Monday, 

December 6, 2010 

Part II 

Commodity Futures 

Trading Corporation 

17 CFR Part 165 

Implementing the Whistleblower 

Provisions of Section 23 of the 

Commodity Exchange Act; Proposed Rule 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75728 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

1See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010). The text of the Dodd-Frank Act 

may be accessed at http://www.cftc.gov./ 

LawRegulation/OTCDERIVATIVES/index.htm. 

2Pursuant to Section 701 of the Dodd-Frank Act, 

Title VII may be cited as the ‘‘Wall Street 

Transparency and Accountability Act of 2010.’’ 

3 7 U.S.C. 1 et seq. (2006). 

4Section 922(a), Public Law 111–203, 124 Stat. 

1841 (2010). 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 165 

RIN 3038–AD04 

Implementing the Whistleblower 

Provisions of Section 23 of the 

Commodity Exchange Act 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is proposing rules to 

implement new statutory provisions 

enacted by Title VII of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act. These proposed rules 

apply to the whistleblowers incentives 

and protection of section 748. The 

proposed rules establish a 

whistleblower program that enables the 

Commission to pay an award, under 

regulations prescribed by the 

Commission and subject to certain 

limitations, to eligible whistleblowers 

who voluntarily provide the 

Commission with original information 

about a violation of the Commodity 

Exchange Act that leads to the 

successful enforcement of a covered 

judicial or administrative action, or a 

related action. The proposed rules also 

provide public notice of section 748’s 

prohibition on retaliation by employers 

against individuals that provide the 

Commission with information about 

potential violations. 

DATES: Comments must be received on 

or before February 4, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN number 3038–AD04, 

by any of the following methods: 

• Agency Web site, via its Comments 

Online process: http:// 

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Please submit your comments using 

only one method. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to http:// 

www.cftc.gov. You should submit only 

information that you wish to make 

available publicly. If you wish the 

Commission to consider information 

that you believe is exempt from 

disclosure under the Freedom of 

Information Act, a petition for 

confidential treatment of the exempt 

information may be submitted according 

to the procedures established 

procedures in CFTC Regulation 145.9, 

17 CFR 145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Edward Riccobene, Chief, Policy and 

Review, Division of Enforcement, 202– 

418–5327, ericcobene@cftc.gov, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1151 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(‘‘Dodd-Frank Act’’).1 Title VII of the 

Dodd-Frank Act 2 amended the 

Commodity Exchange Act (‘‘CEA’’) 3 to 

establish a comprehensive new 

regulatory framework for swaps and 

security-based swaps. The legislation 

was enacted to reduce risk, increase 

transparency, and promote market 

integrity within the financial system by, 

among other things: (1) Providing for the 

registration and comprehensive 

regulation of swap dealers and major 

swap participants; (2) imposing clearing 

and trade execution requirements on 

standardized derivative products; (3) 

creating robust recordkeeping and realtime reporting regimes; and 4) 

enhancing the Commission’s 

rulemaking and enforcement authorities 

with respect to, among others, all 

registered entities and intermediaries 

subject to the Commission’s oversight. 

In addition, Title VII of the DoddFrank Act contains provisions to 

provide incentives and protections for 

whistleblowers. 

Section 748 of the Dodd-Frank Act 

amends the CEA by adding Section 23, 

entitled ‘‘Commodity Whistleblower 

Incentives and Protection.’’ 4 Section 23 

directs that the Commission must pay 

awards, subject to certain limitations 

and conditions, to whistleblowers who 

voluntarily provide the Commission 

with original information about a 

violation of the CEA that leads to 

successful enforcement of an action 

brought by the Commission that results 

in monetary sanctions exceeding 

$1,000,000, and of certain related 

actions. 

The Commission is proposing 

Regulation 165 to implement Section 23 

of the CEA. As described in detail 

below, the rules contained in proposed 

Regulation 165 define certain terms 

critical to the operation of the 

whistleblower program, outline the 

procedures for applying for awards and 

the Commission’s procedures for 

making decisions on claims, and 

generally explain the scope of the 

whistleblower program to the public 

and to potential whistleblowers. 

Further, Proposed Regulation 165 

includes an appendix informing 

whistleblowers of their protections from 

employer retaliation under Section 23 of 

the CEA. 

Section 23 of the CEA also requires 

the Commission to fund customer 

education initiatives designed to help 

customers protect themselves against 

fraud or other violations of the CEA, or 

rules or regulations thereundeCr. The 

Commission will, in a future 

rulemaking, address related internal 

procedural and organizational issues, 

including establishment of, and 

delegation of authority to, an office or 

offices to administer the Commission’s 

whistleblower and customer education 

programs. 

Accordingly, the Commission is 

proposing rules to implement Section 

748 and establish a whistleblower 

program. The Commission requests 

comment on all aspects of the proposed 

rules, as well as comment on the 

specific provisions and issues 

highlighted in the discussion below. 

II. Description of the Proposed Rules 

A. Proposed Rule 165.1—General 

Proposed Rule 165.1 provides a 

general, plain English description of 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75729 

5See Proposed Rule 165.8. 6See Black’s Law Dictionary 31 (8th ed. 2004) 

(defining an ‘‘action’’ as ‘‘a civil or criminal judicial 

proceeding’’). Section 23 of the CEA does not appear 

to contemplate the aggregation of separate judicial 

or administrative actions for purposes of 

determining whether the $1,000,000 threshold is 

satisfied, even if the actions arise out of a single 

investigation. 

7This approach offers enhanced potential 

incentives for whistleblowers when compared to 

other similar programs because those programs 

have typically limited awards to successful claims 

that the whistleblower actually identified. See 

Rockwell International Corp. v. United States, 

549 U.S. 457 (2007) (False Claims Act); John Doe 

v. United States, 65 Fed. Cl. 184 (2005) (Customs 

moiety statute, 19 U.S.C. 1619); Internal Revenue 

Manual 25.2.2.2.8.A (under IRS whistleblower 

program, collected proceeds only include proceeds 

from the single issue identified by the 

whistleblower, or substantially similar improper 

activity). 

Section 23 of the CEA. It sets forth the 

purposes of the rules and states that the 

Commission administers the 

whistleblower program. In addition, the 

proposed rule states that, unless 

expressly provided for in the rules, no 

person is authorized to make any offer 

or promise, or otherwise to bind the 

Commission with respect to the 

payment of an award or the amount 

thereof. 

B. Proposed Rule 165.2—Definitions 

1. Proposed Rule 165.2(a) Action 

Proposed Rule 165.2(a) defines the 

term ‘‘action’’ to mean a single captioned 

civil or administrative proceeding. This 

defined term is relevant for purposes of 

calculating whether monetary sanctions 

in a Commission action exceed the 

$1,000,000 threshold required for an 

award payment pursuant to Section 23 

of the CEA, as well as determining the 

monetary sanctions on which awards 

are based.5 The Commission proposes to 

interpret the ‘‘action’’ to include all 

defendants or respondents, and all 

claims, that are brought within that 

proceeding without regard to which 

specific defendants or respondents, or 

which specific claims, were included in 

the action as a result of the information 

that the whistleblower provided. This 

approach to determining the scope of an 

‘‘action’’ appears consistent with the 

most common meaning of the term,6

will effectuate the purposes of Section 

23 by enhancing the incentives for 

individuals to come forward and report 

potential violations to the Commission,7

and will avoid the challenges associated 

with attempting to allocate monetary 

sanctions involving multiple 

individuals and claims based upon the 

select individuals and claims reported 

by whistleblowers. 

The Commission requests comment 

on the proposed definition of the word 

‘‘action.’’ Is it appropriate to pay 

whistleblower awards based on all 

monetary sanctions obtained in a single 

proceeding, even when the 

whistleblower’s information did not 

concern all defendants or claims in that 

proceeding? 

2. Proposed Rule 165.2(b) Aggregate 

Amount 

Proposed Rule 165.2(b) defines the 

phrase ‘‘aggregate amount’’ to mean the 

total amount of an award granted to one 

or more whistleblowers pursuant to 

Proposed Rule 165.7. The term is 

relevant for purposes of determining the 

amount of an award pursuant to 

Proposed Rule 165.8. 

3. Proposed Rule 165.2(c) Analysis 

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

original information provided by a 

whistleblower can include information 

that is derived from independent 

knowledge and also from independent 

‘‘analysis’’ of a whistleblower. Proposed 

Rule 165.2(c) defines the term ‘‘analysis’’ 

to mean the whistleblower’s 

examination and evaluation of 

information that may be generally 

available, but which reveals information 

that is not generally known or available 

to the public. This definition recognizes 

that there are circumstances where 

individuals can review publicly 

available information, and, through 

their additional evaluation and analysis, 

provide vital assistance to the 

Commission staff in understanding 

complex schemes and identifying 

potential violations of the CEA. 

The Commission requests comment 

on the definition of ‘‘analysis.’’ Is there 

a different or more specific definition of 

‘‘analysis’’ that would better effectuate 

the purposes of Section 23 of the CEA? 

4. Proposed Rule 165.2(d) Collected by 

the Commission 

Proposed Rule 165.2(d) defines the 

phrase ‘‘collected by the Commission,’’ 

when used in the context of deposits 

and credits into the Fund, to refer to a 

monetary sanction that is both collected 

by the Commission and is recorded as 

a payment receivable on the 

Commission’s books and records. While 

the amount of a whistleblower award is 

based upon ‘‘what has been collected of 

the monetary sanctions imposed in an 

action or related action,’’ see Section 

23(b), Congress used different language 

to describe the source of funding for 

whistleblower awards. Specifically, 

Congress states that the Fund will be 

financed through monetary sanctions 

‘‘collected by the Commission,’’ meaning 

that deposits into the Fund are based 

only upon what the Commission 

actually collects. See Section 23(g)(3). 

The Commission generally collects civil 

monetary sanctions and disgorgement 

amounts in civil actions, or fines in 

administrative actions. A federal court 

or the Commission generally awards 

restitution to victims in civil and 

administrative actions, respectively, but 

the Commission does not ‘‘collect’’ 

restitution, i.e., restitution is not 

recorded as a payment receivable on the 

Commission’s books and records. 

Consequently, restitution amounts 

collected in a covered action or related 

action will not be deposited into the 

Fund. 

5. Proposed Rule 165.2(e) Covered 

Judicial or Administrative Action 

Proposed Rule 165.2(e) defines the 

phrase ‘‘covered judicial or 

administrative action’’ to mean any 

judicial or administrative action brought 

by the Commission under the CEA 

whose successful resolution results in 

monetary sanctions exceeding 

$1,000,000. 

6. Proposed Rule 165.2(f) Fund 

Proposed Rule 165.2(f) defines the 

term ‘‘Fund’’ to mean the ‘‘Commodity 

Futures Trading Commission Customer 

Protection Fund’’ established by Section 

23(g) of the CEA. The Commission will 

use the Fund to pay whistleblower 

awards as provided in Proposed Rule 

165.12 and to finance customer 

education initiatives designed to help 

customers protect themselves against 

fraud and other violations of the CEA or 

the Commission’s regulations. 

7. Proposed Rule 165.2(g) Independent 

Knowledge 

Proposed Rule 165.2(g) defines 

‘‘independent knowledge’’ as factual 

information in the whistleblower’s 

possession that is not obtained from 

publicly available sources, which would 

include such sources as corporate 

filings, media, and the Internet. 

Importantly, the proposed definition of 

‘‘independent knowledge’’ does not 

require that a whistleblower have direct, 

first-hand knowledge of potential 

violations. Instead, independent 

knowledge may be obtained from any of 

the whistleblower’s experiences, 

observations, or communications 

(subject to the exclusion for knowledge 

obtained from public sources). Thus, for 

example, under Proposed Rule 165.2(g), 

a whistleblower would have 

‘‘independent knowledge’’ of 

information even if that knowledge 

derives from facts or other information 

that has been conveyed to the 

whistleblower by third parties. 

The Commission preliminarily 

believes that defining ‘‘independent 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75730 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

8 In addition, the distinction between 

‘‘independent knowledge’’ (as knowledge not 

dependent upon publicly available sources) and 

direct, first-hand knowledge, is consistent with the 

approach courts have typically taken in interpreting 

similar terminology in the False Claims Act. Until 

this year, the ‘‘public disclosure bar’’ provisions of 

the False Claims Act defined an ‘‘original source’’ 

of information, in part, as ‘‘an individual who [had] 

direct and independent knowledge of the 

allegations of the information on which the 

allegations [were] based * * *.’’ 31 U.S.C. 

3130(e)(4) (prior to 2010 amendments). Courts 

interpreting these terms generally defined 

‘‘independent knowledge’’ to mean knowledge that 

was not dependent on public disclosures, and 

‘‘direct knowledge’’ to mean first-hand knowledge 

from the relator’s own work and experience, with 

no intervening agency. E.g., United States ex rel. 

Fried v. West Independent School District, 527 F.3d 

439 (5th Cir. 2008); United States ex rel. Paranich 

v. Sorgnard, 396 F.3d 326 (3d Cir. 2005). See 

generally John T. Boese, Civil False Claims and Qui 

Tam Actions § 4.02[D][2] (Aspen Publishers) (2006) 

(citing cases). Earlier this year, Congress amended 

the ‘‘public disclosure bar’’ to, among other things, 

remove the requirement that a relator have ‘‘direct 

knowledge’’ of information. Sec. 10104(h)(2), Public 

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

9This 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). 

knowledge’’ in this manner best 

effectuates the purposes of Section 23 of 

the CEA. An individual may learn about 

potential violations of the CEA without 

being personally involved in the 

conduct. If an individual voluntarily 

comes forward with such information, 

and the information leads the 

Commission to a successful enforcement 

action (as defined in Proposed Rule 

165.2(i)), that individual should be 

eligible to receive a whistleblower 

award.8

Proposed Rule 165.2(g) further 

provides that an individual will not be 

considered to have ‘‘independent 

knowledge’’ in four other circumstances. 

The effect of these provisions would be 

to exclude individuals who obtain 

information under these circumstances 

from being eligible for whistleblower 

awards. 

The first exclusion contemplated is 

for information that was obtained 

through a communication that is subject 

to the attorney-client privilege. 

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

Compliance with the CEA is promoted 

when individuals, corporate officers, 

Commission registrants and others 

consult with counsel about potential 

violations, and the attorney-client 

privilege furthers such consultation. 

This important benefit could be 

undermined if the whistleblower award 

program vitiated the public’s perception 

of the scope of the attorney-client 

privilege or created monetary incentives 

for counsel to disclose information 

about potential CEA violations that they 

learned of through privileged 

communications. 

The exception for knowledge obtained 

through privileged attorney-client 

communications would not apply in 

circumstances where the disclosure of 

the information is otherwise permitted. 

This could include, for example, 

circumstances where the privilege has 

been waived, and where the privilege is 

not applicable because of a recognized 

exception such as the crime-fraud 

exception to the attorney-client 

privilege. 

