistleblower as a result of his 

or her reporting and assisting in the 

enforcement action; 

• The degree to which the 

whistleblower took steps to prevent the 

violations from occurring or continuing; 

• 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; 

• 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; 116 and 

• 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 reiterated the statutory 

prohibition in Section 23(c)(1)(B)(ii) of 

the CEA from taking into consideration 

the balance of the Fund when making 

an award determination. 

2. Comments 

The Commission received comment 

that the Rule should expressly permit 

the Commission to deny an award when 

it determines that payment of an award 

would be against public policy.117 One 

commenter, a Senator, also expressed 

concern that excessive monetary 

incentives may lead to misreporting 

causing investigative waste.118 The 

Senator also suggested that the 

Commission should exercise discretion 

afforded the Commission in Section 

23(c)(1)(A) to reasonably limit the 

amount that may be awarded to a single 

whistleblower in any one matter. 

3. Final Rule 

The Commission notes that the SEC, 

in promulgating its own final 

whistleblower rules, added two 

additional discretionary factors to 

consider in making award amount 

decisions: (1) ‘‘whether the 

whistleblower unreasonably delayed 

reporting the securities violations (SEC 

Rule 240.21F–6(b)(2))’’; and (2) whether 

the whistleblower interfered or 

hindered internal compliance and 

reporting systems (SEC Rule 240.21F– 

6(b)(3)). The Commission has amended 

the Rule to add such factors in the 

interest of increasing transparency 

regarding the Commission’s award 

determination process, and to be 

consistent with the statutory mandate in 

Section 23(c)(1)(B)(IV) of the CEA that 

the Commission establish additional 

relevant factors per rule or regulation. In 

addition, with respect to the Senator’s 

comment, the Rule now affords the 

Commission discretion regarding award 

determinations to take into 

consideration ‘‘[p]otential adverse 

incentives from oversize awards’’.119

J. 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 set 

forth the contents of record for award 

determinations relating to covered 

judicial or administrative actions or 

related actions. Under the Proposed 

Rule, the record shall include: 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; and any other documents 

that appear on the docket of the 

proceeding. Under the Proposed Rule, 

the record shall also include 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; and 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. 

However, Proposed Rule 165.10(b) 

explicitly stated that the record upon 

which the award determination under 

Proposed Rule 165.7 shall be made shall 

not include any Commission predecisional or internal deliberative 

process materials related to the 

Commission’s or its staff’s 

determinations: (1) To file or settle the 

covered judicial or administrative 

action; and/or (2) 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 did not receive any 

comments on the contents of record for 

award determinations. The Commission 

has considered the issue and has 

decided to adopt Rule 165.10 as 

proposed, with two modifications 

intended to improve clarity. First, the 

Final Rule clarifies that the record shall 

not include documents protected under 

the attorney-client privilege or the 

attorney work-product privilege. 

Second, the ‘‘statements by litigation 

staff’’ provision has been simplified to 

include ‘‘[s]worn declarations 

(including attachments) from the 

Commission’s Division of Enforcement 

staff regarding any matters relevant to 

the award determination.’’ 

K. Rule 165.11—Awards Based Upon 

Related Actions 

Proposed Rule 165.11 provided that 

the Commission, or its delegate, may 

determine an award based on amounts 

collected in related actions brought by 

appropriate Federal or state agencies, 

registered entities, or SROs rather than 

on the amount collected in a covered 

judicial or administrative action. 

Regardless of whether the Commission’s 

award determination is based on the 

Commission’s covered judicial or 

administrative action or a related action 

or actions, Rule 165.7 sets forth the 

procedures for whistleblower award 

applications and Commission award 

determinations. 

The Commission received one 

comment regarding awards based upon 

related actions. The commenter 

suggested that the Commission should 

remove the potential for a whistleblower 

to recover from both the Commission 


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53190 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

120See letter from FSR. 

121See 7 U.S.C. 26(a)(5), 26(h)(2)(C)(i)(VI). 

122See letter from NCCMP. 

123See 5 U.S.C. 553. 

124See Section 23(f) of the CEA, 7 U.S.C. 26(f). 

125See letter from NCCMP. 

126 7 U.S.C. 26(g). 127 7 U.S.C. 26(b)(1). 

and the SEC for providing each agency 

with the same information. This 

commenter noted that the SEC will not 

make an award for a related action, and 

that the Commission’s provisions 

should be similar.120

The Commission has considered the 

comment and has decided to adopt Rule 

165.11 as proposed, with one 

modification. Rule 165.11 tracks Section 

23(a)(5) of the CEA, and the payment of 

awards on related actions is not within 

in the discretion of the Commission. 

Rule 165.11(a)(5) adds ‘‘[a] foreign 

futures authority’’ to the list of 

authorities whose judicial or 

administrative actions could potentially 

qualify as a ‘‘related action.’’ 121

L. Rule 165.12—Payment of Awards 

From the Fund, Financing Customer 

Education Initiatives, and Deposits and 

Credits to the Fund 

1. Proposed Rule 

Proposed Rule 165.12 sets forth 

Commission procedures with respect to 

the Fund to pay whistleblower awards, 

fund customer education initiatives, and 

maintain appropriate amounts in the 

Fund. 

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 

the 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 limits 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. 

2. Comments 

The Commission received one 

comment that suggested Fund amounts 

be used to educate the public about the 

rights of whistleblowers. The comment 

suggests that the Commission publish 

materials that companies can distribute 

to their employees that are simple and 

easy to understand informing them of 

their rights as a potential 

whistleblower.122 The Commission did 

not receive any comments regarding the 

Commission’s delegation of authority to 

the Office of the Executive Director. 

3. Final Rule 

The Commission has considered the 

comment received regarding the use of 

the Fund. The Commission has 

established a working group to make 

suggestions regarding customer 

education initiatives. The Commission 

has decided to adopt Rule 165.12 with 

revisions. Specifically, the Final Rule 

includes revisions to reflect the 

Commission’s intent to undertake and 

maintain customer education initiatives 

through an Office of Consumer 

Outreach. Because Rule 165.12 is a rule 

of the Commission’s ‘‘organization, 

procedure, or practice,’’ the Commission 

is not presenting these revisions for 

notice and comment.123

M. 165.13—Appeals 

1. Proposed Rule 

Section 23(f) of the CEA provided for 

rights of appeal of Final Orders of the 

Commission with respect to 

whistleblower award determinations.124

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. 

Subparagraph (b) of Proposed Rule 

165.13 designates the materials that 

shall be included in the record on any 

appeal. Those materials include: The 

Contents of Record for Award 

Determinations, as set forth in Proposed 

Rule 165.10, and any Final Order of the 

Commission, as set forth in Rule 

165.7(e). 

2. Comments 

The Commission received one 

comment regarding appeals.125 This 

commenter suggested that a 

whistleblower who provides 

information to the Commission that the 

Commission subsequently decides not 

to pursue should have the right to 

appeal to the Commission’s Office of the 

Inspector General the decision not to 

pursue. This commenter reasons that 

otherwise legitimate claims that could 

expose violations could be dismissed 

without appropriate investigation. 

3. Final Rule 

After considering the comment 

received, the Commission has decided 

to adopt Rule 165.13 as proposed. The 

Final Rule tracks Section 23(f) of the 

CEA, which states that appeals of 

Commission decisions regarding 

whistleblower awards may be made to 

the appropriate U.S. Circuit Court of 

Appeals. However, although Section 

23(f) provides for appeals of 

Commission determinations of whether, 

to whom, or in what amount to make an 

award, it does not grant any right to 

appeal the Commission’s prosecutorial 

discretion, including the Commission’s 

decisions to: open or close an 

investigation; file an enforcement 

action, including the Commission’s 

determination of the violations charged; 

and settling an enforcement action. 

N. Rule 165.14—Procedures Applicable 

to the Payment of Awards 

1. Proposed Rule 

Proposed Rule 165.14 addressed 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.126 Subparagraph (a) 

provided 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,127 which provides that an award 

is based upon the monetary sanctions 

collected in the covered judicial or 

administrative action or related action. 

Subparagraph (b) stated 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 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53191 

128See 5 U.S.C. 553. 

129See http://www.cftc.gov/ucm/groups/public/ 

@cpdisciplinaryhistory/documents/file/ 

enfcooperation-advisory.pdf. 

130 7 U.S.C. 26(c)(2)(B). 

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, 

then 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 described how the Commission 

will address situations where there are 

insufficient amounts available in the 

Fund to pay the entire amount of an 

award to a whistleblower or 

whistleblowers within a reasonable 

period of time from 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, then 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. 

2. Comments and Final Rule 

The Commission did not receive any 

comments regarding procedures 

applicable to the payment of awards. 

The Commission is adopting Rule 

165.14 as proposed. The Final Rule 

tracks the relevant provisions of Section 

23 of the CEA. 

O. Rule 165.15—Delegations of 

Authority 

Proposed Rule 165.15 included 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(g) of CEA. Specifically, Proposed 

Rule 165.15 delegated authority to the 

Executive Director, or a designee, upon 

the concurrence of the General Counsel 

and the Director of the Commission’s 

Division of Enforcement, to make both 

deposits into and award payments out 

of the Fund. 

The Commission did not receive any 

comments regarding delegations of 

authority. The Commission is adopting 

Rule 165.15 with revisions to address 

internal Commission organizational and 

procedural issues. Specifically, the 

Final Rule includes revisions to reflect 

the Commission’s delegation to a 

Whistleblower Office the authority to 

administer the Commission’s 

whistleblower program. The Final Rule 

also provides that the Commission will 

exercise its authority to make 

whistleblower award determinations 

through a delegation of authority to a 

panel that shall be composed of three of 

the Commission’s Offices or Divisions. 

Under Rule 165.15, the Commission’s 

Executive Director will select the 

members of the ‘‘Whistleblower Award 

Determination Panel.’’ Because Rule 

165.15 is a rule of the Commission’s 

‘‘organization, procedure, or practice,’’ 

the Commission is not presenting these 

revisions for notice and comment.128

P. Rule 165.16—No Immunity and Rule 

165.17—Awards to Whistleblowers Who 

Engage in Culpable Conduct 

1. Proposed Rules 

Proposed Rule 165.16 provided 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. 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.129

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,130 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 action or a related action is 

ordered to pay monetary sanctions in a 

civil enforcement action, Proposed Rule 

165.17 stated 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 

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 nonculpable 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, which would exceed the 

$1,000,000 minimum threshold required 

for making an award, could potentially 

be eligible for an award even though he 

personally was ordered to pay $750,000 

of those monetary sanctions. Under 

similar circumstances, a non-culpable 

whistleblower would be deemed 

ineligible for an award if they reported 

a CEA violation that resulted in 

monetary sanctions of less than 

$1,000,000. The Proposed Rule would 

prevent such inequitable treatment. 

2. Comments 

Many commenters suggested that the 

Commission should not allow 

whistleblowers with varying degrees of 

culpability to be eligible for an 


srobinson on DSK4SPTVN1PROD with RULES2
53192 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

131See letters from SIFMA/FIA, and U.S. 

Chamber of Commerce. 

132See above, Section II.F. 

133See Section II.I, above, discussing Rule 

165.9(c)(1). 

134See Section 23(b)–(d) and (h) of the CEA, 7 

U.S.C 26(b)–(d), (h). 

135

136See letter from ABA. 

137See letter from ABA. 

138See letter from ABA. 

139See letter from SIFMA/FIA. 

140See letter from FSR. 

award.131 These comments are 

discussed under Rule 165.6 in the 

context of discussing whistleblowers 

ineligible for an award.132

3. Final Rule 

Upon consideration of the comments, 

the Commission has decided to adopt 

Rules 165.16 and 165.17 as proposed. 

These rules track the Commission’s 

authority to deny whistleblower awards 

to individuals who are criminally 

culpable as stated in Section 23(c)(2)(B). 

As discussed above with respect to Rule 

165.9, the Commission will consider 

‘‘the culpability or involvement of the 

whistleblower in matters associated 

with the Commission’s action or related 

actions’’ in determining the amount of 

a whistleblower award.133

Q. Rule 165.18—Staff Communications 

With Whistleblowers From Represented 

Entities 

1. Proposed Rule 

Proposed Rule 165.18 clarified 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 

violation of the CEA. The Proposed Rule 

made 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.134

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 the Commission and who is a 

director, officer, member, agent, or 

employee of the entity. For this reason, 

Section 23 of the CEA implicitly 

authorizes the Commission to 

communicate directly with these 

individuals without first obtaining the 

consent of the entity’s counsel. 

The Commission included this 

authority in the Proposed Rule to 

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 intended the 

Proposed Rule to clarify that, in 

accordance with American Bar 

Association Model Rule 4.2, the staff is 

authorized by law to make these 

communications.135 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). 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. 

2. Comments 

The ABA strongly disagreed with the 

Commission’s view that Part 165 

authorized the Commission to bypass 

state bar ethics rules.136 The ABA also 

expressed concern that Proposed Rule 

165.18 may have profound implications 

with respect to the preservation of an 

entity’s attorney-client privilege and 

information protected by the workproduct doctrine.137 The ABA stated: 

[W]e strongly disagree with the 

Commission’s view that Part 165 authorized 

the Commission to bypass state bar ethics 

rules. In our view, Proposed Rule 165.18 may 

have profound implications with respect to 

the preservation of an entity’s attorney-client 

privilege and information protected by the 

work-product doctrine * * *. The 

Commission would justify this position by 

viewing the discussions with such a person 

as having been ‘authorized by law.’ However, 

it is not clear to us as to whether a 

Commission Rule (as opposed to a statute) 

can supersede the State Bar provisions 

governing attorney conduct * * *. Proposed 

Rule 165.18 deals not with the initial 

communication by the employee, but instead 

with responsive communications by the staff. 