The second exclusion to ‘‘independent 

knowledge’’ in the proposed rule applies 

when a person with legal, compliance, 

audit, supervisory, or governance 

responsibilities for an entity receives 

information about potential violations, 

and the information was communicated 

to the person with the reasonable 

expectation that the person would take 

appropriate steps to cause the entity to 

remedy the violation.9 (Proposed Rule 

165.2(g)(4).) 

The third exclusion is closely related 

to the second, and applies any other 

time that information is obtained from 

or through an entity’s legal, compliance, 

audit, or similar functions or processes 

for identifying, reporting, and 

addressing potential non-compliance 

with applicable law. (Proposed Rule 

165.2(g)(5).) However, each of these two 

exclusions ceases to be applicable, with 

the result that an individual may be 

deemed to have ‘‘independent 

knowledge,’’ and therefore may become 

a whistleblower, if the entity fails to 

disclose the information to the 

Commission within sixty (60) days or 

otherwise proceeds in bad faith. 

Compliance with the CEA is 

promoted when companies implement 

effective legal, audit, compliance, and 

similar functions. The rationale for 

these proposed exclusions is the 

concern that Section 23 not be 

implemented in a way that would create 

incentives for persons involved in such 

functions, as well as other responsible 

persons who are informed of 

wrongdoing, to circumvent or 

undermine the proper operation of the 

entity’s internal processes for 

investigating and responding to 

violations of law. Accordingly, under 

the proposed rule, officers, directors, 

employees, and others who learn of 

potential violations as part of their 

official duties in the expectation that 

they will take steps to address the 

violations, or otherwise from or through 

the various processes that companies 

employ to identify problems and 

advance compliance with legal 

standards, would not be permitted to 

use that knowledge to obtain a personal 

benefit by becoming whistleblowers. 

Nevertheless, if the entity failed to 

disclose the information to the 

Commission within sixty (60) days or 

otherwise proceeds in bad faith, the 

exclusion would no longer apply, 

thereby making an individual who 

knows this undisclosed information 

eligible to become a whistleblower. The 

rationale for this provision is that if the 

entity fails to report information 

concerning the violation to the 

Commission, it would be inconsistent 

with the purposes of Section 23 to 

continue to disable individuals with 

knowledge of the potential violations 

from coming forward and providing the 

information to the Commission. 

Furthermore, this provision provides a 

reasonable period of time for entities to 

report potential violations, thereby 

minimizing the potential of 

circumventing or undermining existing 

compliance programs. 

The fourth and final exclusion to 

‘‘independent knowledge’’ in the 

proposed rule applies if the 

whistleblower obtains the information 

by means or in a manner that violates 

applicable federal or state criminal law. 

This exclusion is necessary to avoid the 

unintended effect of incentivizing 

criminal misconduct. 

The Commission requests comment 

on the definition of ‘‘independent 

knowledge.’’ Is it appropriate to include 

within the scope of the phrase 

‘‘independent knowledge’’ knowledge 

that is not direct, first-hand knowledge, 

but is instead learned from others, 

subject only to an exclusion for 

knowledge learned from publiclyavailable sources? Is it appropriate to 

exclude from the definition of 

‘‘independent knowledge’’ information 

that is obtained through a 

communication that is protected by the 

attorney-client privilege? Are there 

other ways these rules should address 

privileged communications? 

The Commission also requests 

comment on the proposed exclusions 

for information obtained by a person 

with legal, compliance, audit, 

supervisory, or governance 

responsibilities for an entity under an 

expectation that the person would cause 

the entity to take steps to remedy the 

violation, and for information otherwise 

obtained from or through an entity’s 

legal, compliance, audit, or similar 

functions. Does this exclusion strike the 

proper balance? Will the carve-out for 

situations where the entity fails to 

disclose the information within sixty 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75731 

(60) days promote effective self-policing 

functions and compliance with the law 

without undermining the operation of 

Section 23? Is sixty (60) days a 

‘‘reasonable time’’ for the entity to 

disclose the information and, if not, 

what period should be specified (e.g., 

three months, six months, one year)? 

Are there alternative provisions the 

Commission should consider that would 

promote effective self-policing and selfreporting while still being consistent 

with the goals and text of Section 23? 

Finally, the Commission seeks 

comment on whether there are other 

sources of knowledge that should or 

should not be deemed ‘‘independent’’ for 

purposes of Section 23 and that should 

be specifically addressed by rule? 

8. Proposed Rule 165.2(h) Independent 

Analysis 

Proposed Rule 165.2(h) defines the 

phrase ‘‘independent analysis’’ to mean 

the whistleblower’s own analysis, 

whether done alone or in combination 

with others. The proposed rule thus 

recognizes that analysis—in particular 

academic or professional studies—is 

often the product of collaboration 

among two or more individuals. The 

phrase is relevant to the definition of 

‘‘original information’’ in Proposed Rule 

165.2(k). 

9. Proposed Rule 165.2(i) Information 

That Led to Successful Enforcement 

Under Section 23, a whistleblower’s 

eligibility for an award depends in part 

on whether the whistleblower’s original 

information ‘‘led to the successful 

enforcement’’ of the Commission’s 

covered judicial or administrative action 

or a related action. Proposed Rule 

165.2(i) defines when original 

information ‘‘led to successful 

enforcement.’’ 

The Commission’s enforcement 

practice generally proceeds in several 

stages. First, the staff opens an 

investigation based upon some 

indication of potential violations of the 

CEA and/or Commission regulations. 

Second, the staff conducts its 

investigation to gather additional facts 

in order to determine whether there is 

sufficient basis to recommend 

enforcement action. If so, the staff may 

recommend, and the Commission may 

authorize, the filing of an action. The 

definition in Proposed Rule 165.2(i) 

addresses the significance of the 

whistleblower’s information to both the 

decision to open an investigation and 

the success of the resulting enforcement 

action. The proposed rule would 

distinguish between situations where 

the whistleblower’s information causes 

the staff to begin an investigation or 

inquire about new or different conduct 

as part of a current investigation, and 

situations where the whistleblower 

provides information about conduct that 

is already under investigation. In the 

latter case, awards would be limited to 

the rare circumstances where the 

whistleblower provided essential 

information that the staff would not 

have otherwise obtained in the normal 

course of the investigation. 

Subparagraphs (1) and (2) of Proposed 

Rule 165.2(i) reflect these 

considerations. 

Subparagraph (1) of Proposed Rule 

165.2(i) applies to situations where the 

staff is not already reviewing the 

conduct in question, and establishes a 

two-part test for determining whether 

‘‘original information’’ voluntarily 

provided by a whistleblower led to 

successful enforcement of a Commission 

action. First, the information must have 

caused the staff to open an 

investigation, reopen an investigation 

that had been closed, or to inquire 

concerning new and different conduct 

as part of an open investigation. This 

does not necessarily contemplate that 

the whistleblower’s information will be 

the only information that the staff 

obtains before deciding to proceed. 

However, the proposed rule would 

apply when the whistleblower gave the 

staff information about conduct that the 

staff is not already investigating or 

examining, and that information was the 

principal motivating factor behind the 

staff’s decision to begin looking into the 

whistleblower’s allegations. 

Second, if the whistleblower’s 

information caused the Commission 

staff to start looking at the conduct for 

the first time, the proposed rule would 

require that the information 

‘‘significantly contributed’’ to the 

success of an enforcement action filed 

by the Commission. The proposed rule 

includes this requirement because the 

Commission believes that it is not the 

intent of Section 23 to authorize 

whistleblower awards for any and all 

tips about conduct that led to the 

opening of an investigation if the 

resulting investigation concludes in a 

successful covered judicial or 

administrative action. Rather, implicit 

in the requirement in Section 23(b) that 

a whistleblower’s information ‘‘led to 

* * * successful enforcement’’ is the 

further expectation that the information, 

because of its high quality, reliability, 

and specificity, had a meaningful 

connection to the Commission’s ability 

to successfully complete its 

investigation and to either obtain a 

settlement or prevail in a litigated 

proceeding. 

At bottom, successful enforcement of 

a judicial or administrative action 

depends on the staff’s ability to 

establish unlawful conduct by a 

preponderance of evidence. Thus, in 

order to have ‘‘led to successful 

enforcement,’’ the ‘‘original information’’ 

provided by a whistleblower should be 

connected to evidence that plays a 

significant role in successfully 

establishing the Commission’s claim. 

For example, the ‘‘led to’’ standard of 

Proposed Rule 165.2(i)(1) would be met 

if a whistleblower were to provide the 

Commission staff with strong, direct 

evidence of violations that supported 

one or more claims in a successful 

enforcement action. To give another 

example, a whistleblower whose 

information did not provide this degree 

of evidence in itself, but who played a 

critical role in advancing the 

investigation by leading the staff 

directly to evidence that provided 

important support for one or more of the 

Commission’s claims could also receive 

an award, in particular if the evidence 

the whistleblower pointed to might have 

otherwise been difficult to obtain. A 

whistleblower who only provided vague 

information, or an unsupported tip, or 

evidence that was tangential and did not 

significantly help the Commission 

successfully establish its claims, would 

ordinarily not meet the standard of this 

proposed rule. 

If information that a whistleblower 

provides to the Commission consists of 

‘‘independent analysis’’ (Proposed Rule 

165.2(h)) rather than ‘‘independent 

knowledge’’ (Proposed Rule 165.2(g)), 

the evaluation of whether this analysis 

‘‘led to successful enforcement’’ 

similarly would turn on whether it 

significantly contributed to the success 

of the action. This would involve, for 

example, considering the degree to 

which the analysis, by itself and 

without further investigation, indicated 

a high likelihood of unlawful conduct 

that was the basis, or was substantially 

the basis, for one or more claims in the 

Commission’s enforcement action. The 

purpose of this provision is to ensure 

that the analysis provided to the 

Commission results in the efficiency 

and effectiveness benefits to the 

enforcement program that were 

intended by Congress. Thus, if a person 

provided analysis based upon readily 

available public information and the 

staff opened an inquiry based upon this 

analysis but was required to conduct 

significant additional analysis and 

investigation to conclude a successful 

enforcement action, the person would 

not be deemed to have provided 

‘‘independent analysis.’’ 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75732 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

10The proposed rule also makes clear that 

subparagraph (2) of Proposed Rule 165.2(i) does not 

apply when a whistleblower provides information 

to the Commission about a matter that is already 

under investigation by another authority if the 

whistleblower is the ‘‘original source’’ for that 

investigation under Proposed Rule 165.2(l)). In 

those circumstances, subparagraph (1) of Proposed 

Rule 165.2(i) would govern the Commission’s 

analysis. 

11See Lacy v. United States, 221 Ct. Cl. 526 

(1979); cf. United States ex rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir. 2000). 

12As discussed below, however, if the 

Commission prevails on a claim that is based upon 

the information the whistleblower provided, and if 

all the conditions for an award are otherwise 

satisfied, the award to the whistleblower would be 

based upon all of the monetary sanctions obtained 

as a result of the action. See Proposed Rule 165.8. 

13 7 U.S.C. 26(a)(4). 

14Section 23(k) of the CEA directs that: 

‘‘Information submitted to the Commission by a 

whistleblower in accordance with rules or 

regulations implementing this section shall not lose 

its status as original information solely because the 

whistleblower submitted such information prior to 

the effective date of such rules or regulations, 

provided that such information was submitted after 

the date of enactment of the Wall Street 

Transparency and Accountability Act of 2010.’’ 

Subparagraph (2) of Proposed Rule 

165.2(i) sets forth a separate, and higher, 

standard for cases in which a 

whistleblower provides original 

information to the Commission about 

conduct that is already under 

investigation by the Commission, 

Congress, any other federal, state, or 

local authority, any self-regulatory 

organization, or the Public Company 

Accounting Oversight Board. In this 

situation, the information will be 

considered to have led to the successful 

enforcement of a judicial or 

administrative action if the information 

would not have otherwise been obtained 

and was essential to the success of the 

action.10 Although the Commission 

believes that awards under Section 23 

generally should be limited to cases 

where whistleblowers provide original 

information about violations that are not 

already under investigation,11 there may 

be rare circumstances where 

information received from a 

whistleblower in relation to an ongoing 

investigation is so significant for the 

success of a Commission action that a 

whistleblower award should be 

considered. For example, a 

whistleblower who is not within the 

scope of the staff’s investigation, but 

who nonetheless has access to, and 

comes forward with a document that 

had been concealed from the staff, and 

that establishes proof of wrongdoing 

that is critical to the Commission’s 

ability to sustain its burden of proof, 

provides the type of assistance that 

should be considered for an award 

without regard to whether the staff was 

already investigating the conduct at the 

time the document was provided. The 

Commission anticipates applying 

Proposed Rule 165.2(i) in a strict 

fashion, however, such that awards 

under the proposed rule would be 

exceedingly rare. 

In considering the relationship 

between information obtained from a 

whistleblower and the success of a 

covered judicial or administrative 

action, the Commission will take into 

account the difference between settled 

and litigated actions. Specifically, in a 

litigated action the whistleblower’s 

information must significantly 

contribute, or, in the case of conduct 

that is already under investigation, be 

essential, to the success of a claim on 

which the Commission prevails in 

litigation. For example, if a court finds 

in favor of the Commission on a number 

of claims in an enforcement action, but 

rejects the claims that are based upon 

the information the whistleblower 

provided, the whistleblower would not 

be considered eligible to receive an 

award.12 By contrast, in a settled action 

the Commission would consider 

whether the whistleblower’s 

information significantly contributed, or 

was essential, to allegations included in 

the Commission’s federal court 

complaint, or to factual findings in the 

Commission’s administrative order. 

The Commission requests comment 

on the proposed standard for when 

original information voluntarily 

provided by a whistleblower ‘‘led to’’ 

successful enforcement action. Is the 

proposed standard appropriate? 

The Commission also requests 

comment on cases where the original 

information provided by the 

whistleblower caused the staff to begin 

looking at conduct for the first time. 

Should the standard also require that 

the whistleblower’s information 

‘‘significantly contributed’’ to a 

successful enforcement action? If not, 

what standards should be used in the 

evaluation? If yes, should the proposed 

rule define with greater specificity when 

information ‘‘significantly contributed’’ 

to enforcement action? In what way 

should the phrase be defined? 

Finally, the Commission requests 

comment on the proposal in 

Subparagraph (i)(2), which would 

consider that a whistleblower’s 

information ‘‘led to’’ successful 

enforcement even in cases where the 

whistleblower gave the Commission 

original information about conduct that 

was already under investigation. Is this 

proposal appropriate? Should the 

Commission’s evaluation turn on 

whether the whistleblower’s 

information would not otherwise have 

been obtained and was essential to the 

success of the action? If not, what other 

standard(s) should apply? 