Having had the benefit of a whistleblower’s 

initial communication, we see no reasonable 

basis not to require the staff to communicate 

with entity counsel prior to any further 

communications. 

The ABA also advised, in the 

alternative, that if the Commission 

retains Proposed Rule 165.18, it should 

be revised to include procedures 

governing staff communications to 

ensure that attorney-client privileges 

and the information protected by 

attorney work-product doctrine are not 

jeopardized.138 The ABA elaborated 

that, ‘‘information the CFTC might seek 

from an employee, and which the 

employee might disclose, might have 

derived from privileged 

communications the employee or others 

within the organization might have had 

with the entity’s counsel.’’ It was also 

suggested that the right to waive the 

privilege in such circumstances would 

belong to the entity, not to any single 

employee, and that the ability of 

Commission staff to communicate with 

an employee without first seeking the 

consent of the entity’s counsel may 

affect the entity’s ability to claim 

privilege with respect to such matters.’’ 

Finally, the ABA suggested that 

‘‘[h]aving had the benefit of a 

whistleblower’s initial communication, 

we see no reasonable basis not to 

require the [CFTC] staff to communicate 

with entity counsel prior to any further 

communications,’’ because in many 

cases CFTC communications with entity 

counsel preceding further discussions 

with a whistleblower could assist the 

CFTC’s investigative efforts. Another 

commenter recommended that Proposed 

Rule 165.18 be clarified to provide that 

‘‘if the commission remains in contact 

with a whistleblower during the course 

of an entity’s internal investigation, it 

cannot seek from the whistleblower 

information about counsel’s views and 

advice (or the privileged information 

and discussions) that the whistleblower 

obtains during that investigation.’’ 139

Another commenter warned that ‘‘[t]he 

communications contemplated by 

Section 165.18 of the Proposed Rules 

run afoul of ABA Model Rule 4.2 

* * *’’ and recommended that the 

Commission ‘‘should withdraw Section 

165.18 of the Proposed Rules.’’ 140

3. Final Rule 

After considering the comments 

received, the Commission has decided 

to adopt Rule 165.18, with 

modifications. The Final Rule 

authorizes the staff to directly 

communicate with directors, officers, 

members, agents, or employees of an 

entity that has counsel where the 

individual first initiates communication 

with the Commission as a 

whistleblower; the staff is authorized to 

have such direct communication 

without the consent of the entity’s 

counsel. The Commission believes that 

the Rule implements congressional 


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141The Commission is mindful that the SEC has 

reached the same conclusion with respect to the 

SEC’s Dodd-Frank Act whistleblower provision. See 

SEC Rule 240.21F–17(b) (’’If you are a director, 

officer, member, agent, or employee of an entity that 

has counsel, and you have initiated communication 

with the Commission relating to a possible 

securities law violation, the staff is authorized to 

communicate directly with you regarding the 

possible securities law violation without seeking 

the consent of the entity’s counsel.’’). 

142Cf. ABA Formal Ethics Opinion 95–396 (1995) 

(Rule 4.2’s exception permitting communication 

‘‘authorized by law’’ is satisfied by ‘‘a constitutional 

provision, statute or court rule, having the force and 

effect of law, that expressly allows a particular 

communication to occur in the absence of 

counsel.’’); see, e.g., Wilkerson v. Brown, 995 P.2d 

393 (Kan. Ct. App. 1999) (statutes allowing for 

service of demands and offers of judgment on 

opposing party trigger ‘‘authorized by law’’ 

exception to anti-contact rule); Lewis v. Bayer A.G., 

No. 2353 Aug. Term 2001, 2002 WL 1472339 (Pa. 

C.P. June 12, 2002) (drug company’s mailings to 

putative members of plaintiff class of patients who 

experienced adverse drug reactions were sent 

pursuant to FDA regulations and thus were 

‘‘authorized by law’’). 

143See, e.g., ABA Model Rule 1.7(a) (providing, 

in general, that ‘‘a lawyer shall not represent a 

client if the representation involves a concurrent 

conflict of interest. A concurrent conflict of interest 

exists if * * * the representation of one client will 

be directly adverse to another client’’). 

144See Proposed Rule 165.2(l). 

145See letter from NSCP; see also letters from EEI, 

ICI, ACC, Equal Employment Advisory Council 

(‘‘EEAC’’), U.S. Chamber of Commerce, ABA, and 

FSR. 

intent and meets the ‘‘authorized by 

law’’ exception to ABA Model Rule of 

Professional Conduct 4.2 and similar 

state bar rules that might otherwise 

prohibit direct communication. 

With respect to the ABA’s comment 

that ‘‘it is not clear to [the ABA] as to 

whether a Commission Rule (as opposed 

to a statute) can supersede the State Bar 

provisions governing attorney conduct’’, 

the Commission does not believe that 

Final Rule 165.18 ‘‘supersedes’’ state bar 

provisions. Rather, the Commission 

believes that by granting the 

Commission rulemaking authority 

pursuant to Section 23(i) of the CEA to 

implement an effective whistleblower 

program, Congress conferred upon the 

Commission the authority to permit its 

staff to have direct communications 

with whistleblowers without seeking 

consent of an entity’s counsel. Final 

Rule 165.18, therefore, is intended to 

and does satisfy the ‘‘authorized by 

law’’ exception to the rule that would 

otherwise prohibit an attorney from 

communicating directly with an 

individual about a matter when the 

individual is represented by counsel in 

the matter.141

The Commission disagrees with any 

suggestion that the Commission does 

not have the authority to give such 

permission. The authority is derived 

from Congress’s direction in Section 

23(i) of the CEA to promulgate rules to 

create an effective and robust 

whistleblower program, and to preserve 

the confidentiality of whistleblowers.142

The Commission believes that it would 

undermine Congressional intent if staff 

were prohibited from communicating 

directly with a whistleblower merely 

because the whistleblower was 

employed by an entity that was 

represented by counsel. Not only would 

such a prohibition allow a state bar rule 

to trump a federal statute and an 

independent federal agency’s rule, but 

such a blanket prohibition would have 

the perverse result of giving an entity 

the option to decide whether a 

whistleblower should be allowed to 

report the entity’s misconduct to the 

Commission. Giving an entity the right 

to stifle a whistleblower plainly is not 

what Congress intended. Nor would it 

be consistent with congressional intent 

to require staff to identify a 

whistleblower to an entity, which 

would be necessary if the staff were 

required to seek the entity’s counsel 

consent to speak to the whistleblower. 

Such a requirement could deter 

whistleblowers from coming forward, 

which would frustrate congressional 

purpose. 

Moreover, any state bar prohibition on 

attorney contact with an employee 

ultimately is premised on the notion 

that an entity-employer’s counsel is by 

extension the employee’s counsel. 

However, a lawyer for an entity cannot 

ethically also represent a whistlebloweremployee on the same matter when the 

whistleblower’s interests and the 

entity’s interests are in conflict, such as 

when a whistleblower wants to report 

an entity’s misconduct to the 

Commission.143 Based on the same 

reasoning, Rule 165.18 does not 

authorize Commission staff to have 

direct communication with a 

whistleblower who is personally 

represented by an attorney without the 

consent of that attorney. 

Authorizing the staff to have direct 

communication with a whistleblower 

employed by a represented entity does 

not mean that the staff should be the 

first to initiate such contact. For the 

sake of clarity, the Commission is 

explicitly modifying the proposed rule 

to grant authority only when the 

whistleblower first initiates contact with 

the staff. Thereafter, all direct 

communications are ‘‘authorized by 

law.’’ 

In addition, the Commission 

acknowledges some commenters’ 

concern that direct communication with 

whistleblowers raises the possibility of 

the staff’s inadvertent receipt of 

information covered by an entity’s 

attorney-client privilege or the attorney 

work product protection. These 

concerns are valid. This Rule does not 

authorize staff to access information 

protected by the attorney-client 

privilege or attorney work product 

protection. Accordingly, when invoking 

Rule 165.18, the staff shall undertake 

reasonable best efforts to avoid receiving 

such information. 

R. 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 

provided that the rights and remedies 

provided for in 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 pre-dispute arbitration agreement 

shall be valid or enforceable, if the 

agreement requires arbitration of a 

dispute arising under this Part. 

The Commission did not receive any 

comments on Proposed Rule 165.19. 

The Commission is adopting Rule 

165.19 as proposed. This rule tracks 

Section 23(n) of the CEA and is in 

keeping with congressional intent to 

make waiver of certain rights and 

remedies of whistleblowers 

nonenforceable, as well as any 

predispute arbitration agreement if the 

agreement requires arbitration of a 

dispute arising under Part 165. 

S. Internal Reporting and 

Harmonization 

The Proposed Rules did not require 

individuals to report potential CEA 

violations to their employers. However, 

the Proposed Rules did include 

provisions that would allow employees 

to claim an award from the Commission 

if they reported the information to their 

employer and the employer reported 

that information to the Commission.144

Numerous commenters requested that 

the Commission either make internal 

reporting mandatory for whistleblowers, 

or at least provide individuals with 

incentives to make internal reports. 

Several commenters recommended 

that the Commission adopt a ‘‘provision 

requiring internal reporting by all 

employees as a condition of eligibility 

for a whistleblower award.’’ 145 Some 

commentators suggest that the only 

exception to internal reporting should 

be when the whistleblower can prove 

that the employer’s internal system is 


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146See letter from U.S. Chamber of Commerce. 

147See letter from SIFMA/FIA. 

148See letter from TAF. 

149See letter from TAF. 

150See letter from POGO. 

151See letter from POGO. 

152See letter from FSR at 8; see also letters from 

NSCP at 3–7, 10, Senator Carl Levin at 3, U.S. 

Chamber of Commerce at 14, SIFMA/FIA at 2–3, 6; 

cf. letter from FSR at 9 (suggesting that 

whistleblowers who fail to report internally 

‘‘without clear, appropriate justification’’ be 

limited, in general, to the ‘‘statutory minimum of 

10 percent of the total monetary sanctions collected 

in the action.’’). 

153See letter from SIFMA/FIA. 

154See letter from SIFMA/FIA. 

155See letter from SIFMA/FIA. 

156See, e.g., letter from SIFMA/FIA. 

157See SEC Rule 240.21F–6(a)(4) (‘‘Criteria For 

Determining Amount of Award’’). 

158See letter from POGO. 

159See Rule 165.9 Criteria for determining 

amount of award. 

inadequate.146 One commenter 

suggested that ‘‘[t]he rules should 

provide that an internal reporting 

requirement prior to going to the CFTC 

would not apply where it would be 

futile, for example where individuals 

responsible for investigating complaints 

were themselves involved in the alleged 

violations,’’ and ‘‘if the entity has an 

effective internal compliance reporting 

system and internal reporting would not 

be futile, the entity should be allowed 

at least 180 days to complete its own 

internal investigation before the 

whistleblower can report the matter to 

the CFTC.’’ 147

Other commentators cautioned 

against making internal reporting 

mandatory. One commenter stated 

‘‘[r]equiring that a whistleblower first 

advance his allegations internally to 

officials who may be the architects of 

the scheme places that individual’s 

livelihood in peril. * * * In addition, 

requiring that whistleblowers report 

internally first in all situations can 

imperil law enforcement ends, by 

providing opportunities to destroy or 

conceal evidence, or otherwise 

thwarting the CFTC’s investigation of 

alleged wrongdoing.’’ 148 This 

commenter also expressed belief that 

‘‘the Commission’s approach of 

encouraging whistleblowers to first 

report violations internally * * * 

without penalizing those who do not 

report, strikes an appropriate 

balance.’’ 149

Another commenter advised that 

whistleblowers should be given the 

option to report problems directly to the 

Commission, ‘‘especially if they have 

reason to believe that their entity’s 

internal compliance program will not do 

an adequate job of investigating the 

wrongdoing and taking corrective 

action.’’ 150 This commenter also stated 

that to require internal reporting would 

be contrary to the meaning and intent of 

Section 23 of the CEA, would have a 

chilling effect on the whistleblower 

program and would put whistleblowers 

in harm’s way.151

In the alternative to mandatory 

internal reporting, several commenters 

suggested that the Commission make 

internal reporting a positive criterion in 

an award determination.152 For 

example, one commenter stated that the 

Commission ‘‘[s]hould make explicit 

that a whistleblower will receive credit 

in the calculation of award amount 

when the [whistleblower] uses a entity’s 

internal reporting mechanism.’’ 153 In 

addition, this commenter suggested that 

the Final Rule ‘‘should provide strong 

financial disincentives against 

individuals who violate entity rules 

requiring them to report misconduct 

internally.’’ 154 Taking another tack, this 

commenter suggested that the 

Commission deem ineligible for an 

award any individual who refuses to 

cooperate with the entity’s internal 

investigation, or who provides 

inaccurate or incomplete information or 

otherwise hinders such an 

investigation.155

Also, several commenters pointed out 

that the SEC’s whistleblower rules 

incentivize internal reporting through 

positive consideration of internal 

reporting in award determinations,156

and suggested that the Commission’s 

whistleblower program be harmonized 

with that of the SEC (harmonization to 

be discussed below). The SEC’s final 

whistleblower rules include factors that 

may increase a whistleblower’s 

award.157

The Commission declines to mandate 

that whistleblowers report potential 

violations internally either before or 

concurrent to reporting to the 

Commission. The Commission believes 

that to require internal reporting could 

raise the risk of retaliation, and have a 

chilling effect on whistleblowers who 

are inclined to come forward and bring 

information to the attention of the 

Commission.158 For these same reasons, 

the Commission has decided not to 

deem lack of cooperation with an 

internal investigation a basis to render 

a person ineligible for an award. 

Nonetheless, the Commission 

recognizes that internal whistleblower, 

compliance and legal systems can 

contribute to detecting, deterring and 

preventing misconduct including 

violations of the CEA, goals that are 

consistent with the Commission’s 

mission. Many entities properly 

encourage their employees to use such 

functions to report misconduct 

internally. By establishing financial 

incentives to report misconduct to the 

Commission, the Commission does not 

want to discourage employees from 

making internal reports when 

appropriate. The Commission 

recognizes that internal compliance and 

reporting systems ought to contribute to 

the goal of detecting, deterring and 

preventing misconduct, including CEA 

violations, and does not want to 

discourage employees from using such 

systems when they are in place. 

The Commission is striking an 

appropriate balance between the 

interests of maintaining strong internal 

reporting functions and the interests of 

the Commission’s whistleblower 

program by tailoring the Final Rules in 

two respects. First, the Final Rules state 

that the Commission will consider the 

whistleblower’s decision to report 

internally as a potentially positive factor 

in the Commission’s award 

determination. Whether the decision to 

report internally increases the amount 

of the award will depend on the facts 

and circumstances. If the whistleblower 

chooses not to report internally, his 

award determination will be unaffected 

by that decision. Indeed, the 

Commission recognizes that a 

whistleblower may reasonably believe 

that reporting internally could risk 

retaliation or be counterproductive to 

preventing and/or remedying 

misconduct; but such a whistleblower 

should be no less incentivized to report 

to the Commission. Second, if a 

whistleblower reports information 

internally within an entity, according to 

the Final Rules the Commission will 

attribute to the whistleblower all 

information later reported by the entity 

to the Commission, including any 

additional information reported by the 

entity that was not part of the 

whistleblower’s internal report. 

In response to this possibility, the 

Commission has tailored the Final Rules 

to provide whistleblowers who are 

otherwise pre-disposed to report 

internally, but who may also be affected 

by financial incentives, with additional 

economic incentives to continue to 

report internally. Specifically, after 

considering the comments received, the 

Commission has decided to revise and 

adopt the Proposed Rules to incentivize 

internal reporting, as discussed 

throughout this Release, specifically by 

providing whistleblowers who report 

internally with: (a) Positive weight in 

Commission award determinations; 159

and (b) the benefit of the employer’s 


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160See Rule 165.2(i) (‘‘Information that led to 

successful enforcement’’). 

161See 75 FR at 75739. 

162See letters from NSCP at 2, ABA at 4, ICI at 

1, SIFMA/FIA at 14. 

163 7 U.S.C. 19(a). 

164See, e.g., Fisherman’s Doc Co-op., Inc v. 

Brown, 75 F.3d 164 (4th Cir. 1996); Center for Auto 

Safety v. Peck, 751 F.2d 1336 (D.C. Cir. 1985) 

(noting that an agency has discretion to weigh 

factors in undertaking cost-benefit analysis). 

165See letters from ABA, EEI, and U.S. Chamber 

of Commerce. 

166See letter from ABA. 

167See letter from EEI. 

investigation.160 The Commission has 

decided not to deem ineligible a person 

for an award who does not cooperate 

with an internal investigation because 

the Commission has previously 

indicated that the Commission will take 

into consideration the degree to which 

a whistleblower took steps to prevent 

the violations from occurring, or 

continuing, when making an award 

determination.161

Commission staff has consulted with 

SEC staff regarding drafting of rules to 

implement the Commission’s and SEC’s 

respective Dodd-Frank Act 

whistleblower provisions, Section 748 

(Commodity Whistleblower Incentives 

and Protection) and Section 922 

(Whistleblower Protection). Several 

commenters noted that some companies 

may be subject to both whistleblower 

programs, and to reduce uncertainty and 

cost to these companies the respective 

whistleblower programs should be as 

uniform as possible.162 Wherever 

appropriate and consistent with the 

underlying statutory mandate in Section 

23 of the CEA, the Commission has 

endeavored to harmonize its 

whistleblower rules with those of the 

SEC. 

However, the CFTC’s Proposed Rules 

and SEC’s Final Rules are similar but 

not identical due to a number of factors, 

including the following: (1) While 

similar, the provisions of the Sections 

748 and 922 are not identical; (2) certain 

terms in the SEC’s statutory provision 

are either defined terms under the 

Securities Exchange Act of 1934 or are 

terms of art under SEC case law, and 

there is no comparable CFTC precedent; 

(3) unlike the CFTC, the SEC has an 

existing whistleblower program for 

insider trading violations that was 

established under Section 21A(e) of the 

Securities Exchange Act of 1934, 15 

U.S.C. 78u–1(e); and (4) also unlike the 

CFTC, the SEC has existing obligations 

for persons to report violations to it (see, 

e.g., Section 10A of the Securities 

Exchange Act of 1934, 15 U.S.C. 78j–1 

(establishing requirements and 

procedure for a ‘‘registered public 

accounting firm [that] detects or 

otherwise becomes aware of information 

indicating that an illegal act (whether or 

not perceived to have a material effect 

on the financial statements of the issuer) 

has or may have occurred’’ to report 

such illegal act to management, board of 

directors, and the SEC) (alteration in 

original)). 

III. Administrative Compliance 

A. Cost-Benefit Considerations 

Section 15(a) of the CEA requires the 

Commission to consider the costs and 

benefits of its action before 

promulgating a regulation.163

Furthermore, such costs and benefits 

shall be evaluated in light of the 

following five considerations: (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 

depending upon the nature of the 

regulatory action.164

The Final Rules implement Section 23 

of the CEA which requires the 

Commission, subject to certain 

requirements, to pay eligible 

whistleblowers a monetary award for 

voluntarily providing original 

information about violations of the CEA 

leading to a successful enforcement 

action. The Final Rules define the key 

terms, specify procedures for the 

submission and handling of original 

information, and enumerate procedures 

for consideration and payment of 

awards including appeals. 

Many of the Final Rules are mandated 

by section 748 of the Dodd-Frank Act, 

leaving the Commission with little or no 

discretion to consider any alternatives 

where the statute prescribes particular 

procedures. Therefore, the 

Commission’s final regulations adhere 

closely to the enabling language of the 

statute. For example, the final 

regulations implement, among other 

provisions, the statutory requirement 

that, if all preconditions are met, the 

Commission must pay an award to one 

or more whistleblowers in an aggregate 

amount of not less than 10 percent and 

not more than 30 percent of what has 

been collected of the monetary 

sanctions imposed in the Commission’s 

action or related actions. Another 

example is the statutory requirement 

that anonymous whistleblowers must be 

represented by counsel when making a 

claim for a whistleblower award. To the 

extent that the Commission was left 

with discretion under section 748 of the 

Dodd-Frank Act, the Commission 

exercised that discretion with 

consideration of minimizing the 

potential costs while maintaining 

fidelity to the Congressional intent 

behind section 748 of the Dodd-Frank 

Act. 

The Commission has considered the 

costs and benefits of its regulations as 

part of the deliberative rulemaking 

process, and discussed them throughout 

the preamble. The Commission 

generally views the costs-benefits 

section of this Final Rulemaking to be 

an extension of that discussion. 

Paperwork Reduction Act related costs 

are included in the overall compliance 

costs considered with respect to Final 

Rule 165. 

The comments that the Commission 

received regarding costs and benefits 

can be categorized under three major 

topics. Broadly speaking, the comments 

assert that (1) Employers and the CFTC 

will face increased costs because the 

Final Rule does not contain a 

requirement that a whistleblower first 

report an alleged CEA violation 

internally to the entity committing the 

alleged offense; (2) firms regulated by 

both the CFTC and the SEC will face 

increased costs due to the lack of 

regulatory harmonization between the 

CFTC and SEC whistleblower rules; and 

(3) potential whistleblowers will face 

costs excessive procedural burdens 

under the rules. 

A discussion of the comments on each 

topic and the Commission’s response to 

those comments in light of the five 

public interest considerations follows. 

1. Costs to Employers and the 

Commission Associated With the Lack 

of an Internal Reporting Requirement 

Three commenters 165 commented 

specifically on the cost-benefit section 

of the Proposed Rules, stating that the 

cost-benefit section of the Proposed 

Rules only described costs to 

whistleblowers and did not describe 

costs to employers and the Commission 

that would arise under the Proposed 

Rules. One commenter stated that the 

anti-retaliation provision would lead to 

false or spurious whistleblower claims 

and that firms and the Commission 

would incur significant costs to evaluate 

these claims.166 Another commenter 

stated that two types of costs to 

employers would be incurred by not 

requiring whistleblowers to report to the 

firm’s compliance department.167

According to that commenter, the costs 

of responding to Commission 

investigations exceed the costs of 

internal investigations. In addition, the 


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168See letter from U.S. Chamber of Commerce. 

169See letters from SIFMA/FIA, EEAC, Working 

Group, AICPA, and NSCP. 

170See letters from NSCP, Working Group, EEAC 

and AICPA. 

171See letter from AICPA. 

172Such false statements also could be a violation 

of Sections 6(c)(2) and 9(a)(3) of the CEA, 7 U.S.C. 

9, 13(a)(3), 15. 

commenter stated that the lack of an 

internal reporting requirement would 

give rise to meritless complaints which 

would be costly to investigate. Further, 

though not specifically enumerated in 

its analysis of the cost-benefit section, 

that commenter stated that the proposed 

rule would likely result in slower 

identification, investigation, and 

potentially remediation by employers of 

alleged violations. Another commenter 

also stated that the lack of an internal 

reporting requirement would increase 

employer costs.168 The common theme 

in the above cost-benefit comments, as 

well as other more general cost 

comments submitted by several 

commenters 169 focused on the potential 

damage to existing compliance systems 

without an internal reporting 

requirement. While not specifically 

commenting on the cost-benefit section 

of the Proposed Rules, several 

commenters noted increased legal, 

investigative, and remedial costs to 

firms and increased costs to and use of 

resources by the Commission.170 One of 

the commenters expanded upon 

potential costs and negative 

consequences of the lack of a rule 

requiring, at a minimum, concurrent 

reporting to the firm. This commenter 

stated that ‘‘a failure or delay in the 

communication of whistleblower 

reports of potential violations to these 

entities may reduce the entity’s ability 

of their independent accountants to rely 

on the efficacy of an entity’s internal 

control systems and could adversely 

impact the entity’s and independent 

accountants’ evaluations of internal 

control over financial reporting.171 It 

could have significant negative 

consequences for investors, reporting 

entities, and the audit process alike.’’ 

These concerns are addressed below in 

the context of the above mentioned 

Section 15(a) considerations. 

Considerations of Protection of Market 

Participants and the Public 

The Commission believes that the 

Final Rules implement the statutory 

mandate and serve the purpose of 

protecting market participants and the 

public. The statute does not require 

whistleblowers to report violations 

through an entity’s internal reporting 

process. To impose such a requirement 

may be inconsistent with Congressional 

intent in establishing the whistleblower 

program. Specifically, the Commission 

believes that this potential alternative 

would impose substantial costs and 

burdens on whistleblowers, victims of 

CEA violations, market participants, and 

the public. Such a rule could prevent or 

deter whistleblowers from making 

legitimate complaints out of fear of 

reprisal from their employer. 

Consequently, some violations may 

never be brought to the attention of the 

Commission, which would prevent the 

Commission from bringing actions 

against violators of the CEA. A rule 

requiring internal reporting could 

therefore deprive victims of restitution 

and could deprive market participants 

and the public of the benefits associated 

with detection, prosecution, and 

deterrence of such violations of the 

CEA. Thus, the Commission believes 

that the overall cost of an internal 

reporting requirement and the attendant 

risks of undetected violations are greater 

than the cost to firms subject to a 

potential whistleblower referral. Indeed, 

if Congress thought such a requirement 

was necessary, Congress could have 

incorporated such a provision in 

Section 748 of the Dodd Frank Act. 

Regarding the comment that the antiretaliation provision of Section 748 

would lead to more meritless 

complaints, the Commission notes that 

Section 748 of the Dodd-Frank Act 

prohibits retaliation against 

whistleblowers for any lawful act done 

by the whistleblower. Because the Final 

Rules implement this statutory mandate, 

the commenter did not provide any 

basis for claiming that the language of 

the proposed rule will cause such 

consequences under the statutory 

provision. 

The whistleblower program is distinct 

from and does not undermine or require 

any changes to any entity’s existing 

compliance systems. However, the 

Commission is cognizant that firms may 

be incentivized to re-evaluate and adjust 

their existing internal compliance 

systems to encourage employees to 

report internally and forestall the 

occurrence of CEA violations. 

While the Commission is not 

persuaded of the need to adopt a rule to 

require internal reporting, after 

consideration of the comments on 

internal reporting, the Commission has 

included incentives for internal 

reporting in Final Rule 165.2(i) and 

165.9. The Commission has determined 

that the risk of meritless complaints is 

outweighed by the benefits of a Final 

Rule that enables whistleblowers to 

make referrals without fear of 

retaliation. Regarding the comment that 

the lack of an internal reporting 

requirement would likely result in 

slower identification, investigation, and 

potential remediation of violations by 

firms, the Commission will evaluate 

whistleblower referrals promptly and 

take action as necessary and 

appropriate. The comment does not 

illustrate how and to what extent the 

lack of an internal reporting 

requirement undermines existing 

compliance protocols. The 

whistleblower program, by definition, is 

an external reporting regime. To the 

extent there is a delay in the entity 

learning of violations and taking 

corrective measures in the absence of 

internal reporting, the cost of such a 

delay is outweighed by the risks of 

discouraging meritorious claims. 