10. Proposed Rule 165.2(j) Monetary 

Sanctions 

Proposed Rule 165.2(j) defines the 

phrase ‘‘monetary sanctions,’’ when used 

with respect to any judicial or 

administrative action, to mean (1) any 

monies, including penalties, 

disgorgement, restitution, and interest 

ordered to be paid; and (2) any monies 

deposited into a disgorgement fund or 

other fund pursuant to Section 308(b) of 

the Sarbanes-Oxley Act of 2002 

(15 U.S.C. 7246(b)), as a result of such 

action or any settlement of such action. 

This phrase is relevant to the definition 

of ‘‘covered judicial or administrative 

action’’ in Proposed Rule 165.2(d) and to 

the amount of a whistleblower award 

under Proposed Rule 165.8. 

11. Proposed Rule 165.2(k) Original 

Information and Proposed Rule 165.2(l) 

Original Source 

Proposed Rule 165.2(k) tracks the 

definition of ‘‘original information’’ set 

forth in Section 23(a)(4) of the CEA.13

‘‘Original information’’ means 

information that is derived from the 

whistleblower’s independent knowledge 

or analysis; is not already known to the 

Commission from any other source, 

unless the whistleblower is the original 

source of the information; and is not 

exclusively derived from an allegation 

made in a judicial or administrative 

hearing, in a governmental report, 

hearing, audit, or investigation, or from 

the news media, unless the 

whistleblower is a source of the 

information. Consistent with Section 

23(l) of the CEA, the Dodd-Frank Act 

authorizes the Commission to pay 

whistleblower awards on the basis of 

original information that is submitted 

prior to the effective date of final rules 

implementing Section 23 (assuming that 

all of the other requirements for an 

award are met); the Dodd-Frank Act 

does not authorize the Commission to 

apply Section 23 retroactively to pay 

awards based upon information 

submitted prior to the enactment date of 

the statute.14 Consistent with Congress’s 

intent, Proposed Rule 165.2(k)(4) also 

requires that ‘‘original information’’ be 

provided to the Commission for the first 

time after July 21, 2010 (the date of 

enactment of the Dodd-Frank Act). 

Under the statutory definition of 

‘‘original information,’’ a whistleblower 

who provides information that the 

Commission already knows from 

another source has not provided original 

information, unless the whistleblower is 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75733 

15See Proposed Rule 165.3. 

16 31 U.S.C. 3730(e)(4)(B), Public Law 111–148 

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

the ‘‘original source’’ of that information. 

Proposed Rule 165.2(l) defines the term 

‘‘original source,’’ which will be used in 

the definition of ‘‘original information.’’ 

Under the proposed rule, a 

whistleblower is an ‘‘original source’’ of 

the same information that the 

Commission obtains from another 

source if the other source obtained the 

information from the whistleblower or 

his representative. The whistleblower 

bears the burden of establishing that he 

is the original source of information. 

In Commission investigations, this 

situation may arise if the staff receives 

a referral from another authority such as 

the Department of Justice, a selfregulatory organization, or another 

organization that is identified in the 

proposed rule. On occasion, the 

situation may also arise that the 

‘‘original source’’ of information shares 

his information with another person, 

and such other person files a 

whistleblower claim with the 

Commission prior to the original source 

filing a claim for whistleblower status. 

In these circumstances, the proposed 

rule would credit a whistleblower as 

being the ‘‘original source’’ of 

information on which the referral was 

based as long as the whistleblower 

‘‘voluntarily’’ provided the information 

to the other authority within the 

meaning of these rules; i.e., the 

whistleblower or his representative 

must have come forward and given the 

other authority the information before 

receiving any request, inquiry, or 

demand to which the information was 

relevant, or was the individual who 

originally possessed either the 

independent knowledge or conducted 

the independent analysis. 

As is described elsewhere in these 

proposed rules, a whistleblower will 

need to submit two forms, a Form TCR 

(‘‘Tip, Complaint or Referral’’) and Form 

WB–DEC (‘‘Declaration Concerning 

Original Information Provided Pursuant 

to Section 23 of the Commodity 

Exchange Act’’) in order to start the 

process and establish the 

whistleblower’s eligibility for award 

consideration.15 A whistleblower who 

either provides information to another 

authority first, or who shared his 

independent knowledge or analysis 

with another who is also claiming to be 

a whistleblower, will need to follow 

these same procedures and submit the 

necessary forms to the Commission in 

order to perfect his status as a 

whistleblower under the Commission’s 

whistleblower program. However, under 

Proposed Rule 165.2(l)(2), as long as the 

whistleblower submits the necessary 

forms to the Commission within 90 days 

after he provided the information to the 

other authority, or 90 days after the 

other person claiming to be a 

whistleblower submits his claim to the 

Commission, the Commission will 

consider the whistleblower’s 

submission to be effective. 

As noted above, the whistleblower 

must establish that he is the original 

source of the information provided to 

the other authority as well as the date 

of his submission, but the Commission 

may seek confirmation from the other 

authority, or any other source, in 

making this determination. The 

objective of this procedure is to provide 

further incentive for persons with 

knowledge of CEA violations to come 

forward (consistent with the purposes of 

Section 23) by assuring potential 

whistleblowers that they can provide 

information to appropriate Government 

or regulatory authorities, and their 

‘‘place in line’’ will be protected in the 

event that other whistleblowers later 

provide the same information directly to 

the Commission. 

For similar reasons, the proposed rule 

extends the same protection to 

whistleblowers who provide 

information about potential violations to 

the persons specified in Proposed Rule 

165.2(g)(3) and (4) (i.e., personnel 

involved in compliance or similar 

functions, or who are informed about 

potential violations with the expectation 

that they will take steps to address 

them), and who, within 90 days, submit 

the necessary whistleblower forms to 

the Commission. Compliance with the 

CEA is promoted when companies have 

effective programs for identifying, 

correcting, and self-reporting unlawful 

conduct by company officers or 

employees. The objective of this 

provision is to support, not undermine, 

the effective functioning of company 

compliance and related systems by 

allowing employees to take their 

concerns about potential violations to 

appropriate company officials while 

still preserving their rights under the 

Commission’s whistleblower program. 

Proposed Rule 165.2(l)(3) addresses 

circumstances where the Commission 

already possesses some information 

about a matter at the time that a 

whistleblower provides additional 

information about the same matter. The 

whistleblower will be considered the 

‘‘original source’’ of any information that 

is derived from his independent 

knowledge or independent analysis and 

that materially adds to the information 

that the Commission already possesses. 

The standard is modeled after the 

definition of ‘‘original source’’ that 

Congress included in the False Claims 

Act through amendments earlier this 

year.16

The Commission requests comment 

on all aspects of the definitions of 

‘‘original information’’ and ‘‘original 

source’’ set forth in Proposed Rules 

165.2(k) and (l). Is the provision that 

would credit individuals with providing 

original information to the Commission, 

as of the date of their submission to 

another Governmental or regulatory 

authority, or to company legal, 

compliance, or audit personnel, 

appropriate? In particular, does the 

provision regarding the providing of 

information to a company’s legal, 

compliance, or audit personnel 

appropriately accommodate the internal 

compliance process? 

The Commission also requests 

comment on whether the ninety (90) 

day deadline for submitting Forms TCR 

and WB–DEC to the Commission (after 

initially providing information about 

violations or potential violations to 

another authority or the employer’s 

legal, compliance, or audit personnel) is 

the appropriate time frame? Should 

there be different time frames for 

disclosures to other authorities and 

disclosures to an employer’s legal, 

compliance or audit personnel? 

12. Proposed Rule 165.2(m) Related 

Action 

The phrase ‘‘related action,’’ when 

used with respect to any judicial or 

administrative action brought by the 

Commission under the CEA, means any 

judicial or administrative action brought 

by an entity listed in Proposed Rule 

165.11(a) that is based upon the original 

information voluntarily submitted by a 

whistleblower to the Commission 

pursuant to Proposed Rule 165.3 that 

led to the successful resolution of the 

Commission action. This phrase is 

relevant to the Commission’s 

determination of the amount of a 

whistleblower award under Proposed 

Rules 165.8 and 165.11. 

13. Proposed Rule 165.2(n) Successful 

Resolution or Successful Enforcement 

Proposed Rule 165.2(n) defines the 

phrase ‘‘successful resolution,’’ when 

used with respect to any judicial or 

administrative action brought by the 

Commission under the Commodity 

Exchange Act, to include any settlement 

of such action or final judgment in favor 

of the Commission. It shall also have the 

same meaning as ‘‘successful 

enforcement.’’ This phrase is relevant to 

the definition of the phrase ‘‘covered 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75734 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

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

18 Various books and records provisions of the 

CEA and Commission regulations generally require 

registrants to furnish records to the Commission 

upon request. See e.g., Section 4(g) of the CEA, 7 

U.S.C. 6(g). 

19See S. Rep. No. 111–176 at 110 (2010) 

(discussing Section 922 of the Dodd-Frank Act, 

which establishes ‘‘Securities Whistleblower 

Incentives and Protection’’ similar to the 

‘‘Commodity Whistleblower Incentives and 

Protection’’ in Section 748; ‘‘The Whistleblower 

Program aims to motivate those with inside 

knowledge to come forward and assist the 

Government to identify and prosecute persons who 

have violated securities laws * * *.’’). 

20See United States ex rel. Barth v. Ridgedale 

Electric, Inc., 44 F.3d 699 (8th Cir. 1994); United 

States ex rel. Paranich v. Sorgnard, 396 F.3d 326 

(3d Cir. 2005); United States ex rel. Fine v. Chevron, 

USA, Inc., 72 F.3d 740 (9th Cir. 1995), cert. denied, 

517 U.S.1233 (1996) (rejecting argument that 

provision of information to the Government is 

always voluntary unless compelled by subpoena). 

The qui tam provisions of the False Claims Act 

include a ‘‘public disclosure bar,’’ which, as recently 

amended, requires a court to dismiss a private 

action or claim if substantially the same allegations 

or transactions as alleged in the action or claim 

were publicly disclosed in certain fora, unless the 

Government opposes dismissal or the plaintiff is an 

‘‘original source’’ of the information. 31 U.S.C. 

3730(e)(4). An ‘‘original source’’ is further defined, 

in part, with reference to whether the plaintiff 

‘‘voluntarily’’ disclosed the information to the 

Government before filing suit. Id. Because the qui 

tam provisions of the False Claims Act have played 

a significant role in the development of 

whistleblower law generally, and because some of 

the terminology used by Congress in Section 23 has 

antecedents in the False Claims Act, the 

Commission believes that precedent under the False 

Claims Act can provide helpful guidance in the 

interpretation of Section 23 of the CEA. At the same 

time, because the False Claims Act and Section 23 

serve different purposes, are structured differently, 

and the two statutes may use the same words in 

different contexts, the Commission does not view 

False Claims Act precedent as necessarily 

controlling or authoritative in all circumstances for 

purposes of Section 23 of the CEA. 

21See United States ex rel. Biddle v. Board of 

Trustees of The Leland Stanford, Jr. University, 161 

F.3d 533 (9th Cir. 1998), cert. denied, 526 U.S. 1066 

(1999); United States ex rel. Schwedt v. Planning 

Research Corp., 39 F. Supp. 2d 28 (D.D.C. 1999). 

22 15 U.S.C. 78u-6(c)(2). 

judicial or administrative action’’ as set 

forth in Proposed Rule 165.2(e). 

14. Proposed Rule 165.2(o) Voluntary 

Submission or Voluntarily Submitted 

Under Section 23(b)(1) of the CEA,17

whistleblowers are eligible for awards 

only when they provide original 

information to the Commission 

‘‘voluntarily.’’ Proposed Rule 165.2(o) 

would define ‘‘voluntary submission’’ or 

‘‘voluntarily submitted’’ in the context of 

submission to the Commission of 

original information as a 

whistleblower’s provision of 

information to the Commission before 

receipt by the whistleblower (or anyone 

representing the whistleblower, 

including counsel) of any request, 

inquiry, or demand from the 

Commission, Congress, any other 

federal, state or local authority, or any 

self-regulatory organization about a 

matter to which the information in the 

whistleblower’s submission is relevant. 

The fact that such request, inquiry or 

demand is not compelled by subpoena 

or other applicable law, does not render 

a subsequent submission voluntary. 

Proposed Rule 165.2(o) would make 

clear that, in order to have acted 

‘‘voluntarily’’ under the statute, a 

whistleblower must do more than 

merely provide the Commission with 

information that is not compelled by 

subpoena (or by a court order following 

a Commission action to enforce a 

subpoena) or by other applicable law.18

Rather, the whistleblower or his 

representative (such as an attorney) 

must come forward with the 

information before receiving any 

request, inquiry, or demand from the 

Commission staff or from any other 

investigating authority described in the 

proposed rule about a matter to which 

the whistleblower’s information is 

relevant. A request, inquiry, or demand 

that is directed to an employer is also 

considered to be directed to employees 

who possess the documents or other 

information that is necessary for the 

employer to respond. Accordingly, a 

subsequent whistleblower submission 

from any such employee will not be 

considered ‘‘voluntary’’ for purposes of 

the rule, and the employee will not be 

eligible for award consideration, unless 

the employer fails to provide the 

employee’s documents or information to 

the requesting authority within sixty 

(60) days. 

This approach is consistent with the 

statutory purpose of creating a strong 

incentive for whistleblowers to come 

forward early with information about 

possible violations of the CEA rather 

than wait until Government or other 

official investigators ‘‘come knocking on 

the door.’’ 19 This approach is also 

consistent with the approach federal 

courts have taken in determining 

whether a private plaintiff, suing on 

behalf of the Government under the qui 

tam provisions of the False Claims Act, 

‘‘voluntarily’’ provided information 

about the false or fraudulent claims to 

the Government before filing suit.20

Disclosure to the Government should 

also not be considered voluntary if the 

individual has a pre-existing legal or 

contractual duty to report violations of 

the type at issue to the Commission, 

Congress, any other federal or state 

authority, or any self-regulatory 

organization.21 Thus, for example, 

Section 23(c)(2) of the CEA 22 prohibits 

awards to members, officers, or 

employees of an appropriate regulatory 

agency, the Department of Justice, a 

registered entity, a registered futures 

association, or a self-regulatory 

organization. The Commission 

anticipates that other similarly-situated 

persons should not be eligible for award 

consideration if they are under a preexisting legal duty to report the 

information to the Commission or to any 

of the other authorities described above. 

Proposed Rule 165.2(o) accomplishes 

this goal by providing that submissions 

from such individuals will not be 

considered voluntary for purposes of 

Section 23 of the CEA. Proposed Rule 

165.2(o) also includes a similar 

exclusion for information that the 

whistleblower is contractually obligated 

to provide. This exclusion is intended to 

preclude awards to persons who 

provide information pursuant to 

preexisting agreements that obligate 

them to assist Commission staff or other 

investigative authorities. 