Considerations of Efficiency, 

Competitiveness, and Financial Integrity 

of Futures Markets, Price Discovery, and 

Sound Risk Management Practices 

The Commission has determined that 

its Final Rules implement Congressional 

intent. After consideration and 

evaluation of the public comments, and 

to the extent the Commission declines 

to impose an additional internal 

reporting requirement upon 

whistleblowers beyond the statutory 

mandate under section 748 of the DoddFrank Act, the Commission has 

determined that the Final Rules will 

further the goals of each of these three 

considerations under Section 15(a) of 

the CEA. For example, to the extent 

whistleblowers are incentivized to refer 

cases of market manipulation and 

disruptive trading practices, the 

efficiency, competitiveness and 

financial integrity of futures markets, 

the price discovery process, and 

effective risk management will be 

enhanced by improved detection and 

enforcement of such violations. The 

Commission is not persuaded by, nor 

was there any reliable evidence to 

support, assertions that the Commission 

and affected parties will bear excess 

costs due to a high volume of meritless 

claims in the absence of an internal 

reporting requirement. Congress placed 

a procedural safeguard in the statute by 

advising whistleblowers that they can 

be criminally prosecuted for making 

false statements to the Commission 

under 18 U.S.C. 1001.172 These and 

other provisions will reduce the risk of 

meritless referrals. Moreover, 

whistleblowers are incentivized to 

provide referrals only if they believe 

those referrals have merit since they can 

only get an award if their referrals lead 


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173See letter from SIFMA/FIA. 

174See letter from NSCP. 

175See letter from EEI. 

176Similar to the SEC, the Commission is not 

persuaded by the commenter’s suggestion that the 

Proposed Rules were inconsistent with the 

Sarbanes-Oxley Act of 2002. See 76 FR at 34326 

n.230 (the SEC concluded that the mandates of 

Section 301 of the Sarbanes-Oxley Act of 2002 and 

Section 21F of the Securities Exchange Act of 1934 

were different and declined to follow the 

commenters’ suggestion that the SEC impose a 

‘‘requirement that employees of listed companies 

also utilize internal audit committee or other 

complaint procedures.’’). 

177See letter from TAF. 

178See letter from POGO. 

179See https://service.govdelivery.com/service/ 

multi_subscribe.html?code=USCFTC. 

180 7 U.S.C. 19(b). 

181 44 U.S.C. 3501 et seq. 

182 44 U.S.C. 3507(d); 5 CFR 1320.11. 

183See letter from NWC. 

to a successful enforcement action (see 

Rules 165.2(i) and 165.9.). 

2. Costs to Firms Regulated by Both the 

Commission and SEC 

One commenter stated that the lack of 

regulatory harmonization between the 

Commission and SEC whistleblower 

rules would ‘‘impose costs and lead to 

the potential for confusion for duallyregulated firms without any 

corresponding benefit.’’ 173 Another 

commenter stated that Commission-SEC 

harmonization would benefit ‘‘dually 

registered firms [and] the financial 

industry generally.’’ 174 In addition, 

another commenter stated that the 

Proposed Rules are ‘‘inconsistent with 

the framework of compliance processes 

established under Sarbanes-Oxley and 

other federal laws and regulations.’’ 

This commenter further stated the 

importance of harmonizing the 

implementation of the Dodd-Frank Act 

with existing processes.175 We address 

each of these concerns below in the 

context of the above mentioned Section 

15(a) considerations. 

The Commission has considered the 

public comments calling for 

harmonization with SEC whistleblower 

rules. The Dodd-Frank Act does not 

require harmonization between the 

Commission and the SEC with respect 

to their respective whistleblower 

provisions. Moreover, this is not a joint 

Commission-SEC rulemaking. Having 

considered the comments and consulted 

with SEC staff, the Commission has 

revised several whistleblower rules, as 

discussed in detail under Section II.S. 

above, with those of the SEC’s 

whistleblower rules to enhance 

regulatory certainty for market 

participants subject to both 

whistleblower programs, which furthers 

the public interest.176

With respect to costs, as explained in 

various places throughout this release, 

the remaining differences between the 

SEC and Commission rules are due to 

differences between the statutes 

governing the two agencies and their 

respective regulatory objectives. 

Consequently, costs associated with 

these remaining differences are not 

likely to be significant under the five 

broad areas as enumerated in Section 

15(a) of the CEA. 

3. Costs to Whistleblowers 

A commenter stated that the proposed 

claims process is burdensome and 

backwards. Specifically, this commenter 

noted that it is problematic to require 

that a whistleblower notify the 

Commission of a claim for reward upon 

the successful completion of an 

enforcement action. The commenter 

also recommended that the Commission 

notify the individual about a reward 

after an administrative or judicial action 

has been taken.177 Another commenter 

shared similar concerns and stated that 

the Commission should establish better 

policies for communicating with 

whistleblowers throughout the 

application process to lessen 

whistleblowers’ burden to explain the 

importance of their disclosures.178 We 

address each of these concerns below in 

the context of Section 15(a) 

considerations. 

Protection of Market Participants and 

the Public Considerations of Efficiency, 

Competitiveness, and Financial Integrity 

of Futures Markets, Price Discovery, and 

Sound Risk Management Practices 

The Final Rules implement 

procedures mandated by section 748 of 

the Dodd-Frank Act for whistleblowers 

to report CEA violations. The 

Commission is aware of the concerns 

expressed by Commenters and intends 

to implement policies and procedures 

for communicating with whistleblowers 

that will address these concerns. 

Specifically, following the successful 

completion of a covered action, the 

Commission will publish a Notice of 

Covered Action on the Commission web 

site. Whistleblowers will be able to 

utilize the Commission’s Email 

Subscriptions service 179 to receive an 

email message when their actions are 

resolved successfully. The Final Rules 

also reduce the number of forms that a 

whistleblower must submit to the 

Commission from three to two. 

The Commission has considered the 

paperwork requirements in light of all 

five of the considerations in Section 

15(a) of the CEA. With respect to 

benefits, the procedural requirements 

under the Final Rule will enable the 

Commission to effectively implement 

and administer the mandated 

whistleblower program in furtherance of 

these considerations without imposing 

excessive costs or burdens upon 

whistleblowers. 

B. Anti-Trust Considerations 

Section 15(b) of the CEA 180 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. 

IV. Paperwork Reduction Act 

Certain provisions of the Proposed 

Rules contained ‘‘collection of 

information’’ requirements within the 

meaning of the Paperwork Reduction 

Act (‘‘PRA’’) of 1995.181 An agency may 

not sponsor, conduct, or require a 

response to an information collection 

unless a currently valid Office of 

Management and Budget (‘‘OMB’’) 

control number is displayed. The 

Commission submitted proposed 

collections of information to OMB for 

review in accordance with the PRA.182

The titles for the collections of 

information were: (1) Form TCR (Tip, 

Complaint or Referral); (2) Form WB– 

DEC (Declaration Concerning Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act); and (3) Form WB–APP 

(Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act). These three forms were proposed 

to implement Section 23 of the CEA. 

The proposed forms allowed a 

whistleblower to provide information to 

the Commission and its staff regarding: 

(1) Potential violations of the CEA; and 

(2) the whistleblower’s eligibility for 

and entitlement to an award. 

The Commission did not receive any 

comments that directly addressed its 

PRA analysis or its burden estimates. In 

comments on the Proposing Release, a 

commenter suggested that the threeform process proposed for obtaining 

information from whistleblowers was 

burdensome.183 As the Commission 

discusses in connection with Rule 

165.3, its Final Rules require largely the 

same information to be collected, but in 

response to comments the Commission 

has combined the information collection 


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53198 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

into only two forms—Form TCR, which 

incorporates several questions 

previously posed on Proposed Form 

WB–DEC, and Form WB–APP—to 

simplify the process for whistleblowers. 

A. Summary of Collection of 

Information 

Form TCR, submitted pursuant to 

Rule 165.3, requests the following 

information: 

1. Background information regarding 

each complainant submitting the TCR, 

including the person’s name and contact 

information. The Commission has 

added a section for the identification of 

additional complainants; 

2. If the complainant is represented by 

an attorney, the name and contact 

information for the complainant’s 

attorney; 

3. Information regarding the 

individual or entity that is the subject of 

the tip or complaint, including contact 

information; 

4. Information regarding the tip or 

complaint, including: the date of the 

alleged violation; the nature of the 

complaint; the name and type of 

financial product or investment, if 

relevant; whether the complainant or 

counsel has had prior contact with 

Commission staff and with whom; 

whether information has been 

communicated to another agency and, if 

so, details about that communication, 

including the name and contact 

information for the point of contact at 

such agency, if available; whether the 

complaint relates to an entity of which 

the complainant is or was an officer, 

director, counsel, employee, consultant 

or contractor; whether the complainant 

has reported this violation to his or her 

supervisor, compliance office, 

whistleblower hotline, ombudsman, or 

any other available mechanism at the 

entity for reporting violations and the 

date of such action was taken; 

5. A description of the facts pertinent 

to the alleged violation, including an 

explanation of why the complainant 

believes the acts described constitute a 

violation of the CEA; 

6. A description of all supporting 

materials in the complainant’s 

possession and the availability and 

location of any additional supporting 

materials not in the complainant’s 

possession; 

7. An explanation of how the person 

submitting the complaint obtained the 

information and, if any information was 

obtained from an attorney or in a 

communication where an attorney was 

present, the identification of any such 

information; 

8. A description of any information 

obtained from a public source and a 

description of such source; 

9. A description of any documents or 

other information in the complainant’s 

submission that the complainant 

believes could reasonably be expected 

to reveal his or her identity, including 

an explanation of the basis for the 

complainant’s belief that his or her 

identity would be revealed if the 

documents were disclosed to a third 

party; and 

10. Any additional information the 

complainant believes may be relevant. 

Also included in Form TCR are 

several items previously included in 

proposed Form WB–DEC, which was 

required to be submitted pursuant to 

Proposed Rule 165.3. First, there are 

several questions that require a 

complainant to provide eligibilityrelated information by checking a series 

of ‘‘yes/no’’ answers. Second, the form 

contains a declaration, signed under 

penalty of perjury, that the information 

provided to the Commission pursuant to 

Rule 165.3 is true, correct and complete 

to the best of the person’s knowledge, 

information and belief. Third, there is a 

counsel certification, which is required 

to be executed in instances where a 

complainant makes an anonymous 

submission pursuant to the 

whistleblower program and is 

represented by an attorney. This 

statement certifies that the attorney has 

verified the complainant’s identity, and 

has reviewed the complainant’s 

completed and signed Form TCR for 

completeness and accuracy, and that the 

information contained therein is true, 

correct and complete to the best of the 

attorney’s knowledge, information and 

belief. The certification also contains 

new statements, which were not 

included in proposed Form WB–DEC, 

that: (i) The attorney has obtained the 

complainant’s non-waivable consent to 

provide the Commission with the 

original completed and signed Form 

TCR in the event that the Commission 

requests it due to concerns that the form 

may contain false, fictitious or 

fraudulent statements or representations 

that were knowingly or willfully made 

by the complainant; and (ii) the attorney 

consents to be legally obligated to 

provide the signed Form TCR within 

seven (7) calendar days of receiving 

such request from the Commission. 

Form WB–APP, submitted pursuant to 

Rule 165.7, requires the following 

information: 

1. The applicant’s name, address and 

contact information; 

2. The applicant’s social security 

number, if any; 

3. If the person is represented by an 

attorney, the name and contact 

information for the attorney; 

4. Details concerning the tip or 

complaint, including (a) The manner in 

which the information was submitted to 

the Commission, (b) the subject of the 

tip, complaint or referral, (c) the Form 

TCR number, and (d) the date the Form 

TCR was submitted to the Commission; 

5. Information concerning the Notice 

of Covered Action to which the claim 

relates, including (a) The date of the 

Notice, (b) the Notice number, and (c) 

the case name and number; 

6. For related actions, (a) The name 

and contact information for the agency 

or organization to which the person 

provided the original information, (b) 

the date the person provided this 

information, (c) the date the agency or 

organization filed the related action, (d) 

the case name and number of the related 

action, and (e) the name and contact 

information for the point of contact at 

the agency or organization, if known; 

7. A series of questions concerning 

the person’s eligibility to receive an 

award as described in the Form TCR 

discussion above; 

8. An optional explanation of the 

reasons why that the person believes he 

is entitled to an award in connection 

with his submission of information to 

the Commission, or to another agency in 

a related action, including any 

additional information and supporting 

documents that may be relevant in light 

of the criteria for determining the 

amount of an award set forth in Rule 

165.9, and any supporting documents; 

and 

9. A declaration, signed under penalty 

of perjury, that the information 

provided in Form WB–APP is true, 

correct and complete to the best of the 

person’s knowledge, information and 

belief. 

B. Use of Information 

The collection of information on 

Forms TCR and WB–APP will be used 

to permit the Commission and its staff 

to collect information from 

whistleblowers regarding alleged 

violations of the CEA and the rules and 

regulations thereunder and to determine 

claims for whistleblower awards. 

C. Respondents 

The likely respondents to Form TCR 

will be individuals who wish to provide 

information relating to possible 

violations of the CEA and the rules and 

regulations thereunder, and who wish to 

be eligible for whistleblower awards. 

The likely respondents to Form WB– 

APP will be individuals who have 

provided the Commission, or another 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53199 

184This number is a staff estimate based upon the 

volume of tips, complaints or referrals received by 

the Commission in recent years. 

185This number is a staff estimate based on the 

volume of whistleblower tips, complaints and 

referrals that the Commission has received in the 

first eleven months after the enactment of the DoddFrank Act (less than two dozen) and an expectation 

that this volume will increase as the public 

becomes more aware of the Commission’s 

whistleblower program. 

186This number is a staff estimate based on two 

expectations: First, that the Commission will 

receive Forms WB–APP in approximately 15 

percent of cases in which it posts a Notice of 

Covered Action because the Commission expects 

that the Commission will continue to bring a 

substantial number of enforcement cases that are 

not based on whistleblower information; and 

second, that the Commission will receive 

approximately three Forms WB–APP in each of 

those cases. Because this is a new program, the staff 

does not have prior relevant data on which it can 

base these estimates. 

187This estimate is based, in part, on the 

Commission’s belief that most whistleblowers likely 

will not retain counsel to assist them in preparing 

the forms. 

188The basis for these assumed amounts are 

explained in Parts IV.D.1. and I.V.D.2. above. 

189These amounts are based on the assumption, 

as noted above, that no more than five percent of 

all whistleblowers will be represented by counsel 

pursuant to an hourly fee arrangement. 

190The Commission uses this hourly rate for 

estimating the billing rates of lawyers for purposes 

of other rules. Absent historical data for the 

Commission to rely upon in connection with the 

whistleblower program, the Commission believes 

that this billing rate estimate is appropriate, 

recognizing that some attorneys representing 

whistleblowers may charge different average hourly 

rates. 

agency in a related action, with 

information relating to a possible 

violation of the CEA and who believe 

they are entitled to an award. 

D. Total Annual Reporting and 

Recordkeeping Burden 

1. Form TCR 

The Commission estimates that it will 

receive submissions of approximately 

3,800 tips, complaints and referrals each 

year.184 Of those 3,800 submissions, the 

Commission estimates that it will 

receive approximately 100 

whistleblower tips, complaints and 

referrals on Form TCR each year.185

Each respondent would submit only one 

Form TCR and would not have a 

recurring obligation to file additional 

Forms TCR. In the Proposing Release, 

the Commission proposed that a 

whistleblower would have to complete 

two forms, proposed Form TCR and 

proposed Form WB–DEC, to be eligible 

for an award. In the Final Rules, the 

Commission has eliminated Form WB– 

DEC and added the eligibility questions 

from that proposed form to Form TCR. 

The Commission estimates that it will 

take a whistleblower, on average, two 

and one-half hours to complete the 

Form TCR, which includes the 

questions that had previously been 

included in proposed Form WB–DEC. 

The completion time will depend 

largely on the complexity of the alleged 

violation and the amount of information 

the whistleblower possesses in support 

of the allegations. As a result, the 

Commission estimates that the annual 

PRA burden of Form TCR is 250 hours. 

2. Form WB–APP 

Each whistleblower who believes that 

he is entitled to an award because he 

provided original information to the 

Commission that led to successful 

enforcement of a covered judicial or 

administrative action, or a related 

action, is required to submit a Form 

WB–APP to be considered for an award. 

The Commission estimates that it will 

receive approximately nine Forms WB– 

APP each year.186 Finally, the 

Commission estimates that it will take a 

whistleblower, on average, ten hours to 

complete Form WB–APP. The 

completion time will depend largely on 

the complexity of the alleged violation 

and the amount of information the 

whistleblower possesses in support of 

his application for an award. This 

estimate assumes that most 

whistleblowers will elect to complete 

optional Section G (Entitlement to 

Award) of Form WB–APP. As a result, 

the Commission estimates that the 

annual PRA burden of Form WB–APP is 

90 hours. 

3. Involvement and Cost of Attorneys 

Under the Proposed Rules, an 

anonymous whistleblower is required 

(when filing a claim for an award), and 

a whistleblower whose identity is 

known may elect to retain counsel to 

represent the whistleblower in the 

whistleblower program. The 

Commission expects that, in most of 

those instances, the whistleblower’s 

counsel will complete, or assist in the 

completion, of some or all of the 

required forms on behalf of the 

whistleblower. The Commission also 

expects that in the vast majority of cases 

in which a whistleblower is represented 

by counsel, the whistleblower will enter 

into a contingency fee arrangement with 

counsel, providing that counsel will be 

paid for the representation through a 

fixed percentage of any recovery by the 

whistleblower under the program. Thus, 

most whistleblowers will not incur any 

direct, quantifiable expenses for 

attorneys’ fees for the completion of the 

required forms. 

The Commission anticipates that a 

small number of whistleblowers (no 

more than five percent) will enter into 

hourly fee arrangements with 

counsel.187 In those cases, a 

whistleblower will incur direct 

expenses for attorneys’ fees for the 

completion of the required forms. To 

estimate those expenses, the 

Commission makes the following 

assumptions: 

1. The Commission will receive 

approximately 100 Forms TCR, and nine 

Forms WB–APP annually; 188

2. Whistleblowers will pay hourly 

fees to counsel for the submission of 

approximately five Forms TCR and one 

Form WB–APP annually; 189

3. Counsel retained by whistleblowers 

pursuant to an hourly fee arrangement 

will charge on average $400 per 

hour; 190 and 

4. Counsel will bill on average: (a) 2.5 

hours to complete a Form TCR, and (b) 

10 hours to complete a Form WB–APP. 

Based on those assumptions, the 

Commission estimates that each year 

whistleblowers will incur the following 

total amounts of attorneys’ fees for 

completion of the whistleblower 

program forms: (i) $5,000 for the 

completion of Forms TCR; and (ii) 

$4,000 for the completion of Form WB– 

APP. 

E. Mandatory Collection of Information 

A whistleblower would be required to 

complete a Form TCR, or submit his 

information electronically, and a Form 

WB–APP, or submit his information 

electronically, to qualify for a 

whistleblower award. 

F. Confidentiality 

As explained above, the statute 

provides that the Commission must 

maintain the confidentiality of the 

identity of each whistleblower, subject 

to certain exceptions. Section 23(h)(2) of 

the CEA states that, except as expressly 

provided: 

[T]he Commission, and any officer or 

employee of the Commission, shall not 

disclose any information, including 

information provided by a whistleblower to 

the Commission, which could reasonably be 

expected to reveal the identity of a 

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 certain 

specific entities listed in paragraph (C) of 

Section 23(h)(2)]. 

Section 23(h)(2) also allows the 

Commission to share information 

received from whistleblowers with 

certain domestic and foreign regulatory 

and law enforcement agencies. 

However, the statute requires the 

domestic entities to maintain such 


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53200 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

191 5 U.S.C. 601, et seq. 

192 Id. 

information as confidential, and 

requires foreign entities to maintain 

such information in accordance with 

such assurances of confidentiality as the 

Commission deems appropriate. 

In addition, Section 23(d)(2) provides 

that a whistleblower may submit 

information to the Commission 

anonymously, so long as the 

whistleblower is represented by counsel 

when the time comes for the 

whistleblower to make a claim for an 

award. However, the statute also 

provides that a whistleblower must 

disclose his or her identity prior to 

receiving payment of an award. 

V. Regulatory Flexibility Act 

Certification 

The Regulatory Flexibility Act 191

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.192 In the Commission’s 

Proposing Release, the Chairman, on 

behalf of the Commission, certified that 

a regulatory flexibility analysis is not 

required because the persons that would 

be subject to the rules—individuals—are 

not ‘‘small entities’’ for purposes of the 

Regulatory Flexibility Act and the rules 

therefore would not have a significant 

economic impact on a substantial 

number of small entities. The 

Commission received no comments 

regarding this conclusion. 

VI. Statutory Authority 

The Commission is adopting the rules 

and forms contained in this document 

under the authority contained in 

Sections 2, 5, 8a(5) and 23 of the 

Commodity Exchange Act. 

List of Subjects in 17 CFR Part 165 

Whistleblowing. 

In consideration of the foregoing and 

pursuant to the authority contained in 

the Commodity Exchange Act, in 

particular, Sections 2, 5, 8a(5) and 23 

thereof, the Commodity Futures Trading 

Commission adds a new 17 CFR Part 

165 as set forth below: 

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, 5, 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 (July 16, 

2010). 

§ 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 explains the procedures 

the whistleblower 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 

result in 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. 

§ 165.2 Definitions. 

As used in this part: 

(a) Action. The term ‘‘action’’ 

generally means a single captioned 

judicial or administrative proceeding. 

Notwithstanding the foregoing: 

(1) For purposes of making an award 

under § 165.7, the Commission will treat 

as a Commission action two or more 

administrative or judicial proceedings 

brought by the Commission if these 

proceedings arise out of the same 

nucleus of operative facts; or 

(2) For purposes of determining the 

payment on an award under § 165.14, 

the Commission will deem as part of the 

Commission action upon which the 

award was based any subsequent 

Commission proceeding that, 

individually, results in a monetary 

sanction of $1,000,000 or less, and that 

arises out of the same nucleus of 

operative facts. 

(b) Aggregate amount. The phrase 

‘‘aggregate amount’’ means the total 

amount of an award granted to one or 

more whistleblowers pursuant to 

§ 165.8. 

(c) Analysis. The term ‘‘analysis’’ 

means 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. 

(d) Collected by the Commission. The 

phrase ‘‘collected by the Commission’’ 

refers to any funds received, and 

confirmed by the U.S. Department of 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 the 

whistleblower’s possession that is not 

generally known or available to the 

public. The whistleblower may gain 

independent knowledge from the 

whistleblower’s experiences, 

communications and observations in the 

whistleblower’s personal business or 

social interactions. The Commission 

will not consider the whistleblower’s 

information to be derived from the 

whistleblower’s independent knowledge 

if the whistleblower 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 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53201 

otherwise permitted by the applicable 

federal or state attorney conduct rules; 

(3) In connection with the legal 

representation of a client on whose 

behalf the whistleblower, or the 

whistleblower’s employer or firm, have 

been providing services, and the 

whistleblower seek to use the 

information to make a whistleblower 

submission for the whistleblower’s own 

benefit, unless disclosure is authorized 

by the applicable federal or state 

attorney conduct rules; 

(4) Because the whistleblower was an 

officer, director, trustee, or partner of an 

entity and another person informed the 

whistleblower of allegations of 

misconduct, or the whistleblower 

learned the information in connection 

with the entity’s processes for 

identifying, reporting, and addressing 

possible violations of law; 

(5) Because the whistleblower was an 

employee whose principal duties 

involved compliance or internal audit 

responsibilities; or 

(6) By a means or in a manner that is 

determined by a United States court to 

violate applicable Federal or state 

criminal law. 

(7) Exceptions. Paragraphs (g)(4) and 

(5) of this section shall not apply if: 

(i) The whistleblower has a reasonable 

basis to believe that disclosure of the 

information to the Commission is 

necessary to prevent the relevant entity 

from engaging in conduct that is likely 

to cause substantial injury to the 

financial interest or property of the 

entity or investors; 

(ii) The whistleblower has a 

reasonable basis to believe that the 

relevant entity is engaging in conduct 

that will impede an investigation of the 

misconduct; or 

(iii) At least 120 days have elapsed 

since the whistleblower provided the 

information to the relevant entity’s audit 

committee, chief legal officer, chief 

compliance officer (or their 

equivalents), or the whistleblower’s 

supervisor, or since the whistleblower 

received the information, if the 

whistleblower received it under 

circumstances indicating that the 

entity’s audit committee, chief legal 

officer, chief compliance officer (or their 

equivalents), or the whistleblower’s 

supervisor was already aware of the 

information. 

(h) Independent analysis. The phrase 

‘‘independent analysis’’ means the 

whistleblower’s own analysis, whether 

done alone or in combination with 

others. 

(i) Information that led to successful 

enforcement. The Commission will 

consider that the whistleblower 

provided original information that led to 

the successful enforcement of a judicial 

or administrative action, or related 

action, in the following circumstances: 

(1) The whistleblower gave the 

Commission original information that 

was sufficiently specific, credible, and 

timely to cause the Commission staff to 

commence an examination, open an 

investigation, reopen an investigation 

that the Commission had closed, or to 

inquire concerning different conduct as 

part of a current examination or 

investigation, and the Commission 

brought a successful judicial or 

administrative action based in whole or 

in part on conduct that was the subject 

of the whistleblower’s original 

information; or 

(2) The whistleblower gave the 

Commission original information about 

conduct that was already under 

examination or investigation by the 

Commission, the Congress, any other 

authority of the federal government, a 

state Attorney General or securities 

regulatory authority, any self-regulatory 

organization, futures association or the 

Public Company Accounting Oversight 

Board (except in cases where the 

whistleblower was an original source of 

this information as defined in paragraph 

(i) of this section), and the 

whistleblower’s submission 

significantly contributed to the success 

of the action. 

(3) The whistleblower reported 

original information through an entity’s 

internal whistleblower, legal, or 

compliance procedures for reporting 

allegations of possible violations of law 

before or at the same time the 

whistleblower reported them to the 

Commission; the entity later provided 

the whistleblower’s information to the 

Commission, or provided results of an 

audit or investigation initiated in whole 

or in part in response to information the 

whistleblower reported to the entity; 

and the information the entity provided 

to the Commission satisfies either 

paragraph (i)(1) or (i)(2) of this section. 