The Commission requests comment 

on the definition of ‘‘voluntarily.’’ Does 

Proposed Rule 165.2(o) appropriately 

define the circumstances when a 

whistleblower should be considered to 

have acted ‘‘voluntarily’’ in providing 

information about CEA or Commission 

regulation violations to the 

Commission? Are there other 

circumstances not clearly included that 

should be in the rule? Is it appropriate 

for the proposed rule to consider a 

request or inquiry directed to an 

employer to be directed at individual 

employees who possess the documents 

or other information needed for the 

employer’s response? Should the 

persons who are considered to be within 

the scope of an inquiry be narrowed or 

expanded? Will the carve-out that 

permits such an employee to become a 

whistleblower if the employer fails to 

disclose the information the employee 

provided within sixty (60) days promote 

compliance with the law and the 

effective operation of Section 23? Is 

sixty (60) days a ‘‘reasonable time’’ for 

employers to disclose the information 

the employee provided, or should a 

different period be specified (e.g., three 

months, six months, one year)? 

The Commission also requests 

comment on the standard described in 

Proposed Rule 165.2(o) that would 

credit an individual with acting 

‘‘voluntarily’’ in circumstances where 

the individual was aware of fraudulent 

conduct for an extended period of time, 

but chose not to come forward as a 

whistleblower until after he became 

aware of a governmental investigation 

(such as by observing document 

requests being served on his employer 

or colleagues, but before he received an 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75735 

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

inquiry, request, or demand himself, 

assuming that he was not within the 

scope of an inquiry directed to his 

employer). Is this an appropriate result, 

and, if not, how should the proposed 

rule be modified to account for it? 

Finally, the Commission seeks 

Comment on the exclusion set forth in 

Proposed Rule 165.2(o) for information 

provided pursuant to a pre-existing legal 

or contractual duty to report violations. 

Is the exclusion appropriate? Should the 

exclusion be expanded to other forms of 

duties such as ethical duties or duties 

imposed by codes of conduct? 

15. Proposed Rule 165.2(p)

Whistleblower(s) 

The term ‘‘whistleblower’’ is defined 

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

Consistent with this language, Proposed 

Rule 165.2(p) would define a 

whistleblower as an individual who, 

alone or jointly with others, provides 

information to the Commission relating 

to a potential violation of the CEA. A 

company or another entity is not eligible 

to receive a whistleblower award. This 

definition tracks the statutory definition 

of a ‘‘whistleblower,’’ except that the 

proposed rule uses the term ‘‘potential 

violation’’ in order to make clear that the 

whistleblower anti-retaliation 

protections set forth in Section 23(h) of 

the CEA do not depend on an ultimate 

adjudication, finding or conclusion that 

conduct identified by the whistleblower 

constituted a violation of the CEA. 

Proposed Rule 165.2(p) (and Proposed 

Rule 165.6(b)) would further make clear 

that the anti-retaliation protections set 

forth in Section 23(h) of the CEA apply 

irrespective of whether a whistleblower 

satisfies all the procedures and 

conditions to qualify for an award under 

the Commission’s whistleblower 

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

prohibits employment retaliation 

against a whistleblower who provides 

information to the Commission (i) ‘‘in 

accordance with this section,’’ or (ii) ‘‘in 

assisting in any investigation or judicial 

or administrative action of the 

Commission based upon or related to 

such information.’’ The Commission 

interprets the statute as designed to 

extend the protections against 

employment retaliation that are 

provided for in Section 23(h)(1) to any 

individual who provides information to 

the Commission about potential 

violations of the CEA regardless of 

whether the person satisfies procedures 

and conditions necessary to qualify for 

an award under the Commission’s 

whistleblower program. 

The Commission requests comment 

on whether the anti-retaliation 

protections set forth in Section 23(h)(1) 

of the CEA should be applied broadly to 

any person who provides information to 

the Commission concerning a potential 

violation of the CEA, or should they be 

limited by the various procedural or 

substantive prerequisites to 

consideration for a whistleblower 

award? Should the application of the 

anti-retaliation provisions be limited or 

broadened in any other ways? 

C. Proposed Rule 165.3—Procedures for 

Submitting Original Information 

The Commission proposes a two-step 

process for the submission of original 

information under the whistleblower 

award program. In general, the first step 

would require the submission of the 

standard form on which the information 

concerning potential violations of the 

CEA are reported. The second step 

would require the whistleblower to 

complete a unique form, signed under 

penalties of perjury (consistent with 

Section 23(m) of the CEA), in which the 

whistleblower would be required to 

make certain representations concerning 

the veracity of the information provided 

and the whistleblower’s eligibility for a 

potential award. The use of 

standardized forms will greatly assist 

the Commission in managing and 

tracking the thousands of tips that it 

receives annually. This will also better 

enable the Commission to connect tips 

to each other so as to make better use 

of the information provided, and to 

connect tips to requests for payment 

under the whistleblower provisions. 

The purpose of requiring a sworn 

declaration is to help deter the 

submission of false and misleading tips 

and the resulting inefficient use of the 

Commission’s resources. The 

requirement should also mitigate the 

potential harm to companies and 

individuals that may be caused by false 

or spurious allegations of wrongdoing. 

As set forth in Proposed Rule 165.5, 

Commission staff may also request 

testimony and additional information 

from a whistleblower relating to the 

whistleblower’s eligibility for an award. 

1. Form TCR and Instructions 

Subparagraph (a) of Proposed Rule 

165.3 requires the submission of 

information to the Commission on 

proposed Form TCR. The Form TCR, 

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

instructions thereto, are designed to 

capture basic identifying information 

about a complainant and to elicit 

sufficient information to determine 

whether the conduct alleged suggests a 

violation of the CEA. 

2. Form WB–DEC and Instructions 

In addition to Form TCR, the 

Commission proposes in subparagraph 

(b) of Proposed Rule 165.3 to require 

that whistleblowers who wish to be 

considered for an award in connection 

with the information they provide to the 

Commission also complete and provide 

the Commission with proposed Form 

WB–DEC, ‘‘Declaration Concerning 

Original Information Provided Pursuant 

to Section 23 of the Commodity 

Exchange Act.’’ Proposed Form 

WB–DEC would require a whistleblower 

to answer certain threshold questions 

concerning the whistleblower’s 

eligibility to receive an award. The form 

also would contain a statement from the 

whistleblower acknowledging that the 

information contained in the Form 

WB–DEC, as well as all information 

contained in the whistleblower’s Form 

TCR, is true, correct and complete to the 

best of the whistleblower’s knowledge, 

information and belief. Moreover, the 

statement would acknowledge the 

whistleblower’s understanding that the 

whistleblower may be subject to 

prosecution and ineligible for an award 

if, in the whistleblower’s submission of 

information, other dealings with the 

Commission, or dealings with another 

authority in connection with a related 

action, the whistleblower knowingly 

and willfully makes any false, fictitious, 

or fraudulent statements or 

representations, or uses any false 

writing or document knowing that the 

writing or document contains any false, 

fictitious, or fraudulent statement or 

entry. 

In instances where information is 

provided by an anonymous 

whistleblower, proposed subparagraph 

(c) of Proposed Rule 165.3 would 

require that the whistleblower’s identity 

must be disclosed to the Commission 

and verified in a form and manner 

acceptable to the Commission consistent 

with the procedure set forth in Proposed 

Rule 165.7(c) prior to Commission’s 

payment of any award. 

The Commission proposes to allow 

two alternative methods of submission 

of Form TCRs and WB–DEC. A 

whistleblower would have the option of 

submitting a Form TCR electronically 

through the Commission’s website, or 

by mailing or faxing the form to the 

Commission. Similarly, a Form 

WB–DEC could be submitted 

electronically, in accordance with 

instructions set forth on the 

Commission’s website or, alternatively, 

by mailing or faxing the form to the 

Commission. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75736 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

24 7 U.S.C. 26(h)(2). 

25Section 23(h)(2)(A) provides that the 

Commission shall not disclose any information, 

including that provided to the whistleblower to the 

Commission, which could reasonably be expected 

to reveal the identity of the whistleblower, except 

in accordance with the provisions of Section 552a 

of title 5, United States Code, unless and until 

required to be disclosed to a defendant or 

respondent in connection with a public proceeding 

instituted by the Commission or governmental 

organizations described subparagraph (C). 

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

27See Section 23(d)(1), 7 U.S.C. 26(d)(1). Under 

the statute, however, an anonymous whistleblower 

seeking an award is required to be represented by 

counsel. Section 23(d)(2), 7 U.S.C. 26(d)(2). 

3. Perfecting Whistleblower Status for 

Submissions Made Before Effectiveness 

of the Rules 

As previously discussed, Section 

748(k) of Dodd-Frank Act states that 

information submitted to the 

Commission by a whistleblower after 

the date of enactment, but before the 

effective date of these proposed rules, 

retains the status of original 

information. The Commission has 

already received tips from potential 

whistleblowers after the date of 

enactment of the Dodd-Frank Act. 

Proposed Rule 165.3(d) would provide a 

mechanism by which potential 

whistleblowers who provide tips 

between enactment of the Dodd-Frank 

Act and the effective date of the final 

rules could perfect their status as 

whistleblowers under the Commission’s 

award program once final rules are 

adopted. Subparagraph (d)(1) requires a 

whistleblower who provided original 

information to the Commission in a 

format or manner other than a Form 

TCR to submit a completed Form TCR 

within one hundred twenty (120) days 

of the effective date of the proposed 

rules and to otherwise follow the 

procedures set forth in subparagraphs 

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

whistleblower provided the original 

information to the Commission in a 

Form TCR, subparagraph (d)(2) would 

require the whistleblower to submit 

Form WB–DEC within one hundred 

twenty (120) days of the effective date 

of the proposed rules in the manner set 

forth in subparagraph (b) of Proposed 

Rule 165.3. 

Although the Commission is 

proposing alternative methods of 

submission of the Form TCR and WB– 

DEC, it expects that electronic 

submissions would dramatically reduce 

the administrative costs, enhance ability 

to evaluate tips (generally and using 

automated tools), and improve 

efficiency in processing whistleblower 

submissions. Accordingly, the 

Commission solicits comment on 

whether it would be appropriate to 

eliminate the fax and mail option and 

require that all submissions of proposed 

Form TCRs and WB–DEC be made 

electronically. Would the elimination of 

submissions by fax and mail create an 

undue burden for some potential 

whistleblowers who may not have easy 

access to a computer or who may prefer 

to submit their information in that 

manner? Is there other information that 

the Commission should elicit from 

whistleblowers on Form TCRs and WB– 

DEC? Are there categories of 

information included on these forms 

that are unnecessary, or should be 

modified? 

The Commission also requests 

comment on whether the requirement 

that an attorney for an anonymous 

whistleblower certify that the attorney 

has verified the whistleblower’s identity 

and eligibility for an award is 

appropriate? Is there an alternative 

process the Commission should 

consider that would accomplish its goal 

of ensuring that it is communicating 

with a legitimate whistleblower? 

Finally, the Commission seeks 

comment on whether the Commission’s 

proposed process for allowing 

whistleblowers 120 days to perfect their 

status in cases where the whistleblower 

provided original information to the 

Commission in writing after the date of 

enactment of the Dodd-Frank Act but 

before adoption of the proposed rules is 

reasonable? Should the period be made 

shorter (e.g., 30 or 60 days) or longer 

(e.g., 180 days)? 

D. Proposed Rule 165.4—Confidentiality 

Proposed Rule 165.4 summarizes the 

confidentiality requirements set forth in 

Section 23(h)(2) of the CEA 24 with 

respect to information that could 

reasonably be expected to reveal the 

identity of a whistleblower. As a general 

matter, it is the Commission’s policy 

and practice to treat all information 

obtained during its investigations as 

confidential and nonpublic. Disclosures 

of enforcement-related information to 

any person outside the Commission may 

only be made as authorized by the 

Commission and in accordance with 

applicable laws and regulations. 

Consistent with Section 23(h)(2), the 

proposed rule explains that the 

Commission will not reveal the identity 

of a whistleblower or disclose other 

information that could reasonably be 

expected to reveal the identity of a 

whistleblower, except under 

circumstances described in the statute 

and the rule.25 As is further explained 

below, there may be circumstances in 

which disclosure of information that 

identifies a whistleblower will be 

legally required or will be necessary for 

the protection of investors. 

Subparagraph (a)(1) of the proposed 

rule would authorize disclosure of 

information that could reasonably be 

expected to reveal the identity of a 

whistleblower when disclosure is 

required to a defendant or respondent in 

a public proceeding that the 

Commission files or in another public 

action or a public proceeding filed by an 

authority to which the Commission is 

authorized to provide the information. 

For example, in a related action brought 

as a criminal prosecution by the 

Department of Justice, disclosure of a 

whistleblower’s identity may be 

required, in light of the requirement of 

the Sixth Amendment of the 

Constitution that a criminal defendant 

have the right to be confronted with 

witnesses against him.26 Subparagraph 

(a)(2) would authorize disclosure to: 

The Department of Justice; an 

appropriate department or agency of the 

Federal Government, acting within the 

scope of its jurisdiction; a registered 

entity, registered futures association, a 

self-regulatory organization; a state 

attorney general in connection with a 

criminal investigation; any appropriate 

state department or agency, acting 

within the scope of its jurisdiction; or a 

foreign futures authority. 

Because many whistleblowers may 

wish to provide information 

anonymously, subparagraph (b) of the 

proposed rule, consistent with Section 

23(d) of the CEA, states that anonymous 

submissions are permitted with certain 

specified conditions. Subparagraph (b) 

would require that anonymous 

whistleblowers who submit information 

to the Commission must follow the 

procedure in Proposed Rule 165.3(c) for 

submitting original information 

anonymously. Further, anonymous 

whistleblowers would be required to 

follow the procedures set forth in 

Proposed Rule 165.7(c) requiring that 

the whistleblower’s identity be 

disclosed to the Commission and 

verified in a form and manner 

acceptable to the Commission prior to 

Commission’s payment of any award. 

The purpose of this requirement is to 

prevent fraudulent submissions and to 

facilitate communication and assistance 

between the whistleblower and the 

Commission’s staff. Any whistleblower 

may be represented by counsel— 

whether submitting information 

anonymously or not.27 The Commission 

emphasizes that anonymous 

whistleblowers have the same rights and 

responsibilities as other whistleblowers 

under Section 23 of the CEA and these 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75737 

28See, e.g., Yuen v. U.S., 825 F.2d 244 (9th Cir. 

1987) (taxpayer barred from recovery due to failure 

to timely file a written request for refund). 

proposed rules, unless expressly 

exempted. 