Under this paragraph (i)(3), the 

whistleblower must also submit the 

same information to the Commission in 

accordance with the procedures set 

forth in § 165.3 within 120 days of 

providing it to the entity. 

(j) Monetary sanctions. The phrase 

‘‘monetary sanctions,’’ when used with 

respect to any judicial or administrative 

action, or related 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. The phrase 

‘‘original information’’ means 

information that— 

(1) Is derived from the independent 

knowledge or independent analysis of a 

whistleblower; 

(2) Is not already known to the 

Commission from any other source, 

unless the whistleblower is the original 

source of the information; 

(3) 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 

(4) 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). 

(5) Original information shall not lose 

its status as original information solely 

because the whistleblower submitted 

such information prior to October 24, 

2011, 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 October 

24, 2011, must comply with the 

procedure set forth in § 165.3(d). 

(l) Original source. The whistleblower 

must satisfy the whistleblower’s status 

as the original source of information to 

the Commission’s satisfaction. 

(1) Information obtained from another 

source. The Commission will consider 

the whistleblower to be an ‘‘original 

source’’ of the same information that the 

Commission obtains from another 

source if the information the 

whistleblower provide satisfies the 

definition of original information and 

the other source obtained the 

information from the whistleblower or 

the whistleblower’s 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, the whistleblower must 

have voluntarily given such authorities 

the information within the meaning of 

this part. In determining whether the 

whistleblower is 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 the whistleblower 

claims to be the original source of 


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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 the 

whistleblower provides information to 

Congress, any other federal or state 

authority, a registered entity, a 

registered futures association, a selfregulatory organization, or to any of any 

of the persons described in paragraphs 

(g)(4) and (5) of this section, and the 

whistleblower, within 120 days, make a 

submission to the Commission pursuant 

to § 165.3, as the whistleblower must do 

in order for the whistleblower to be 

eligible to be considered for an award, 

then, for purposes of evaluating the 

whistleblower’s claim to an award 

under § 165.7, the Commission will 

consider that the whistleblower 

provided original information as of the 

date of the whistleblower’s original 

disclosure, report, or submission to one 

of these other authorities or persons. 

The whistleblower must establish the 

whistleblower’s 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 the 

whistleblower makes the 

whistleblower’s submission, and the 

whistleblower is not an original source 

of that information, as described above, 

the Commission will consider the 

whistleblower an ‘‘original source’’ of 

any information the whistleblower 

separately provides that is original 

information that 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 

§ 165.11(a) that is based upon the 

original information voluntarily 

submitted by a whistleblower to the 

Commission pursuant to § 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. (1) 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 the 

whistleblower or anyone representing 

the whistleblower (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 makes a request, 

inquiry, or demand to the whistleblower 

or the whistleblower’s representative 

first, the whistleblower’s submission 

will not be considered voluntary, and 

the whistleblower will not be eligible 

for an award, even if the 

whistleblower’s response is not 

compelled by subpoena or other 

applicable law. For purposes of this 

paragraph, the whistleblower will be 

considered to have received a request, 

inquiry or demand if documents or 

information from the whistleblower is 

within the scope of a request, inquiry, 

or demand that the whistleblower’s 

employer receives, unless, after 

receiving the documents or information 

from the whistleblower, the 

whistleblower’s employer fails to 

provide the whistleblower’s documents 

or information to the requesting 

authority in a timely manner. 

(2) In addition, the whistleblower’s 

submission will not be considered 

voluntary if the whistleblower is under 

a pre-existing legal or contractual duty 

to report the violations that are the 

subject of the whistleblower’s 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, or a duty that arises out of 

a judicial or administrative order. 

(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 the 

manner established by § 165.3. A 

company or another entity is not eligible 

to be a whistleblower. 

(2) Prohibition against retaliation. The 

anti-retaliation protections under 

Section 23(h) of the Commodity 

Exchange Act apply whether or not the 

whistleblower satisfies the 

requirements, procedures and 

conditions to qualify for an award. For 

purposes of the anti-retaliation 

protections afforded by Section 

23(h)(1)(A)(i) of the Commodity 

Exchange Act, the whistleblower is a 

whistleblower if: 

(i) The whistleblower possess a 

reasonable belief that the information 

the whistleblower is providing relates to 

a possible violation of the CEA, or the 

rules or regulations thereunder, that has 

occurred, is ongoing, or is about to 

occur; and 

(ii) The whistleblower provides that 

information in a manner described in 

§ 165.3. 

§ 165.3 Procedures for submitting original 

information. 

A whistleblower’s submission of 

information to the Commission will be 

a two-step process. 

(a) First, the whistleblower will need 

to submit the whistleblower’s 

information to the Commission. The 

whistleblower may submit the 

whistleblower’s information: 

(1) By completing and submitting a 

Form TCR online and submitting it 

electronically through the Commission’s 

Web site at http://www.cftc.gov; 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) 418–5975. 

(b) Further, to be eligible for an 

award, the whistleblower must declare 

under penalty of perjury at the time the 

whistleblower submits the 

whistleblower’s information pursuant to 

paragraph (a)(1) or (2) of this section 

that the whistleblower’s information is 

true and correct to the best of the 

whistleblower’s knowledge and belief. 

(c) Notwithstanding paragraph (b) of 

this section, if the whistleblower 

submitted the whistleblower’s original 

information to the Commission 

anonymously, then 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 § 165.7(c) prior to Commission’s 

payment of any award. 

(d) If the whistleblower 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 


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2010) but before the effective date of 

these rules, the whistleblower will be 

eligible for an award only in the event 

that the whistleblower provided the 

original information to the Commission 

in a format or manner other than that 

described in paragraph (a) of this 

section, the whistleblower submits a 

completed Form TCR within 120 days of 

the effective date of these rules and 

otherwise follows the procedures set 

forth above in paragraphs (a) and (b) of 

this section. 

§ 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, or 

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; and 

(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 § 165.3(c) for 

submitting original information 

anonymously. Such whistleblower who 

anonymously submits information to 

the Commission must also follow the 

procedures in § 165.7(c) in submitting to 

the Commission an application for a 

whistleblower award. 

§ 165.5 Prerequisites to the consideration 

of an award. 

(a) Subject to the eligibility 

requirements described in these rules, 

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 

§ 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 

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. 

§ 165.6 Whistleblowers ineligible for an 

award. 

(a) No award under § 165.7 shall be 

made: 

(1) To any whistleblower who is, or 

was at the time the whistleblower 

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 § 165.7; 

(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 the 

whistleblower gave the Commission 

from any of the individuals described in 

paragraphs (a)(1), (2), (3) or (6) of this 

section; 

(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 uses 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; 

(6) To any whistleblower who 

acquired the original information 

reported to the Commission as a result 

of the whistleblower’s role as a member, 

officer or employee of either a foreign 

regulatory authority or law enforcement 

organization; 

(7) To any whistleblower who is, or 

was at the time the whistleblower 

acquired the original information 

submitted to the Commission, a 

member, officer, or employee of a 

foreign regulatory authority or law 

enforcement organization; or 

(8) To any whistleblower who 

acquired the original information the 

whistleblower gave the Commission 

from any other person with the intent to 

evade any provision of these rules. 

(b) Notwithstanding a whistleblower’s 

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)(1) of the 

Commodity Exchange Act. 

§ 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 publish 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 


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monetary sanctions. The Commission 

will not contact whistleblower 

claimants directly as to Notices of 

Covered Actions; prospective claimants 

should monitor the Commission Web 

site for such Notices. A whistleblower 

claimant will have 90 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, the whistleblower must file 

Form WB–APP, Application for Award 

for Original Information Provided 

Pursuant to Section 23 of the 

Commodity Exchange Act. The 

whistleblower 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) 418–5975. The Form 

WB–APP, including any attachments, 

must be received by the Commission 

within 90 calendar days of the date of 

the Notice of Covered Action or 90 

calendar days following the date of a 

final judgment in a related action in 

order to be considered for an award. 

(c) If the whistleblower provided the 

whistleblower’s original information to 

the Commission anonymously pursuant 

to §§ 165.3 and 165.4 and: 

(1) The whistleblower is making the 

whistleblower’s claim for a 

whistleblower award on a disclosed 

basis, the whistleblower must disclose 

the whistleblower’s identity on the 

Form WB–APP. 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; or 

(2) The whistleblower is making the 

whistleblower’s claim for a 

whistleblower award on an anonymous 

basis, the whistleblower must be 

represented by counsel. The 

whistleblower must provide the 

whistleblower’s counsel with a 

completed Form WB–APP that is signed 

by the whistleblower by no later than 

the date upon which the 

whistleblower’s counsel submits to the 

Commission a copy of the Form WB– 

APP that does not disclose the 

whistleblower’s identity and is signed 

solely by the whistleblower’s counsel. 

In addition, the whistleblower’s counsel 

must retain the signed original of the 

whistleblower’s Form WB–APP in 

counsel’s records. Upon request of the 

Commission staff, whistleblower’s 

counsel must produce to the 

Commission the whistleblower’s signed 

original WB–APP 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 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 the 

whistleblower provide additional 

information relating to the 

whistleblower’s eligibility for an award 

or satisfaction of any of the conditions 

for an award, as set forth in § 165.5(b). 

Following that evaluation, the 

Commission will send the 

whistleblower a Final Order 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 the 

whistleblower with the Final Order of 

the Commission. 

§ 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 § 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 

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. 

§ 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 

§ 165.15. 

(a) In determining the amount of an 

award, 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; 

(4) 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; and 

(5) Potential adverse incentives from 

oversize awards. 

(b) Factors that may increase the 

amount of a whistleblower’s award. In 

determining whether to increase the 

amount of an award, the Commission 

will consider the following factors, 

which are not listed in order of 

importance. 

(1) Significance of the information 

provided by the whistleblower. The 

Commission will assess the significance 

of the information provided by a 

whistleblower to the success of the 

Commission action or related action. In 

considering this factor, the Commission 

may take into account, among other 

things: 

(i) The nature of the information 

provided by the whistleblower and how 

it related to the successful enforcement 

action, including whether the reliability 

and completeness of the information 

provided to the Commission by the 

whistleblower resulted in the 

conservation of Commission resources; 

and 

(ii) The degree to which the 

information provided by the 

whistleblower supported one or more 

successful claims brought in the 

Commission action or related action. 

(2) Assistance provided by the 

whistleblower. The Commission will 

assess the degree of assistance provided 

by the whistleblower and any legal 

representative of the whistleblower in 

the Commission action or related action. 

In considering this factor, the 

Commission may take into account, 

among other things: 

(i) Whether the whistleblower 

provided ongoing, extensive, and timely 


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cooperation and assistance by, for 

example, helping to explain complex 

transactions, interpreting key evidence, 

or identifying new and productive lines 

of inquiry; 

(ii) The timeliness of the 

whistleblower’s initial report to the 

Commission or to an internal 

compliance or reporting system of 

business organizations committing, or 

impacted by, the violations of the 

Commodity Exchange Act, where 

appropriate; 

(iii) The resources conserved as a 

result of the whistleblower’s assistance; 

(iv) Whether the whistleblower 

appropriately encouraged or authorized 

others to assist the staff of the 

Commission who might otherwise not 

have participated in the investigation or 

related action; 

(v) The efforts undertaken by the 

whistleblower to remediate the harm 

caused by the violations of the 

Commodity Exchange Act, including 

assisting the authorities in the recovery 

of the fruits and instrumentalities of the 

violations; and 

(vi) Any unique hardships 

experienced by the whistleblower as a 

result of his or her reporting and 

assisting in the enforcement action. 

(3) Law enforcement interest. The 

Commission will assess its 

programmatic interest 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. In considering this factor, the 

Commission may take into account, 

among other things: 

(i) The degree to which an award 

enhances the Commission’s ability to 

enforce the commodity laws; 

(ii) The degree to which an award 

encourages the submission of high 

quality information from whistleblowers 

by appropriately rewarding 

whistleblower submissions of 

significant information and assistance, 

even in cases where the monetary 

sanctions available for collection are 

limited or potential monetary sanctions 

were reduced or eliminated by the 

Commission because an entity selfreported a commodities violation 

following the whistleblower’s related 

internal disclosure, report, or 

submission; 

(iii) Whether the subject matter of the 

action is a Commission priority, 

whether the reported misconduct 

involves regulated entities or 

fiduciaries, whether the whistleblower 

exposed an industry-wide practice, the 

type and severity of the commodity 

violations, the age and duration of 

misconduct, the number of violations, 

and the isolated, repetitive, or ongoing 

nature of the violations; 

(iv) The dangers to market 

participants 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; and 

(v) The degree, reliability and 

effectiveness of the whistleblower’s 

assistance, including the consideration 

of the whistleblower’s complete, timely 

truthful assistance to the Commission 

and criminal authorities. 

(4) Participation in internal 

compliance systems. The Commission 

will assess whether, and the extent to 

which, the whistleblower and any legal 

representative of the whistleblower 

participated in internal compliance 

systems. In considering this factor, the 

Commission may take into account, 

among other things: 

(i) Whether, and the extent to which, 

a whistleblower reported the possible 

Commodity Exchange Act violations 

through internal whistleblower, legal or 

compliance procedures before, or at the 

same time as, reporting them to the 

Commission; and 

(ii) Whether, and the extent to which, 

a whistleblower assisted any internal 

investigation or inquiry concerning the 

reported Commodity Exchange Act 

violations. 