E. Proposed Rule 165.5—Prerequisites to 

the Consideration of an Award 

Proposed Rule 165.5 summarizes the 

general prerequisites for whistleblowers 

to be considered for the payment of 

awards set forth in Section 23(b)(1) of 

the CEA. As set forth in the statute, 

subparagraph (a) states that, subject to 

the eligibility requirements in the 

Regulations, the Commission will pay 

an award or awards to one or more 

whistleblowers who voluntarily provide 

the Commission with original 

information that led to the successful 

resolution of a covered Commission 

judicial or administrative action or the 

successful enforcement of a related 

action by: the Department of Justice; an 

appropriate department or agency of the 

Federal Government, acting within the 

scope of its jurisdiction; a registered 

entity, registered futures association, a 

self regulatory organization; a state 

attorney general in connection with a 

criminal investigation; any appropriate 

state department or agency, acting 

within the scope of its jurisdiction; or a 

foreign futures authority. 

Subparagraph (b) of Proposed Rule 

165.5 emphasizes that, in order to be 

eligible, the whistleblower must have 

submitted to the Commission original 

information in the form and manner 

required by Proposed Rule 165.3. The 

whistleblower must also provide the 

Commission, upon its staff’s request, 

certain additional information, 

including: explanations and other 

assistance, in the manner and form that 

staff may request, in order that the staff 

may evaluate the use of the information 

submitted; all additional information in 

the whistleblower’s possession that is 

related to the subject matter of the 

whistleblower’s submission; and 

testimony or other evidence acceptable 

to the staff relating to the 

whistleblower’s eligibility for an award. 

Subparagraph (b) of Proposed Rule 

165.5 further requires that, to be eligible 

for an award, a whistleblower must, if 

requested by Commission staff, enter 

into a confidentiality agreement in a 

form acceptable to the Commission, 

including a provision that a violation of 

the confidentiality agreement may lead 

to the whistleblower’s ineligibility to 

receive an award. 

The terms ‘‘whistleblower,’’ 

‘‘voluntarily,’’ ‘‘original information,’’ 

‘‘led to successful enforcement,’’ 

‘‘action,’’ and ‘‘monetary sanctions’’ are 

defined in Proposed Rule 165.2. 

F. Proposed Rule 165.6—Whistleblowers 

Ineligible for an Award 

Subparagraph (a) of Proposed Rule 

165.6 recites the categories of 

individuals who are statutorily 

ineligible for an award under Section 23 

of the CEA. These include persons who 

are, or were at the time they acquired 

the original information a member, 

officer, or employee of: the Commission; 

the Board of Governors of the Federal 

Reserve System; the Office of the 

Comptroller of the Currency; the Board 

of Directors of the Federal Deposit 

Insurance Corporation; the Director of 

the Office of Thrift Supervision; the 

National Credit Union Administration 

Board; the Securities and Exchange 

Commission; the Department of Justice; 

a registered entity; a registered futures 

association; a self-regulatory 

organization; or a law enforcement 

organization. Further Proposed Rule 

165.6(a)(2) makes clear that no award 

will be made to any whistleblower who 

is convicted of a criminal violation 

related to the judicial or administrative 

action for which the whistleblower 

otherwise could receive an award under 

Proposed Rule 165.7. 

In order to prevent evasion of these 

exclusions, subparagraph (a)(3) of the 

proposed rule also provides that persons 

who acquire information from ineligible 

individuals are ineligible for an award. 

Consistent with Section 23(m) of the 

CEA, also ineligible for an award is any 

whistleblower that, in his submission of 

information or an application for an 

award, other dealings with the 

Commission, or his dealings with 

another authority in connection with a 

related action: knowingly and willfully 

makes any false, fictitious, or fraudulent 

statement or representation, or uses any 

false writing or document, knowing that 

it contains any false, fictitious, or 

fraudulent statement or entry; or omits 

any material fact whose absence would 

make any other statement or 

representation made to the Commission 

or any other authority misleading. 

Subparagraph (b) of Proposed Rule 

165.6 reiterates that a determination that 

a whistleblower is ineligible to receive 

an award for any reason does not 

deprive the individual of the antiretaliation protections set forth in 

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

The Commission requests comment 

on the ineligibility criteria set forth in 

Proposed Rule 165.6(a). Are there other 

statuses or activities that should render 

an individual ineligible for a 

whistleblower award? 

G. Proposed Rule 165.7—Procedures for 

Award Applications and Commission 

Award Determinations 

Proposed Rule 165.7 describes the 

steps a whistleblower would be required 

to follow in order to make an 

application for an award in relation to 

a Commission covered judicial or 

administrative action or related action. 

In addition, the rule describes the 

Commission’s proposed claims review 

process. 

In regard to covered actions, the 

proposed process would begin with the 

publication of a ‘‘Notice of a Covered 

Action’’ (‘‘Notice’’) on the Commission’s 

Web site. Whenever a covered judicial 

or administrative action brought by the 

Commission results in the imposition of 

monetary sanctions exceeding 

$1,000,000, the Commission will cause 

this Notice of a covered judicial or 

administrative action to be published on 

the Commission’s Web site subsequent 

to the entry of a final judgment or order 

in the action that by itself, or 

collectively with other judgments or 

orders previously entered in the action, 

exceeds the $1,000,000 threshold. If the 

monetary sanctions are obtained 

without a judgment or order, the Notice 

would be published within thirty (30) 

days of the issuance of the settlement 

order that causes total monetary 

sanctions in the action to exceed 

$1,000,000. The Commission’s proposed 

rule requires claimants to file their 

claim for an award within sixty (60) 

days of the date of the Notice. 

In regard to related actions, a claimant 

will be responsible for tracking the 

resolution of the related action. The 

Commission’s proposed rule requires 

claimants to file their claim for an 

award in regard to a related action 

within sixty (60) days of the date of the 

monetary sanctions being imposed in 

the related action. 

A claimant’s failure to file timely a 

request for a whistleblower award 

would bar that individual later seeking 

a recovery.28

Subparagraph (b) of Proposed Rule 

165.7 describes the procedure for 

making a claim for an award. 

Specifically, a claimant would be 

required to submit a claim for an award 

on proposed Form WB–APP 

(‘‘Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act’’). Proposed Form WB–APP, and the 

instructions thereto, will elicit 

information concerning a 

whistleblower’s eligibility to receive an 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75738 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

29See discussion of Proposed 165.9 for a nonexhaustive list of factors the Commission 

preliminarily believes it will consider in 

determining award amounts. 

award at the time the whistleblower 

files his claim. The form will also 

provide an opportunity for the 

whistleblower to ‘‘make his case’’ for 

why he is entitled to an award by 

describing the information and 

assistance he has provided and its 

significance to the Commission’s 

successful action.29

Subparagraph (b) of Proposed Rule 

165.7 provides that a claim on Form 

WB–APP, including any attachments, 

must be received by the Commission 

within sixty (60) calendar days of the 

date of the Notice or sixty (60) calendar 

days of the date of the imposition of the 

monetary sanctions in the related 

action, depending upon which action 

the claimant is seeking an award, in 

order to be considered for an award. 

Subparagraph (c) includes award 

application procedures for a 

whistleblower who submitted original 

information to the Commission 

anonymously. Whistleblowers who 

submitted original information 

anonymously, but who are making a 

claim for a whistleblower award on a 

disclosed basis, are required to disclose 

their identity on the Form WB–APP and 

include with the Form WB–APP a 

signed and completed Form WB–DEC. 

Whistleblowers who submitted 

information anonymously, and are 

making a claim for a whistleblower 

award on an anonymous basis, must be 

represented by counsel and must 

provide their counsel with a completed 

and signed Form WB–DEC by no later 

than the date upon which the counsel 

submits to the Commission the 

whistleblower’s Form WB–APP. In 

addition, whistleblower’s counsel must 

submit with the Form WB–APP a 

separate Form WB–DEC certifying that 

the counsel has verified your identity, 

has reviewed the whistleblower’s Form 

WB–DEC form for completeness and 

accuracy, will retain the signed original 

of your Form WB–DEC in counsel’s 

records, and will produce the 

whistleblower’s Form WB–DEC upon 

request of the Commission’s staff. 

Proposed Rule 165.7(c) makes explicit 

that regardless of whether they make an 

award application on a disclosed or 

anonymous basis, the whistleblower’s 

identity must be verified in a form and 

manner that is acceptable to the 

Commission prior to the payment of any 

award. 

Subparagraph (d) of Proposed Rule 

165.7 describes the Commission’s 

claims review process. The claims 

review process would begin upon the 

later of once the time for filing any 

appeals of the Commission’s judicial or 

administrative action and the related 

action(s) has expired, or where an 

appeal has been filed, after all appeals 

in the action or related action(s) have 

been concluded. 

Under the proposed process, the 

Commission would evaluate all timely 

whistleblower award claims submitted 

on Form WB–APP. In connection with 

this process, the Commission could 

require that claimants provide 

additional information relating to their 

eligibility for an award or satisfaction of 

any of the conditions for an award, as 

set forth in Proposed Rule 165.5(b). 

Following that evaluation, the 

Commission would send any claimant a 

Determination setting forth whether the 

claim is allowed or denied and, if 

allowed, setting forth the proposed 

award percentage amount. 

H. Proposed Rule 165.8—Amount of 

Award 

If all conditions are met, Proposed 

Rule 165.8 provides that the 

whistleblower awards shall be in an 

aggregate amount equal to between 10 

and 30 percent, in total, of what has 

been collected of the monetary 

sanctions imposed in the Commission’s 

action or related actions. This range is 

specified in Section 23(b)(1) of the CEA. 

Where multiple whistleblowers are 

entitled to an award, subparagraph (b) 

states that the Commission will 

independently determine the 

appropriate award percentage for each 

whistleblower, but total award 

payments, in the aggregate, will equal 

between 10 and 30 percent of the 

monetary sanctions collected either in 

the Commission’s action or the related 

action (but not both the Commission’s 

action and the related action). 

The Commission requests comment 

on whether the provision stating that 

the percentage amount of an award in a 

Commission covered judicial or 

administrative action may differ from 

the percentage awarded in a related 

action is appropriate? 

I. Proposed Rule 165.9—Criteria for 

Determining Amount of Award 

Assuming that all of the conditions 

for making an award to a whistleblower 

have been satisfied, Proposed Rule 

165.9 sets forth the criteria that the 

Commission would take into 

consideration in determining the 

amount of the award. Subparagraphs 

(a)(1) through (3) of the proposed rule 

recite three criteria that Section 

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

Commission to consider, and 

subparagraph (a)(4) adds a fourth 

criterion based upon the discretion 

given to the Commission to consider 

‘‘additional relevant factors’’ in 

determining the amount of an award. 

Subparagraph (a)(1) requires the 

Commission to consider the significance 

of the information provided by a 

whistleblower to the success of the 

Commission action or related action. 

Subparagraph (a)(2) requires the 

Commission to consider the degree of 

assistance provided by the 

whistleblower and any legal 

representative of the whistleblower in 

the Commission action or related action. 

Subparagraph (a)(3) requires the 

Commission to consider the 

programmatic interest of the 

Commission in deterring violations of 

the CEA by making awards to 

whistleblowers that provide information 

that led to successful enforcement of 

covered judicial or administrative 

actions or related actions. Subparagraph 

(a)(4) would permit the Commission to 

consider whether an award otherwise 

enhances the Commission’s ability to 

enforce the CEA, protect customers, and 

encourage the submission of high 

quality information from 

whistleblowers. 

The Commission anticipates that the 

determination of award amounts 

pursuant to subparagraphs (a)(1)–(4) 

will involve highly individualized 

review of the circumstances 

surrounding each award. To allow for 

this, the Commission preliminarily 

believes that the four criteria afford the 

Commission broad discretion to weigh a 

multitude of considerations in 

determining the amount of any 

particular award. Depending upon the 

facts and circumstances of each case, 

some of the considerations may not be 

applicable or may deserve greater 

weight than others. 

The permissible considerations 

include, but are not limited to: 

• 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; 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75739 

30As described elsewhere in these rules, if the 

information provided by a whistleblower relates to 

only a portion of a successful covered judicial or 

administrative action or related action, the 

Commission proposes to look to the entirety of the 

action (including all defendants or respondents, all 

claims, and all monetary sanctions obtained) in 

determining whether the whistleblower is eligible 

for an award and the total dollar amount of 

sanctions on which the whistleblower’s award will 

be based. However, under subparagraph (a) of 

Proposed Rule 165.9, the fact that the 

whistleblower’s information related to only a 

portion of the overall action would be a factor in 

determining the amount of the whistleblower’s 

award. Thus, if the whistleblower’s information 

supported only a small part of a larger case, that 

would be a reason for making an award based upon 

a smaller percentage amount than otherwise would 

have been awarded. 

• 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 

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; 30 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 reiterates the statutory 

prohibition in Section 23(c)(2) of the 

CEA from taking into consideration the 

balance of the Fund when making an 

award determination. 

J. Proposed Rule 165.10—Contents of 

Record for Award Determinations 

In order to promote transparency and 

consistency, and also to preserve a clear 

record for appellate review (under 

Proposed Rule 165.13) of Commission 

award determinations (under Proposed 

Rule 165.7), Proposed Rule 165.10 sets 

forth the contents of record for award 

determinations relating to covered 

judicial or administrative actions or 

related actions. The record shall consist 

of: Required forms the whistleblower 

submits to the Commission, including 

related attachments; other 

documentation provided by the 

whistleblower to the Commission; the 

complaint, notice of hearing, answers 

and any amendments thereto; the final 

judgment, consent order, or 

administrative speaking order; the 

transcript of the related administrative 

hearing or civil injunctive proceeding, 

including any exhibits entered at the 

hearing or proceeding; any other 

documents that appear on the docket of 

the proceeding. The record shall also 

include any statements by litigation staff 

to the Commission regarding: The 

significance of the information provided 

by the whistleblower to the success of 

the covered judicial or administrative 

action or related action; the degree of 

assistance provided by the 

whistleblower and any legal 

representative of the whistleblower in a 

covered judicial or administrative action 

or related action; and any facts relating 

to a determination of whether the 

whistleblower provided original 

information, conducted an independent 

analysis, or possessed independent 

knowledge. 

However, Proposed Rule 165.10(b) 

explicitly states that the record upon 

which the award determination under 

Proposed Rule 165.7 shall be made shall 

not include any Commission predecisional or internal deliberative 

process materials related to the 

Commission or its staff’s determination: 

To file or settle the covered judicial or 

administrative action; and/or whether, 

to whom and in what amount to make 

a whistleblower award. Further, the 

record upon which the award 

determination under Proposed Rule 

165.7 shall be made shall not include 

any other entity’s pre-decisional or 

internal deliberative process materials 

related to its or its staff’s determination 

to file or settle a related action. 

The Commission requests comment 

on what other relevant items the 

Commission should consider as part of 

the record for its award determinations? 

K. Proposed Rule 165.11—Awards 

Based Upon Related Actions 

Proposed Rule 165.11 explains that 

the Commission, or its delegate, may 

grant an award based on amounts 

collected in certain related actions 

rather than the amount collected in a 

covered judicial or administrative 

action. Proposed Rule 165.11 sets forth 

the requirements for a related action or 

related actions to serve as the basis of 

a whistleblower award. Regardless of 

whether the Commission’s award 

determination will be based upon the 

Commission’s covered judicial or 

administrative action or a related action 

or actions, Proposed Rule 165.7 sets 

forth the procedures for whistleblower 

award applications and Commission 

award determinations. 

L. Proposed Rule 165.12—Payment of 

Awards From the Fund, Financing 

Customer Education Initiatives, and 

Deposits and Credits to the Fund; and 

Proposed Rule 165.15—Delegations of 

Authority 

Proposed Rules 165.12 and 165.15 set 

forth certain internal Commission 

procedures. Specifically, paragraph (a) 

of Proposed Rule 165.12, consistent 

with Section 23(g)(2) of the CEA, 

requires the Commission to pay 

whistleblower awards from the Fund. 

Importantly, Proposed Rule 165.12(b)(2) 

makes clear that if there is an 

insufficient amount in the Fund to 

satisfy a whistleblower award made 

pursuant to Proposed Rule 165.7, the 

Commission shall deposit into the Fund 

monetary sanctions that are actually 

collected by the Commission in an 

amount equal to the unsatisfied portion 

of the award from any judicial or 

administrative action based on the 

information provided by any 

whistleblower. 

Proposed Rule 165.15 includes the 

Commission’s delegations to the 

Executive Director to take certain 

actions to carry out this Part 165 of the 

Rules and the requirements of Section 

23(h) of CEA. Among the delegations to 

the Executive Director in Proposed Rule 

165.15(a) is the authority to make 

deposits into the Fund. 

Proposed Rule 165.12 also includes 

the Commission’s financing of customer 

education initiatives. Proposed Rule 

165.12(c) provides that the Commission 

shall undertake and maintain customer 

education initiatives. The initiatives 

shall be designed to help customers 

protect themselves against fraud or 

other violations of the CEA, or rules or 

regulations thereunder. The 

Commission shall fund the customer 

education initiatives, and may utilize 

funds deposited into the Fund during 

any fiscal year in which the beginning 

(October 1) balance of the Fund is 

greater than $10,000,000. The 

Commission shall budget on an annual 

basis the amount used to finance 

customer education initiatives, taking 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75740 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

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

32 7 U.S.C. 26(g). 

33 7 U.S.C. 26(b)(1). 34 7 U.S.C. 26(c)(2)(B). 

into consideration the balance of the 

Fund. 

The Commission limited its discretion 

to finance customer education 

initiatives to fiscal years in which the 

beginning (October 1) balance of the 

Fund is greater than $10,000,000 in 

order to limit the possibility that 

spending on customer education 

initiatives may inadvertently result in 

the Commission operating the Fund in 

a deficit and thereby delay award 

payments to whistleblowers. 

The Commission requests comment 

on whether this limitation is 

appropriate, or would other limitations 

better effectuate this purpose? Is the $10 

million Fund balance trigger too high or 

too low, and, if so, what would be a 

better trigger amount? 

M. Proposed Rule 165.13—Appeals 

Section 23(f) of the CEA provides for 

rights of appeal of Final Orders of the 

Commission with respect to 

whistleblower award determinations.31

Subparagraph (a) of Proposed Rule 

165.13 tracks this provision and 

describes claimants’ rights to appeal. 

Claimants may appeal any Commission 

final award determination, including 

whether, to whom, or in what amount 

to make whistleblower awards, to an 

appropriate court of appeals within 

thirty (30) days after the Commission’s 

Final Order of determination. 

Subparagraph (b) of Proposed Rule 

165.13 designates the materials that 

shall be included in the record on any 

appeal. They include: The Contents of 

Record for Award Determination, as set 

forth in Proposed Rule 165.9; any Final 

Order of the Commission, as set forth in 

Rule 165.7(e). 

N. Proposed Rule 165.14—Procedures 

Applicable to the Payment of Awards 

Proposed Rule 165.14 addresses the 

timing for payment of an award to a 

whistleblower. Any award made 

pursuant to the rules would be paid 

from the Fund established by Section 

23(g) of the CEA.32 Subparagraph (a) 

provides that a recipient of a 

whistleblower award will be entitled to 

payment on the award only to the extent 

that a monetary sanction is collected in 

the covered judicial or administrative 

action or in a related action upon which 

the award is based. This requirement is 

derived from Section 23(b)(1) of the 

CEA,33 which provides that an award is 

based upon the monetary sanctions 

collected in the covered judicial or 

administrative action or related action. 

Subparagraph (b) states that any 

payment of an award for a monetary 

sanction collected in a covered judicial 

or administrative action shall be made 

within a reasonable period of time 

following the later of either the 

completion of the appeals process for all 

whistleblower award claims arising 

from the covered judicial or 

administrative action, or the date on 

which the monetary sanction is 

collected. Likewise, the payment of an 

award for a monetary sanction collected 

in a related action shall be made within 

a reasonable period of time following 

the later of either the completion of the 

appeals process for all whistleblower 

award claims arising from the related 

action, or the date on which the 

monetary sanction is collected. This 

provision is intended to cover situations 

where a single action results in multiple 

whistleblowers claims. Under this 

scenario, if one whistleblower appeals a 

Final Order of the Commission relating 

to a whistleblower award determination, 

the Commission would not pay any 

awards in the action until that 

whistleblower’s appeal has been 

concluded, because the disposition of 

that appeal could require the 

Commission to reconsider its 

determination and thereby affect all 

payments for that covered judicial or 

administrative action or related action. 

Subparagraph (c) of Proposed Rule 

165.14 describes how the Commission 

will address situations where there are 

insufficient amounts available in the 

Fund to pay an award to a 

whistleblower or whistleblowers within 

a reasonable period of time of when 

payment should otherwise be made. In 

this situation, the whistleblower or 

whistleblowers will be paid when 

amounts become available in the Fund, 

subject to the terms set forth in 

proposed subparagraph (c). Under 

proposed subparagraph (c), where 

multiple whistleblowers are owed 

payments from the Fund based on 

awards that do not arise from the same 

Notice or resolution of a related action, 

priority in making payment on these 

awards would be determined based 

upon the date that the Final Order of the 

Commission is made. If two or more of 

these Final Orders of the Commission 

are entered on the same date, those 

whistleblowers owed payments will be 

paid on a pro rata basis until sufficient 

amounts become available in the Fund 

to pay their entire payments. Under 

proposed subparagraph (c)(2), where 

multiple whistleblowers are owed 

payments from the Fund based on 

awards that arise from the same Notice 

or resolution of a related action, they 

would share the same payment priority 

and would be paid on a pro rata basis 

until sufficient amounts become 

available in the Fund to pay their entire 

payments. 

O. Proposed Rule 165.16—No Immunity 

and Proposed Rule 165.17—Awards to 

Whistleblowers Who Engage in Culpable 

Conduct 

Proposed Rule 165.16 provides notice 

that the provisions of Section 23 of the 

CEA do not provide immunity to 

individuals who provide information to 

the Commission relating to a violation 

of the CEA. Whistleblowers who have 

not participated in misconduct will of 

course not need immunity. However, 

some whistleblowers who provide 

original information that significantly 

aids in detecting and prosecuting 

sophisticated manipulation or fraud 

schemes may themselves be participants 

in the scheme who would be subject to 

Commission enforcement actions. While 

these individuals, if they provide 

valuable assistance to a successful 

action, will remain eligible for a 

whistleblower award, they will not be 

immune from prosecution. Rather, the 

Commission will analyze the unique 

facts and circumstances of each case in 

accordance with its Enforcement 

Advisory, ‘‘Cooperation Factors in 

Enforcement Division Sanction 

Recommendations’’ to determine 

whether, how much, and in what 

manner to credit cooperation by 

whistleblowers who have participated 

in misconduct. 

The options available to the 

Commission and its staff for facilitating 

and rewarding cooperation ranges from 

taking no enforcement action to 

pursuing charges and sanctions in 

connection with enforcement actions. 

Whistleblowers with potential civil 

liability or criminal liability for CEA 

violations that they report to the 

Commission remain eligible for an 

award. However, pursuant to Section 

23(c)(2)(B) of the CEA,34 if a 

whistleblower is convicted of a criminal 

violation related to the judicial or 

administrative action, they are not 

eligible for an award. Furthermore, if a 

defendant or respondent in a 

Commission or related action is ordered 

to pay monetary sanctions in a civil 

enforcement action, this proposed rule 

states that the Commission will not 

count the amount of such monetary 

sanctions toward the $1,000,000 

threshold in considering an award 

payment to such a defendant or 

respondent in relation to a covered 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75741 

35See Section 23 (b)–(d) & (h) of the CEA, 7 U.S.C 

26(b)–(d) & (h). 

36American 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). 37 7 U.S.C. 19(a). 

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 would exceed the $1,000,000 

minimum threshold required for making 

an award, even though he personally 

was ordered to pay $750,000 of those 

monetary sanctions and, under similar 

circumstances, a non-culpable 

whistleblower would be deemed 

ineligible for an award if they reported 

a CEA or Commission regulation 

violation that resulted in monetary 

sanctions of less than $1,000,000. The 

proposed rule would prevent such 

inequitable treatment. 

P. Proposed Rule 165.18—Staff 

Communications With Whistleblowers 

From Represented Entities 

Proposed Rule 165.18 clarifies the 

staff’s authority to communicate directly 

with whistleblowers who are directors, 

officers, members, agents, or employees 

of an entity that has counsel, and who 

have initiated communication with the 

Commission relating to a potential CEA 

violation. The proposed rule makes 

clear that the staff is authorized to 

communicate directly with these 

individuals without first seeking the 

consent of the entity’s counsel. 

Section 23 of the CEA evinces a strong 

Congressional policy to facilitate the 

disclosure of information to the 

Commission relating to potential CEA 

violations and to preserve the 

confidentiality of those who do so.35

This Congressional policy would be 

significantly impaired were the 

Commission required to seek the 

consent of an entity’s counsel before 

speaking with a whistleblower who 

contacts us and who is a director, 

officer, member, agent, or employee of 

the entity. For this reason, Section 23 of 

the CEA authorizes the Commission to 

communicate directly with these 

individuals without first obtaining the 

consent of the entity’s counsel. 

The Commission believes that 

expressly clarifying this authority in the 

proposed rule would promote 

whistleblowers’ willingness to disclose 

potential CEA violations to the 

Commission by reducing or eliminating 

any concerns that whistleblowers might 

have that the Commission is required to 

request consent of the entity’s counsel 

and, in doing so, might disclose their 

identity. The Commission also believes 

that this proposed rule is appropriate to 

clarify that, in accordance with 

American Bar Association Model Rule 

4.2, the staff is authorized by law to 

make these communications.36 Under 

this provision, for example, the 

Commission could meet or otherwise 

communicate with the whistleblower 

privately, without the knowledge or 

presence of counsel or other 

representative of the entity. 

Q. Proposed Rule 165.19— 

Nonenforceability of Certain Provisions 

Waiving Rights and Remedies or 

Requiring Arbitration of Disputes 

Consistent with Congressional intent 

to protect whistleblowers from 

retaliation as reflected in Section 23(h) 

of the CEA, Proposed Rule 165.19 

provides that the rights and remedies 

provided for in this Part 165 of the 

Commission’s regulations may not be 

waived by any agreement, policy, form, 

or condition of employment including 

by a predispute arbitration agreement. 

No predispute arbitration agreement 

shall be valid or enforceable, if the 

agreement requires arbitration of a 

dispute arising under this Part. 

R. Proposed Appendix A—Guidance 

With Respect to the Protection of 

Whistleblowers Against Retaliation 

The Commission has included a 

Proposed Appendix A (‘‘Guidance With 

Respect To The Protection of 

Whistleblowers Against Retaliation’’) to 

better inform the public regarding the 

protections against retaliation from 

employers provided for whistleblowers 

in Section 23 of the CEA. Specifically, 

the Proposed Appendix A informs the 

public that Section 23(h)(1) of CEA 

provides whistleblowers with certain 

protections against retaliation, 

including: A Federal cause of action 

against the employer, which must be 

filed in the appropriate United States 

district court within two (2) years of the 

employer’s retaliatory act; and potential 

relief for prevailing whistleblowers, 

including reinstatement, back pay, and 

compensation for other expenses, 

including reasonable attorney’s fees. For 

ease of reference, the Proposed 

Appendix also includes a verbatim copy 

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

III. Request for Comment 

The Commission requests comment 

on all aspects of the proposed rules. 

IV. Administrative Compliance 

A. Cost-Benefit Analysis 

Section 15(a) of the CEA 37 requires 

the Commission to consider the costs 

and benefits of its actions before 

promulgating a regulation under the 

CEA. By its terms, section 15(a) does not 

require the Commission to quantify the 

costs and benefits of a rule or to 

determine whether the benefits of the 

regulation outweigh its costs; rather, it 

requires that the Commission ‘‘consider’’ 

the costs and benefits of its actions. 

Section 15(a) further specifies that the 

costs and benefits shall be evaluated in 

light of five broad areas of market and 

public concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission may in its discretion give 

greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

rule is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or 

accomplish any of the purposes of the 

CEA. 

With respect to benefits, the proposed 

rules would enhance the Commission’s 

capacity to ensure fair and equitable 

markets. The Commission has 

determined that market participants and 

the public will benefit substantially 

from prevention and deterrence of 

violations of the CEA and Commission 

regulations, which will be buttressed by 

the whistleblower incentives and 

protections under Section 23 of the CEA 

and Proposed Part 165 of the 

regulations. 

With respect to costs, the procedures 

set forth in the Proposed Rules may 

impose certain costs on prospective 

whistleblowers. As an initial matter, the 

procedures require potential 

whistleblowers to complete certain 

forms to establish eligibility for an 

award under the whistleblower 

program. As noted above, the 

Commission recognizes that it will take 

time and effort on the part of 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75742 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

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

39 5 U.S.C. 601. 

40 Id. 

whistleblowers to complete and submit 

the required forms. In addition, any 

whistleblower wishing to submit one of 

the required forms in hard copy will 

need to arrange for delivery and pay the 

postage or other delivery costs. In these 

Proposed Rules, the Commission has 

attempted to mitigate the potential for 

burden or confusion in the procedures, 

but such costs cannot be eliminated. 

The Commission invites public 

comment on its cost-benefit 

considerations. Commenters are also 

invited to submit any data or other 

information that they may have 

quantifying or qualifying the costs and 

benefits of the proposed rules with their 

comment letters. 

B. Anti-Trust Considerations 

Section 15(b) of the CEA, 7 U.S.C. 