(c) Factors that may decrease the 

amount of a whistleblower’s award. In 

determining whether to decrease the 

amount of an award, the Commission 

will consider the following factors, 

which are not listed in order of 

importance. 

(1) Culpability. The Commission will 

assess the culpability or involvement of 

the whistleblower in matters associated 

with the Commission’s action or related 

actions. In considering this factor, the 

Commission may take into account, 

among other things: 

(i) The whistleblower’s role in the 

Commodity Exchange Act violations; 

(ii) The whistleblower’s education, 

training, experience, and position of 

responsibility at the time the violations 

occurred; 

(iii) Whether the whistleblower acted 

with scienter, both generally and in 

relation to others who participated in 

the violations; 

(iv) Whether the whistleblower 

financially benefitted from the 

violations; 

(v) Whether the whistleblower is a 

recidivist; 

(vi) The egregiousness of any 

wrongdoing committed by the 

whistleblower; and 

(vii) Whether the whistleblower 

knowingly interfered with the 

Commission’s investigation of the 

violations or related enforcement 

actions. 

(2) Unreasonable reporting delay. The 

Commission will assess whether the 

whistleblower unreasonably delayed 

reporting the Commodity Exchange Act 

violations. In considering this factor, the 

Commission may take into account, 

among other things: 

(i) Whether the whistleblower was 

aware of the relevant facts but failed to 

take reasonable steps to report or 

prevent the violations from occurring or 

continuing; 

(ii) Whether the whistleblower was 

aware of the relevant facts but only 

reported them after learning about a 

related inquiry, investigation, or 

enforcement action; and 

(iii) Whether there was a legitimate 

reason for the whistleblower to delay 

reporting the violations. 

(3) Interference with internal 

compliance and reporting systems. The 

Commission will assess, in cases where 

the whistleblower interacted with his or 

her entity’s internal compliance or 

reporting system, whether the 

whistleblower undermined the integrity 

of such system. In considering this 

factor, the Commission will take into 

account whether there is evidence 

provided to the Commission that the 

whistleblower knowingly: 

(i) Interfered with an entity’s 

established legal, compliance, or audit 

procedures to prevent or delay detection 

of the reported Commodity Exchange 

Act violation; 

(ii) Made any material false, fictitious, 

or fraudulent statements or 

representations that hindered an entity’s 

efforts to detect, investigate, or 

remediate the reported Commodity 

Exchange Act violations; or 

(iii) Provided any false writing or 

document knowing the writing or 

document contained any false, fictitious 

or fraudulent statements or entries that 

hindered an entity’s efforts to detect, 

investigate, or remediate the reported 

Commodity Exchange Act violations. 

(d) The Commission shall not take 

into consideration the balance of the 

Fund in determining the amount of an 

award. 

§ 165.10 Contents of record for award 

determinations. 

(a) The following items constitute the 

record upon which the award 

determination under § 165.7 shall be 

made: 


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(1) The whistleblower’s Form TCR, 

‘‘Tip, Complaint or Referral,’’ 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) Sworn declarations (including 

attachments) from the Commission’s 

Division of Enforcement staff regarding 

any matters relevant to the award 

determination. 

(b) The record upon which the award 

determinations under § 165.7 shall be 

made shall not include any Commission 

pre-decisional, attorney-client privilege, 

attorney work product privilege, 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 § 165.7 shall be 

made shall not include any other 

entity’s pre-decisional, attorney-client 

privilege, attorney work product 

privilege, or internal deliberative 

process materials related to its or its 

staff’s determination to file or settle a 

related action. 

§ 165.11 Awards based upon related 

actions. 

Provided that a whistleblower or 

whistleblowers comply with the 

requirements in §§ 165.3, 165.5 and 

165.7, and pursuant to § 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 on 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; 

(4) A State criminal or appropriate 

civil agency, acting within the scope of 

its jurisdiction; or 

(5) A foreign futures authority; 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 judicial or 

administrative action. 

§ 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 or the 

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 a ‘‘covered 

judicial or administrative action’’; 

provided, however, that such judicial or 

administrative action is based on 

information provided by a 

whistleblower. 

(c) Office of Consumer Outreach. The 

Commission shall undertake and 

maintain customer education initiatives 

through its Office of Consumer 

Outreach. The initiatives shall be 

designed to help customers protect 

themselves against fraud or other 

violations of the Commodity Exchange 

Act, or the rules or regulations 

thereunder. The Commission shall fund 

the 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 

into consideration the balance of the 

Fund. 

§ 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 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 

Determinations, as set forth in § 165.9; 

and 

(2) The Final Order of the 

Commission, as set forth in § 165.7. 

§ 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: 


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(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, then 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. 

§ 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 under 

§ 165.12(a), (b). The Executive Director’s 

delegated authority to deposit into or 

credit collected monetary sanctions to 

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) Delegated authority to select a 

Whistleblower Award Determination 

Panel that shall be composed of three of 

the Commission’s Offices or Divisions. 

The Whistleblower Award 

Determination Panel shall include 

neither the Division of Enforcement nor 

the Office of General Counsel. 

(b) Delegation of Authority to 

Whistleblower Award Determination 

Panel. The Commission hereby 

delegates, until such time as the 

Commission orders otherwise, to the 

Whistleblower Award Determination 

Panel the authority to make 

whistleblower award determinations 

under this Part 165, including the 

determinations as whether, to whom, or 

in what amount to make awards. Award 

determinations in matters involving 

monetary sanctions in either the 

Commission’s action or a related action 

that total more than $15,000,000 (i.e., 

matters with a maximum potential 

whistleblower award greater than 

$5,000,000) must be determined by the 

heads of the Offices or Divisions 

comprising the Whistleblower Award 

Determination Panel. In all other 

matters, award determinations may be 

determined by the employee designees 

of the heads of the Offices or Divisions 

comprising the Whistleblower Award 

Determination Panel. 

(c) Delegation of Authority to the 

Whistleblower Office. With the 

exception of § 165.12, the Commission 

hereby delegates, until such time as the 

Commission orders otherwise, to the 

head of the Whistleblower Office the 

authority to take any action under this 

Part 165 that is not otherwise delegated 

to either the Executive Director or the 

Whistleblower Award Determination 

Panel under this section, including 

the authority to administer the 

Commission’s whistleblower program 

and liaise with whistleblowers. 

§ 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 an individual may become a 

whistleblower and assist in Commission 

investigations and enforcement actions 

does not preclude the Commission from 

bringing an action against the 

whistleblower based upon the 

whistleblower’s 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 the 

whistleblower’s cooperation into 

consideration in accordance with its 

sanction recommendations to the 

Commission. 

§ 165.17 Awards to whistleblowers who 

engage in culpable conduct. 

In determining whether the required 

$1,000,000 threshold has been satisfied 

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 

is 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 § 165.14. 

§ 165.18 Staff communications with 

whistleblowers from represented entities. 

If the whistleblower is a 

whistleblower who is a director, officer, 

member, agent, or employee of an entity 

that has counsel, and the whistleblower 

has 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 the whistleblower regarding the 

subject of the whistleblower’s 

communication without seeking the 

consent of the entity’s counsel. 

§ 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 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 district court of the United States 

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. 

(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— 

(1) In providing information to the 

Commission in accordance with this part 

165; or 

(2) In assisting in any investigation or 

judicial or administrative action of the 

Commission based upon or related to such 

information. 

(b) Enforcement—(1) Cause of Action.—An 

individual who alleges discharge or other 

discrimination in violation of section 

23(h)(1)(A) of the Commodity Exchange Act 

may bring an action under section 23(h)(1)(B) 

of the Commodity Exchange Act in the 

appropriate district court of the United States 


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53208 Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 

for the relief provided in section 23(h)(1)(C) 

of the Commodity Exchange Act, unless the 

individual who is alleging discharge or other 

discrimination in violation of section 

23(h)(1)(A) of the Commodity Exchange Act 

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. 

(2) Subpoenas.—A subpoena requiring the 

attendance of a witness at a trial or hearing 

conducted under section 23(h)(1)(A) of the 

Commodity Exchange Act may be served at 

any place in the United States. 

(3) Statute of Limitations.—An action 

under section 23(h)(1)(B) of the Commodity 

Exchange Act may not be brought more than 

2 years after the date on which the violation 

reported in Section 23(h)(1)(A) of the 

Commodity Exchange Act is committed. 

(c) Relief.—Relief for an individual 

prevailing in an action brought under section 

23(h)(1)(B) of the Commodity Exchange Act 

shall include— 

(1) Reinstatement with the same seniority 

status that the individual would have had, 

but for the discrimination; 

(2) The amount of back pay otherwise 

owed to the individual, with interest; and 

(3) 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. 

BILLLING CODE P 


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BILLLING CODE–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 or Commission) 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 the whistleblower is 

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 the 

whistleblower’s 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, including 

pursuant to Section 23 of the Commodity 

Exchange Act and Part 165 of the 

Commission’s regulations thereunder. 

Furnishing the information is voluntary, but 

a decision not to do so may result in the 

whistleblower not being eligible for award 

consideration. 

Questions concerning this form may be 

directed to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 

21st Street, NW., Washington, DC 20581. 

Submission Procedures 

• After completing this Form TCR, please 

send it electronically, by mail, e-mail or 

delivery to the Commission: electronically 

via the Commission’s Web site; by mail or 

delivery to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1151 

21st Street, NW., Washington, DC 20581; by 

e-mail to XXXXX.gov; or by facsimile to (202) 

XXX–XXXX. 

• The whistleblower has the right to 

submit information anonymously. 

• If the whistleblower is submitting 

information for the Commission’s 

whistleblower award program, the 

whistleblower must submit the 

whistleblower’s information using this Form 

TCR. 

Instructions for Completing Form TCR 

Section A: Information About You 

Questions 1–4: Please provide the 

following information about yourself: 

• Last name, first name, and middle initial; 

• Complete address, including city, state 

and zip code; 

• Telephone number and, if available, an 

alternate number where the whistleblower 

can be reached; 

• The whistleblower’s e-mail address (to 

facilitate communications, we strongly 

encourage the whistleblower to provide the 

whistleblower’s email address); 

• The whistleblower’s preferred method of 

communication; and 

• The whistleblower’s occupation. 

Section B: Information about the 

Whistleblower’s Attorney. Complete this 

Section Only if the Whistleblower is 

Represented by an Attorney in this Matter 

Questions 1–4: Provide the following 

information about the attorney representing 

the whistleblower in this matter: 

• Attorney’s name; 

• Firm name; 

• Complete address, including city, state 

and zip code; 

• Telephone number and fax number; and 

• E-mail address. 

Section C: Tell Us About the Individual and/ 

or Entity The Whistleblower Has a Complaint 

Against 

If the whistleblower’s complaint relates to 

more than two individuals and/or entities, 

the whistleblower may use additional sheets, 

if necessary. 

Question 1: Choose one of the following 

that best describes the individual’s 

profession or entity’s type to which the 

whistleblower’s complaint relates: 

• 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). 

• 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 individual and/or 

entity, provide the following information, if 

known: 

• Full name; 

• Complete address, including city, state 

and zip code; 

• Telephone number; 

• E-mail address; and 

• Internet address, if applicable. 

Section D: Tell Us About the Whistleblower’s 

Complaint 

Question 1: State the date (mm/dd/yyyy) 

that the alleged conduct began. 

Question 2: Choose the option that the 

whistleblower believes best describes the 

nature of the whistleblower’s complaint. If 

the whistleblower is alleging more than one 

violation, please list all that the 

whistleblower believes may apply. Use 

additional sheets, if necessary. 

• Theft/misappropriation; 

• Misrepresentation/omission (i.e., false/ 

misleading marketing/sales literature; 

inaccurate, misleading or non-disclosure by 

commodity pool operator, commodity trading 

advisor, futures commission merchant, 

introducing broker, retail foreign exchange 


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dealer, major swap participant, swap dealer, 

or their associated person(s); false/material 

misstatements in any report or statement); 

• Ponzi/pyramid scheme; 

• Off-exchange foreign currency, 

commodity, or precious metal fraud; 

• Registration violations (including 

unregistered commodity pool operator; 

commodity trading advisor; futures 

commission merchant; introducing broker; 

retail foreign exchange dealer; swap dealer; 

or their associated person(s)); 

• 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); 

• 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); 

• Sales and advisory practices (background 

information on past violations/integrity; 

breach of fiduciary duty/responsibility; 

churning/excessive trading; cold calling; 

conflict of interest; abuse 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 (e.g., cold calling, 

seminars); 

• Customer accounts (unauthorized 

trading); identity theft affecting account; 

inaccurate valuation of Net Asset Value; or 

• Other (analyst complaints; market maker 

activities; employer/employee disputes; 

specify other). 

Question 3a: State whether the 

whistleblower or the whistleblower’s counsel 

has had any prior communications with the 

CFTC concerning this matter. 

Question 3b: If the answer to question 3a 

is yes, provide the name of the CFTC staff 

member with whom the whistleblower or the 

whistleblower’s counsel communicated. 

Question 4a: Indicate whether the 

whistleblower or the whistleblower’s counsel 

has provided the information the 

whistleblower is providing to the CFTC to 

any other agency or organization. 

Question 4b: If the answer to question 4a 

is yes, provide details. 

Question 4c: Provide the name and contact 

information of the point of contact at the 

other agency or organization, if known. 

Question 5a: Indicate whether the 

whistleblower’s complaint relates to an entity 

of which the whistleblower is, or was in the 

past, an officer, director, counsel, employee, 

consultant, or contractor. 

Question 5b: If the answer to question 5a 

is yes, state whether the whistleblower has 

reported this violation to the whistleblower’s 

supervisor, compliance office, whistleblower 

hotline, ombudsman, or any other available 

mechanism at the entity for reporting 

violations. 

Question 5c: If the answer to question 5b 

is yes, provide details. 

Question 5d: Provide the date on which the 

whistleblower took the actions described in 

questions 5a and 5b. 

Question 6a: Indicate whether the 

whistleblower has taken any other action 

regarding the whistleblower’s complaint, 

including whether the whistleblower 

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 6b: If the whistleblower answered 

yes to question 6a, provide details, including 

the date on which the whistleblower took the 

action(s) described, the name of the person 

or entity to whom the whistleblower directed 

any report or complaint and contact 

information for the person or entity, if 

known, and the complete case name, case 

number, and forum of any legal action the 

whistleblower has taken. Use additional 

sheets, if necessary. 

Question 7a: Choose from the following the 

option that the whistleblower believes best 

describes the type of financial product or 

investment at issue, if applicable: 

• Commodity futures; 

• Options on commodity futures; 

• Commodity options; 

• Foreign currency transactions; 

• Swaps; or 

• Other (specify). 

Question 7b: Provide the name of the 

financial product or investment, if 

applicable. 

Question 8: State in detail all the facts 

pertinent to the alleged violation. Explain 

why the whistleblower believes the facts 

described constitute a violation of the 

Commodity Exchange Act. Use additional 

sheets, if necessary. 

Question 9: Describe all supporting 

materials in the whistleblower’s possession, 

custody or control, and the availability and 

location of additional supporting materials 

not in the whistleblower’s possession, 

custody or control. Use additional sheets, if 

necessary. 

Question 10: Describe how the 

whistleblower obtained the information that 

supports the whistleblower’s allegation. If 

any information was obtained from an 

attorney or in a communication where an 

attorney was present, identify such 

information with as much particularity as 

possible. In addition, if any information was 

obtained from a public source, identify the 

source with as much particularity as 

possible. Use additional sheets, if necessary. 

Question 11: The whistleblower may use 

this space to identify any documents or other 

information in the whistleblower’s 

submission on this Form TCR that the 

whistleblower believes could reasonably be 

expected to reveal the whistleblower’s 

identity. Explain the basis for the 

whistleblower’s belief that the 

whistleblower’s identity would be revealed if 

the documents or information were disclosed 

to a third party. 

Question 12: Provide any additional 

information the whistleblower thinks may be 

relevant. 

Section E: Eligibility Requirements 

Question 1: State whether the 

whistleblower is currently, or was at the time 

the whistleblower acquired the original 

information that the whistleblower is 

submitting to the Commodity Futures 

Trading Commission, a member, officer or 

employee of the Department of Justice, the 

Commodity Futures Trading Commission, 

the Comptroller of the Currency, the Board of 

Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, the 

Office Thrift Supervision, National Credit 

Union Administration, the Securities and 

Exchange Commission, a registered entity, a 

registered futures association, a selfregulatory organization, or any law 

enforcement organization. 

Question 2: State whether the 

whistleblower is providing the information 

pursuant to a cooperation agreement with the 

Commodity Futures Trading Commission or 

with any other agency or organization. 

Question 3: State whether the 

whistleblower is providing this information 

before the whistleblower (or anyone 

representing you) received any request, 

inquiry or demand that relates to the subject 

matter of the whistleblower’s submission: (i) 

From the CFTC; (ii) in connection with an 

investigation, inspection or examination by 

any registered entity, registered futures 

association or self-regulatory organization; or 

(iii) in connection with an investigation by 

the Congress, or any other federal or state 

authority. 

Question 4: State whether the 

whistleblower is currently a subject or target 

of a criminal investigation, or has the 

whistleblower been convicted of a criminal 

violation, in connection with the information 

the whistleblower is submitting to the 

Commodity Futures Trading Commission. 

Question 5: State whether the 

whistleblower acquired the information the 

whistleblower is providing to the Securities 

and Exchange Commission from any 

individual described in Questions 1 through 

5 of this Section. 

Question 6: State whether the 

whistleblower is currently, or was at the time 

the whistleblower acquired the original 

information that the whistleblower is 

submitting to the Commodity Futures 

Trading Commission, a member, officer, or 

employee of a foreign regulatory authority or 

law enforcement organization. 

Question 7: Use this space to provide 

additional details relating to the 

whistleblower’s responses to questions 1 

through 6. Use additional sheets, if 

necessary. 

Section F: Whistleblower’s Declaration 

The whistleblower must sign this 

Declaration if the whistleblower is 

submitting this information pursuant to the 

Commodity Futures Trading Commission 

whistleblower program and wish to be 

considered for an award. If the whistleblower 

is submitting the whistleblower’s information 

anonymously, the whistleblower must still 

sign this Declaration, and the whistleblower 

must provide the whistleblower’s attorney 

with the original of this signed form. 

If the whistleblower is not submitting the 

whistleblower’s information pursuant to the 


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Commodity Futures Trading Commission 

whistleblower program, the whistleblower do 

not need to sign this Declaration. 

Section G: Counsel Certification 

If the whistleblower is submitting this 

information pursuant to the Commodity 

Futures Trading Commission whistleblower 

program and is doing so anonymously 

through an attorney, the whistleblower’s 

attorney must sign the Counsel Certification 

section. 

If the whistleblower is represented in this 

matter but the whistleblower is not 

submitting the whistleblower’s information 

pursuant to the Commodity Futures Trading 

Commission whistleblower program, the 

whistleblower’s attorney does not need to 

sign the Counsel Certification Section. 

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BILLING CODE–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 or Commission) inform individuals of 

the following when asking for information. 

The information provided will enable the 

Commission to determine the 

whistleblower’s 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 

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 Commission’s 

Regulations thereunder. Furnishing the 

information is voluntary, but a decision not 


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Federal Register / Vol. 76, No. 165 / Thursday, August 25, 2011 / Rules and Regulations 53221 

to do so may result in the whistleblower not 

being eligible for award consideration. 

Questions concerning this form may be 

directed to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 

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, the whistleblower must meet all the 

requirements set forth in Section 23 of the 

Commodities Exchange Act and the rules 

thereunder. 

• The whistleblower must sign the Form 

WB–APP as the claimant. If the 

whistleblower provided the whistleblower’s 

information to the CFTC anonymously, the 

whistleblower must now disclose the 

whistleblower’s identity on this form and the 

whistleblower’s identity must be verified in 

a form and manner that is acceptable to the 

CFTC prior to the payment of any award. 

Æ If the whistleblower is filing the 

whistleblower’s claim in connection with 

information that the whistleblower provided 

to the CFTC, then the whistleblower’s Form 

WB–APP, and any attachments thereto, must 

be received by the CFTC within ninety (90) 

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. 

Æ If the whistleblower is filing the 

whistleblower’s claim in connection with 

information the whistleblower provided to 

another agency in a related action, then the 

whistleblower’s Form WB–APP, and any 

attachments there to, must be received by the 

Commodity Futures Trading Commission as 

follows: 

• If a final order imposing monetary 

sanctions has been entered in a related action 

at the time the whistleblower submits the 

whistleblower’s claim for an award in 

connection with a Commission action, the 

whistleblower must submit the 

whistleblower’s claim for an award in that 

related action on the same Form WB–APP 

that the whistleblower uses for the 

Commission action. 

• If a final order imposing monetary 

sanctions in a related action has not been 

entered at the time the whistleblower 

submits the whistleblower’s claim for an 

award in connection with a Commission 

action, the whistleblower must submit the 

whistleblower’s claim on Form WB–APP 

within ninety (90) days of the issuance of a 

final order imposing sanctions in the related 

action. 

• The whistleblower must submit the 

whistleblower’s Form WB–APP to us in one 

of the following two ways: 

Æ By mailing or delivering the signed form 

to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 

21st Street, NW., Washington, DC 20581; or 

Æ 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: 

• First and last name, and middle initial, 

and social security number; 

• Complete address, including city, state 

and zip code; 

• Telephone number and, if available, an 

alternate number where the whistleblower 

can be reached; and 

• E-mail address. 

Section B: Attorney’s Information 

If the whistleblower is represented by an 

attorney in this matter, provide the 

information requested. If the whistleblower is 

not represented by an attorney in this matter, 

leave this Section blank. 

Questions 1–4: Provide the following 

information about the attorney representing 

the whistleblower in this matter: 

• Attorney’s name; 

• Firm name; 

• Complete address, including city, state 

and zip code; 

• Telephone number and fax number; and 

• E-mail address. 

Section C: Tip/Complaint Details 

Question 1: Indicate the manner in which 

the whistleblower’s original information was 

submitted to the CFTC. 

Question 2a: Include the TCR (Tip, 

Complaint or Referral) number to which this 

claim relates. 

Question 2b: Provide the date on which the 

whistleblower submitted the whistleblower’s 

information to the CFTC. 

Question 2c: Provide the name of the 

individual(s) or entity(s) to which the 

whistleblower’s tip, complaint, or referral 

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 

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 required for 

a whistleblower to be potentially eligible for 

an award. The Commission will not contact 

whistleblower claimants directly as to 

Notices of Covered Actions; prospective 

claimants should monitor the Commission 

Web site for such Notices. 

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 the whistleblower 

provided the whistleblower’s information. 

Question 2: Provide the name and contact 

information for the whistleblower’s point of 

contact at the agency or organization, if 

known. 

Question 3a: Provide the date on which 

that the whistleblower provided the 

whistleblower’s 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 the whistleblower 

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 and Other 

Information 

Question 1: State whether the 

whistleblower is currently, or was at the time 

the whistleblower acquired the original 

information that the whistleblower submitted 

to the CFTC, a member, officer or employee 

of the Department of Justice, the Commodity 

Futures Trading 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, the National 

Credit Union Administration, the Securities 

and Exchange Commission, a registered 

entity, a registered futures association, a selfregulatory organization, any law enforcement 

organization, or a foreign regulatory authority 

or law enforcement organization. 

Question 2: State whether the 

whistleblower provided the information 

submitted to the CFTC pursuant to a 

cooperation agreement with the CFTC or 

with any other agency or organization. 

Question 3: State whether the 

whistleblower acquired the information the 

whistleblower provided to the CFTC from 

any individual described in Question 1 

through 2 of this Section. 

Question 5: If the whistleblower answered 

‘‘yes’’ to questions 1 though 3 of this Section, 

please provide details. 

Question 5a: State whether the 

whistleblower provided the information 

submitted to the CFTC before the 

whistleblower (or anyone representing the 

whistleblower) received any request, inquiry 

or demand that relates to the subject matter 

of the whistleblower’s submission: (i) From 

the CFTC; (ii) in connection with an 

investigation, inspection or examination by 

any registered entity, registered futures 

association or self-regulatory organization; or 

(iii) in connection with an investigation by 

the Congress, or any other federal or state 

authority. 

Question 5b: If the whistleblower answered 

‘‘yes’’ to questions 5a, please provide details. 

Use additional sheets if necessary. 

Question 6a: State whether the 

whistleblower is the subject or target of a 

criminal investigation, or has been convicted 

of a criminal violation, in connection with 

the information upon which the 

whistleblower’s application for an award is 

based. 

Question 6b: If the whistleblower answered 

‘‘yes’’ to question 6a, please provide details, 


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including the name of the agency or 

organization that conducted the investigation 

or initiated the action against you, the name 

and telephone number of the whistleblower’s 

point of contact at the agency or organization, 

if available, and the investigation/case name 

and number, if applicable. Use additional 

sheets, if necessary. 

Section G: Entitlement to Award 

This section is optional. Use this section to 

explain the basis for the whistleblower’s 

belief that the whistleblower is entitled to an 

award in connection with the 

whistleblower’s submission of information to 

the Commission or to another agency in 

connection with a related action. 

Specifically, address how the whistleblower 

believes the whistleblower 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 § 165.11 of Part 165 of the 

Commission’s Regulations for further 

information concerning the relevant award 

criteria. The whistleblower may use 

additional sheets, if necessary. 

Section 23(c)(1)(B) of the CEA requires the 

Commission to consider in determining the 

amount of an award 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 Commodity Exchange Act 

(including Regulations under the Act) 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 the whistleblower’s response 

as well. 

Section H: Declaration 

This section must be signed by the 

claimant. 

Issued in Washington, DC, on August 4, 

2011, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Appendices to Final Rules for 

Implementing the Whistleblower 

Provisions of Section 23 of the 

Commodity Exchange Act— 

Commission Voting Summary and 

Statements of Commissioners 

Note: The following appendices will not 

appear in the Code of Federal Regulations 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Gensler and 

Commissioners Dunn, Chilton and O’Malia 

voted in the affirmative; Commissioner 

Sommers voted in the negative. 

Appendix 2—Statement of Chairman 

Gary Gensler 

I support the final rulemaking to establish 

a program for whistleblowers as mandated by 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act. Congress enacted 

these provisions to incentivize 

whistleblowers to come forward with new 

information about potential fraud, 

manipulation or other misconduct in the 

financial markets. The final rule authorizes 

the Commodity Futures Trading Commission 

(CFTC) to provide a monetary award to 

whistleblowers when their original 

information leads to a successful 

enforcement action that results in sanctions 

over $1 million. The rule encourages people 

to assist the CFTC in identifying, 

investigating and prosecuting potential 

violations of the Commodity Exchange Act. 

[FR Doc. 2011–20423 Filed 8–24–11; 8:45 am] 

BILLING CODE P 


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