19(b), requires the Commission to 

consider the public interests protected 

by the antitrust laws and to take actions 

involving the least anti-competitive 

means of achieving the objectives of the 

CEA. The Commission believes that the 

proposed rules will have a positive 

effect on competition by improving the 

fairness and efficiency of the markets 

through improving detection and 

remediation of potential violations of 

the CEA and Commission regulations. 

C. Paperwork Reduction Act 

This regulation requires that a 

whistleblower seeking an award submit 

whistleblower information and file 

claims for an award determination. An 

agency may not conduct or sponsor, and 

a person is not required to respond to, 

a collection of information unless it 

displays a currently valid control 

number. The Office of Management and 

Budget (‘‘OMB’’) has not yet assigned a 

control number to the new collection. 

Proposed Commission Regulation 165 

would result in new collection of 

information requirements within the 

meaning of the Paperwork Reduction 

Act (‘‘PRA’’).38 The Commission 

therefore is submitting this proposal to 

OMB for review in accordance with 44 

U.S.C. 3507(d) and 5 CFR 1320.11. The 

title for this collection of information is 

‘‘Regulation 165—Proposed Rules for 

Implementing Whistleblower Provisions 

of Section 23 of the Commodity 

Exchange Act.’’ OMB control number 

3038–NEW. If adopted, responses to this 

new collection of information would be 

mandatory. 

The Commission will protect 

proprietary information according to the 

Freedom of Information Act and 17 CFR 

part 145, ‘‘Commission Records and 

Information.’’ In addition, section 8(a)(1) 

of the Act strictly prohibits the 

Commission, unless specifically 

authorized by the Act, from making 

public ‘‘data and information that would 

separately disclose the business 

transactions or market positions of any 

person and trade secrets or names of 

customers.’’ The Commission is also 

required to protect certain information 

contained in a government system of 

records according to the Privacy Act of 

1974, 5 U.S.C. 552a. 

1. Information Provided by Reporting 

Persons 

The Proposed Rules 165.3 (Procedures 

for Submitting Original Information), 

165.4 (Confidentiality), and 165.7 

(Procedures for Award Applications and 

Commission Award Determinations) 

require that all individuals wishing to 

be eligible for an award under the 

Commission’s whistleblower program 

must complete the following standard 

forms: Forms TCR (‘‘Tip, Complaint or 

Referral’’), WB–DEC (‘‘Declaration 

Concerning Original Information 

Provided Pursuant to Section 23 of the 

Commodity Exchange Act,’’ signed 

under penalty of perjury), and WB–APP 

(‘‘Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act’’). The Commission estimates that 

there will be numerous individuals, 

approximately 160 per fiscal year, who 

may wish to file such forms. The 

Commission estimated the number of 

individuals based upon the current 

number of tips, complaints and referrals 

received by the Commission’s Division 

of Enforcement and news articles 

regarding the whistleblower protections 

that indicate the SEC and Commission 

should expect to receive a high volume 

of claims. The proposed collection is 

estimated to involve approximately: 2 

burden hours per Form TCR; 0.5 burden 

hours per Form WB–DEC; and 10 

burden hours per Form WB–APP. The 

Commission expects that this will result 

in a total cost of 12.5 burden hours per 

individual seeking to be considered for 

an award under the Commission’s 

whistleblower program, for an annual 

aggregate 2,000 burden hours per fiscal 

year. The Commission invites public 

comment on the accuracy of its estimate 

regarding the collection requirements 

that would result from the proposed 

regulations. 

2. Information Collection Comments 

The Commission invites the public 

and other federal agencies to comment 

on any aspect of the reporting and 

recordkeeping burdens discussed above. 

Pursuant to 44 U.S.C. 3506(c)(2)(B), the 

Commission solicits comments in order 

to: (i) Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have 

practical utility; (ii) evaluate the 

accuracy of the Commission’s estimate 

of the burden of the proposed collection 

of information; (iii) determine whether 

there are ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and (iv) minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of automated collection 

techniques or other forms of information 

technology. 

Comments may be submitted directly 

to the Office of Information and 

Regulatory Affairs, by fax at (202) 395– 

6566 or by e-mail at 

OIRAsubmissions@omb.eop.gov. Please 

provide the Commission with a copy of 

submitted comments so that they can be 

summarized and addressed in the final 

rule. Refer to the ‘‘Addresses’’ section of 

this notice of proposed rulemaking for 

comment submission instructions to the 

Commission. A copy of the supporting 

statements for the collections of 

information discussed above may be 

obtained by visiting RegInfo.gov. OMB 

is required to make a decision 

concerning the collection of information 

between 30 and 60 days after 

publication of this release. 

Consequently, a comment to OMB is 

most assured of being fully effective if 

received by OMB (and the Commission) 

within 30 days after publication of this 

notice of proposed rulemaking. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 39 requires that agencies 

consider whether the rules they propose 

will have a significant economic impact 

on a substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis respecting the 

impact.40 The rules proposed by the 

Commission will not have a significant 

economic impact on a substantial 

number of small entities. As explained 

above, because only individuals are 

eligible for participation in the 

Commission’s whistleblower program 

under Section 23 of the CEA and 

Proposed Part 165 of the regulations, the 

proposed rules will not have a 

significant impact on small entities. 

Accordingly, the Chairman, on behalf of 

the Commission, hereby certifies, 

pursuant to 5 U.S.C. 605(b), that the 

proposed rules will not have a 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75743 

41 5 U.S.C. 603(a). 

42 5 U.S.C. 605(b). 

significant impact on a substantial 

number of small entities. 

Section 603(a) of the Regulatory 

Flexibility Act 41 requires the 

Commission to undertake an initial 

regulatory flexibility analysis of the 

proposed rule on small entities unless 

the Chairman certifies that the rule, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities.42 The 

Proposed Rules apply only to an 

individual, or individuals acting jointly, 

who provide information to the 

Commission relating to the violation of 

the CEA or Commission regulations. 

Companies and other entities are not 

eligible to participate in the Program as 

whistleblowers. Consequently, the 

persons that would be subject to the 

proposed rule are not ‘‘small entities’’ for 

purposes of the Regulatory Flexibility 

Act. Accordingly, the Chairman, on 

behalf of the Commission, hereby 

certifies pursuant to 5 U.S.C. 605(b) that 

the proposed rules will not have a 

significant economic impact on a 

substantial number of small entities. A 

copy of the certification is attached as 

an appendix to this document. 

List of Subjects in 17 CFR Part 165 

Whistleblower rules. 

In consideration of the foregoing and 

pursuant to the authority contained in 

the Commodity Exchange Act, in 

particular, Sections 2, 3, 8a(5) and 26 

thereof, the Commodity Futures Trading 

Commission proposes to add a new 17 

CFR part 165 to read as follows: 

PART 165—WHISTLEBLOWER RULES 

Sec. 

165.1 General. 

165.2 Definitions. 

165.3 Procedures for submitting original 

information. 

165.4 Confidentiality. 

165.5 Prerequisites to the consideration of 

an award. 

165.6 Whistleblowers ineligible for an 

award. 

165.7 Procedures for award applications 

and commission award determinations. 

165.8 Amount of award. 

165.9 Criteria for determining amount of 

award. 

165.10 Contents of record for award 

determination. 

165.11 Awards based upon related actions. 

165.12 Payment of awards from the fund, 

financing of customer education 

initiatives, and deposits and credits to 

the fund. 

165.13 Appeals. 

165.14 Procedures applicable to the 

payment of awards. 

165.15 Delegations of authority. 

165.16 No immunity. 

165.17 Awards to whistleblowers who 

engage in culpable conduct. 

165.18 Staff communications with 

whistleblowers from represented 

entities. 

165.19 Nonenforceability of certain 

provisions waiving rights and remedies 

or requiring arbitration of disputes. 

Appendix A to Part 165—Guidance With 

Respect to the Protection of 

Whistleblowers Against Retaliation 

Authority: 7 U.S.C. 2, 3, 12a(5) and 26, as 

amended by Title VII of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, 

Pub. L. 111–203, 124 Stat. 1376 (June 16, 

2010). 

§ 165.1 General. 

Section 23 of the Commodity 

Exchange Act, entitled ‘‘Commodity 

Whistleblower Incentives and 

Protection,’’ requires the Commission to 

pay awards, subject to certain 

limitations and conditions, to 

whistleblowers who voluntarily provide 

the Commission with original 

information about violations of the 

Commodity Exchange Act. This part 165 

describes the whistleblower program 

that the Commission intends to 

establish to implement the provisions of 

Section 23, and explain the procedures 

you will need to follow in order to be 

eligible for an award. Whistleblowers 

should read these procedures carefully, 

because the failure to take certain 

required steps within the time frames 

described in this part may serve as 

disqualification from receiving an 

award. Unless expressly provided for in 

this part, no person is authorized to 

make any offer or promise, or otherwise 

to bind the Commission with respect to 

the payment of any award or the amount 

thereof. 

§ 165.2 Definitions. 

(a) Action. The term ‘‘action’’ means a 

single captioned judicial or 

administrative proceeding. 

(b) Aggregate Amount. The phrase 

‘‘aggregate amount’’ means the total 

amount of an award granted to one or 

more whistleblowers pursuant to 

§ 165.8. 

(c) Analysis. The term ‘‘analysis’’ 

means your examination and evaluation 

of information that may be generally 

available, but which reveals information 

that is not generally known or available 

to the public. 

(d) Collected by the Commission. The 

phrase ‘‘collected by the Commission’’ 

refers to any funds received, and 

confirmed by the Treasury, in 

satisfaction of part or all of a civil 

monetary penalty, disgorgement 

obligation, or fine owed to the 

Commission. 

(e) Covered Judicial or Administrative 

action. The phrase ‘‘covered judicial or 

administrative action’’ means any 

judicial or administrative action brought 

by the Commission under the 

Commodity Exchange Act whose 

successful resolution results in 

monetary sanctions exceeding 

$1,000,000. 

(f) Fund. The term ‘‘Fund’’ means the 

Commodity Futures Trading 

Commission Customer Protection Fund. 

(g) Independent Knowledge. The 

phrase ‘‘independent knowledge’’ means 

factual information in your possession 

that is not generally known or available 

to the public. You may gain 

independent knowledge from your 

experiences, communications and 

observations in your personal business 

or social interactions. The Commission 

will not consider your information to be 

derived from your independent 

knowledge if you obtained the 

information: 

(1) From sources generally available 

to the public such as corporate filings 

and the media, including the Internet; 

(2) Through a communication that 

was subject to the attorney-client 

privilege, unless the disclosure is 

otherwise permitted by the applicable 

federal or state attorney conduct rules; 

(3) As a result of the legal 

representation of a client on whose 

behalf your services, or the services of 

your employer or firm, have been 

retained, and you seek to use the 

information to make a whistleblower 

submission for your own benefit, unless 

disclosure is authorized by the 

applicable federal or state attorney 

conduct rules; 

(4) Because you were a person with 

legal, compliance, audit, supervisory, or 

governance responsibilities for an 

entity, and the information was 

communicated to you with the 

reasonable expectation that you would 

take appropriate steps to cause the 

entity to remedy the violation, unless 

the entity subsequently failed to 

disclose the information to the 

Commission within sixty (60) days or 

otherwise proceeded in bad faith; 

(5) Otherwise from or through an 

entity’s legal, compliance, audit or other 

similar functions or processes for 

identifying, reporting and addressing 

potential non-compliance with law, 

unless the entity failed to disclose the 

information to the Commission within 

sixty (60) days or otherwise proceeded 

in bad faith; or 

(6) By a means or in a manner that 

violates applicable federal or state 

criminal law. 

(h) Independent Analysis. The phrase 

‘‘independent analysis’’ means your own 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75744 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

analysis, whether done alone or in 

combination with others. 

(i) Information That Led to Successful 

Enforcement. The Commission will 

consider that you provided original 

information that led to the successful 

enforcement of a judicial or 

administrative action, or related action, 

in the following circumstances: 

(1) If you gave the Commission 

original information that caused the 

staff to open an investigation, reopen an 

investigation that the Commission had 

closed, or to inquire concerning new or 

different conduct as part of a current 

investigation, and your information 

significantly contributed to the success 

of the action; or 

(2) If you gave the Commission 

original information about conduct that 

was already under investigation by the 

Commission, Congress, any other 

federal, state, or local authority, any 

self-regulatory organization, or the 

Public Company Accounting Oversight 

Board (except in cases where you were 

an original source of this information as 

defined in paragraph (i)(1) of this 

section), and your information would 

not otherwise have been obtained and 

was essential to the success of the 

action. 

(j) Monetary Sanctions. The phrase 

‘‘monetary sanctions,’’ when used with 

respect to any judicial or administrative, 

or related action, action means— 

(1) Any monies, including penalties, 

disgorgement, restitution, and interest 

ordered to be paid; and 

(2) Any monies deposited into a 

disgorgement fund or other fund 

pursuant to section 308(b) of the 

Sarbanes-Oxley Act of 2002 (15 U.S.C. 

7246(b)), as a result of such action or 

any settlement of such action. 

(k) Original Information. (1) The 

phrase ‘‘original information’’ means 

information that— 

(i) Is derived from the independent 

knowledge or independent analysis of a 

whistleblower; 

(ii) Is not already known to the 

Commission from any other source, 

unless the whistleblower is the original 

source of the information; 

(iii) Is not exclusively derived from an 

allegation made in a judicial or 

administrative hearing, in a 

governmental report, hearing, audit, or 

investigation, or from the news media, 

unless the whistleblower is a source of 

the information; and 

(iv) Is submitted to the Commission 

for the first time after July 21, 2010 (the 

date of enactment of the Wall Street 

Transparency and Accountability Act of 

2010). 

(2) Original information shall not lose 

its status as original information solely 

because the whistleblower submitted 

such information prior to the 

[EFFECTIVE DATE OF THE FINAL 

RULE], provided such information was 

submitted after July 21, 2010, the date 

of enactment of the Wall Street 

Transparency and Accountability Act of 

2010. In order to be eligible for an 

award, a whistleblower who submits 

original information to the Commission 

after July 21, 2010, but prior to 

[EFFECTIVE DATE OF THE FINAL 

RULE], must comply with the procedure 

set forth in § 165.3(d). 

(l) Original Source. You must satisfy 

your status as the original source of 

information to the Commission’s 

satisfaction. 

(1) Information obtained from another 

source. The Commission will consider 

you to be an ‘‘original source’’ of the 

same information that the Commission 

obtains from another source if the 

information you provide satisfies the 

definition of original information and 

the other source obtained the 

information from you or your 

representative. 

(i) In order to be considered an 

original source of information that the 

Commission receives from Congress, 

any other federal state or local authority, 

or any self-regulatory organization, you 

must have voluntarily given such 

authorities the information within the 

meaning of this part In determining 

whether you are the original source of 

information, the Commission may seek 

assistance and confirmation from one of 

the other entities or authorities 

described above. 

(ii) In the event that you claim to be 

the original source of information that 

an authority or another entity, other 

than as set forth in paragraph (l)(1)(i) of 

this section, provided to the 

Commission, the Commission may seek 

assistance and confirmation from such 

authority or other entity. 

(2) Information first provided to 

another authority or person. If you 

provide information to Congress, any 

other federal, state, or local authority, 

any self-regulatory organization, the 

Public Company Accounting Oversight 

Board, or to any of any of the persons 

described in paragraphs (g)(3) and (4) of 

this section, and you, within 90 days, 

make a submission to the Commission 

pursuant to § 165.3, as you must do in 

order for you to be eligible to be 

considered for an award, then, for 

purposes of evaluating your claim to an 

award under § 165.7, the Commission 

will consider that you provided 

information as of the date of your 

original disclosure, report, or 

submission to one of these other 

authorities or persons. You must 

establish your status as the original 

source of such information, as well as 

the effective date of any prior 

disclosure, report, or submission, to the 

Commission’s satisfaction. The 

Commission may seek assistance and 

confirmation from the other authority or 

person in making this determination. 

(3) Information already known by the 

Commission. If the Commission already 

knows some information about a matter 

from other sources at the time you make 

your submission, and you are not an 

original source of that information, as 

described above, the Commission will 

consider you an ‘‘original source’’ of any 

information you separately provide that 

otherwise satisfies the definition of 

original information and materially adds 

to the information that the Commission 

already possesses. 

(m) Related Action. The phrase 

‘‘related action,’’ when used with respect 

to any judicial or administrative action 

brought by the Commission under the 

Commodity Exchange Act, means any 

judicial or administrative action brought 

by an entity listed in § 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. The phrase 

‘‘voluntary submission’’ or ‘‘voluntarily 

submitted’’ within the context of 

submission of original information to 

the Commission under this part, shall 

mean the provision of information made 

prior to any request from the 

Commission, Congress, any other 

federal or state authority, the 

Department of Justice, a registered 

entity, a registered futures association, 

or a self-regulatory organization to you 

or anyone representing you (such as an 

attorney) about a matter to which the 

information in the whistleblower’s 

submission is relevant. If the 

Commission or any of these other 

authorities make a request, inquiry, or 

demand to you or your representative 

first, your submission will not be 

considered voluntary, and you will not 

be eligible for an award, even if your 

response is not compelled by subpoena 

or other applicable law. For purposes of 

this paragraph, you will be considered 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75745 

to have received a request, inquiry or 

demand if documents or information 

from you are within the scope of a 

request, inquiry, or demand that your 

employer receives, unless, after 

receiving the documents or information 

from you, your employer fails to provide 

your documents or information to the 

requesting authority in a timely manner. 

In addition, your submission will not 

be considered voluntary if you are 

under a pre-existing legal or contractual 

duty to report the violations that are the 

subject of your original information to 

the Commission, Congress, any other 

federal or state authority, the 

Department of Justice, a registered 

entity, a registered futures association, 

or a self-regulatory organization. 

(p) Whistleblower(s). (1) The term 

‘‘whistleblower’’ or ‘‘whistleblowers’’ 

means any individual, or two (2) or 

more individuals acting jointly, who 

provides information relating to a 

potential violation of the Commodity 

Exchange Act to the Commission, in a 

manner established by § 165.3. 

(2) The retaliation protections 

afforded to whistleblowers by the 

provisions of Section 23(h) of the 

Commodity Exchange Act apply 

irrespective of whether a whistleblower 

satisfies the procedures and conditions 

to qualify for an award under this Part 

165. Moreover, for purposes of the antiretaliation provision of paragraph 

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

requirement that a whistleblower 

provide ‘‘information to the Commission 

in accordance’’ with Section 23 is 

satisfied if an individual provides 

information to the Commission that 

relates to a potential violation of the 

Commodity Exchange Act. 

§ 165.3 Procedures for submitting original 

information. 

A whistleblower’s submission of 

information to the Commission will be 

a two-step process. 

(a) First, you will need to submit your 

information to the Commission. You 

may submit your information: 

(1) By completing and submitting a 

Form TCR online and submitting it 

electronically through the Commission’s 

Web site at [insert link] or; 

(2) By completing the Form TCR and 

mailing or faxing the form to the 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581, Fax (202) XXX–XXXX. 

(b) In addition to submitting a Form 

TCR, you will also need to complete and 

provide to the Commission a Form WB– 

DEC, ‘‘Declaration Concerning Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act,’’ signed under penalty of perjury. 

Your Form WB–DEC must be submitted 

as follows: 

(1) If you submit a Form TCR 

electronically, your Form WB–DEC 

must be submitted either: 

(i) Electronically (in accordance with 

the instructions set forth on the 

Commission’s Web site); or 

(ii) By mailing or faxing the signed 

form to the Commission. Your Form 

WB–DEC must be received by the 

Commission within thirty (30) days of 

the Commission’s receipt of your Form 

TCR. 

(2) If you submit a Form TCR either 

by mail or fax, your Form WB–DEC 

must be submitted by mail or fax at the 

same time as the Form TCR. 

(c) Notwithstanding paragraph (b), if 

you submitted your original information 

to the Commission anonymously, then 

your identity must be disclosed to the 

Commission and verified in a form and 

manner acceptable to the Commission 

consistent with the procedure set forth 

in § 165.7(c) prior to the Commission’s 

payment of any award. 

(d) If you submitted original 

information in writing to the 

Commission after July 21, 2010 (the date 

of enactment of the Wall Street 

Transparency and Accountability Act of 

2010) but before the effective date of 

these rules, you will be eligible for an 

award only if: 

(1) In the event that you provided the 

original information to the Commission 

in a format or manner other than that 

described in paragraph (a) of this 

section, you submit a completed Form 

TCR and Form WB–DEC within one 

hundred twenty (120) days of 

[EFFECTIVE DATE OF THE FINAL 

RULE] and otherwise follow the 

procedures set forth above in paragraphs 

(a) and (b) of this section; or 

(2) In the event that you provided the 

original information to the Commission 

in a Form TCR in the manner described 

in paragraph (a) of this section, you 

submit a Form WB–DEC within one 

hundred twenty (120) days of the 

effective date of this section in the 

manner set forth above in paragraph (b) 

of this section. 

§ 165.4 Confidentiality. 

(a) In General. Section 23(h)(2) of the 

Commodity Exchange Act requires that 

the Commission not disclose 

information that could reasonably be 

expected to reveal the identity of a 

whistleblower, except that the 

Commission may disclose such 

information in the following 

circumstances: 

(1) When disclosure is required to a 

defendant or respondent in connection 

with a public proceeding that the 

Commission institutes or in another 

public proceeding that is filed by an 

authority to which the Commission 

provides the information, as described 

below; 

(2) When the Commission determines 

that it is necessary to accomplish the 

purposes of the Commodity Exchange 

Act and to protect customers, it may 

provide whistleblower information to: 

The Department of Justice; an 

appropriate department or agency of the 

Federal Government, acting within the 

scope of its jurisdiction; a registered 

entity, registered futures association, a 

self regulatory organization; a state 

attorney general in connection with a 

criminal investigation; any appropriate 

state department or agency, acting 

within the scope of its jurisdiction; or a 

foreign futures authority. 

(3) The Commission may make 

disclosures in accordance with the 

Privacy Act of 1974 (5 U.S.C. 552a). 

(b) Anonymous Whistleblowers. A 

whistleblower may anonymously 

submit information to the Commission, 

however, the whistleblower must follow 

the procedures in § 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 this part 165, 

the Commission will pay an award to 

one or more whistleblowers who: 

(1) Provide a voluntary submission to 

the Commission; 

(2) That contains original information; 

and 

(3) That leads to the successful 

resolution of a covered Commission 

judicial or administrative action or 

successful enforcement of a related 

action; and 

(b) In order to be eligible, the 

whistleblower must: 

(1) Have given the Commission 

original information in the form and 

manner that the Commission requires in 

§ 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 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75746 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

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 who 

acquired the original information 

submitted to the Commission, a 

member, officer, or employee of: The 

Commission; the Board of Governors of 

the Federal Reserve System; the Office 

of the Comptroller of the Currency; the 

Board of Directors of the Federal 

Deposit Insurance Corporation; the 

Director of the Office of Thrift 

Supervision; the National Credit Union 

Administration Board; the Securities 

and Exchange Commission; the 

Department of Justice; a registered 

entity; a registered futures association; a 

self-regulatory organization; or a law 

enforcement organization; 

(2) To any whistleblower who is 

convicted of a criminal violation related 

to the judicial or administrative action 

for which the whistleblower otherwise 

could receive an award under this 

section; 

(3) To any whistleblower who submits 

information to the Commission that is 

based on the facts underlying the 

covered judicial or administrative action 

submitted previously by another 

whistleblower; 

(4) To any whistleblower who 

acquired the information you gave the 

Commission from any of the individuals 

described in paragraphs (a)(1), (2), or (3) 

of this section; or 

(5) To any whistleblower who, in the 

whistleblower’s submission, the 

whistleblower’s other dealings with the 

Commission, or the whistleblower’s 

dealings with another authority in 

connection with a related action, 

knowingly and willfully makes any 

false, fictitious, or fraudulent statement 

or representation, or use any false 

writing or document, knowing that it 

contains any false, fictitious, or 

fraudulent statement or entry, or 

omitted any material fact, where in the 

absence of such fact, other statements or 

representations made by the 

whistleblower would be misleading. 

(b) Notwithstanding a whistleblowers 

ineligibility for an award for any reason 

set forth in paragraph (a) of this section, 

the whistleblower will remain eligible 

for the anti-retaliation protections set 

forth in Section 23(h) of the Commodity 

Exchange Act. 

§ 165.7 Procedures for award applications 

and commission award determinations. 

(a) Whenever a Commission judicial 

or administrative action results in 

monetary sanctions totaling more than 

$1,000,000 (i.e., a covered judicial or 

administrative action) the Commission 

will cause to be published on the 

Commission’s Web site a ‘‘Notice of 

Covered Action.’’ Such Notice of 

Covered Action will be published 

subsequent to the entry of a final 

judgment or order that alone, or 

collectively with other judgments or 

orders previously entered in the 

Commission covered administrative or 

judicial action, exceeds $1,000,000 in 

monetary sanctions. A whistleblower 

claimant will have sixty (60) calendar 

days from the date of the Notice of 

Covered Action to file a claim for an 

award based on that action, or the claim 

will be barred. 

(b) To file a claim for a whistleblower 

award, you must file Form WB–APP, 

‘‘Application for Award for Original 

Information Provided Pursuant to 

Section 23 of the Commodity Exchange 

Act.’’ You must sign this form as the 

claimant and submit it to the 

Commission by mail or fax to 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581, Fax (202) XXX–XXXX. 

The Form WB–APP, including any 

attachments, must be received by the 

Commission within sixty (60) calendar 

days of the date of the Notice of Covered 

Action or sixty (60) calendar days 

following the date of a final judgment in 

a related action in order to be 

considered for an award. 

(c) If you provided your original 

information to the Commission 

anonymously pursuant to §§ 165.3 and 

165.4 and: 

(1) You are making your claim for a 

whistleblower award on a disclosed 

basis, you must disclose your identity 

on the Form WB–APP and include with 

your Form WB–APP a signed and 

completed Form WB–DEC. Your 

identity must be verified in a form and 

manner that is acceptable to the 

Commission prior to the payment of any 

award; or 

(2) You are making your claim for a 

whistleblower award on an anonymous 

basis, you must be represented by 

counsel. You must provide your counsel 

with a completed and signed Form WB– 

DEC by no later than the date upon 

which your counsel submits to the 

Commission the Form WB–APP. In 

addition, your counsel must submit 

with the Form WB–APP a separate Form 

WB–DEC completed and signed by 

counsel certifying that counsel has 

verified your identity, has reviewed the 

whistleblower’s Form WB–DEC for 

completeness and accuracy, and will 

retain the signed original of 

whistleblower’s Form WB–DEC in 

counsel’s records. Upon request of the 

Commission staff, whistleblower’s 

counsel must produce to the 

Commission the whistleblower’s WB– 

DEC and the whistleblower’s identity 

must be verified in a form and manner 

that is acceptable to the Commission 

prior to the payment of any award. 

(d) Once the time for filing any 

appeals of the Commission’s judicial or 

administrative action and all related 

actions has expired, or where an appeal 

has been filed, after all appeals in the 

judicial, administrative and related 

actions have been concluded, the 

Commission will evaluate all timely 

whistleblower award claims submitted 

on Form WB–APP in accordance with 

the criteria set forth in this part 165. In 

connection with this process, the 

Commission may require that you 

provide additional information relating 

to your eligibility for an award or 

satisfaction of any of the conditions for 

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

Following that evaluation, the 

Commission will send you a 

Determination setting forth whether the 

claim is allowed or denied and, if 

allowed, setting forth the award 

percentage amount. 

(e) The Commission’s Office of the 

Secretariat will provide you with the 

Final Order of the Commission. 

§ 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 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75747 

related action, the Commission will 

determine an individual percentage 

award for each whistleblower, but in no 

event will the total amount awarded to 

all whistleblowers as a group be less 

than 10 percent or greater than 30 

percent of the amount the Commission 

or the other authorities collect. 

§ 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, the 

Commission shall take into 

consideration— 

(1) The significance of the information 

provided by the whistleblower to the 

success of the covered judicial or 

administrative action or related action; 

(2) The degree of assistance provided 

by the whistleblower and any legal 

representative of the whistleblower in a 

covered judicial or administrative action 

or related action; 

(3) The programmatic interest of the 

Commission in deterring violations of 

the Commodity Exchange Act by 

making awards to whistleblowers who 

provide information that leads to the 

successful enforcement of such laws; 

and 

(4) Whether the award otherwise 

enhances the Commission’s ability to 

enforce the CEA, protect customers, and 

encourage the submission of high 

quality information from 

whistleblowers. 

(b) The Commission shall not take 

into consideration the balance of the 

Fund in determining the amount of an 

award. 

§ 165.10 Contents of record for award 

determination. 

(a) The following items constitute the 

record upon which the award 

determination under § 165.7 shall be 

made: 

(1) The whistleblower’s Form TCR, 

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

WB–DEC, ‘‘Declaration Concerning 

Original Information Provided Pursuant 

to Section 23 of the Commodity 

Exchange Act,’’ including related 

attachments, and other documentation 

provided by the whistleblower to the 

Commission; 

(2) The whistleblower’s Form WB– 

APP, ‘‘Application for Award for 

Original Information Provided Pursuant 

to Section 23 of the Commodity 

Exchange Act,’’ and related attachments 

(3) The complaint, notice of hearing, 

answers and any amendments thereto; 

(4) The final judgment, consent order, 

or administrative speaking order; 

(5) The transcript of the related 

administrative hearing or civil 

injunctive proceeding, including any 

exhibits entered at the hearing or 

proceeding; 

(6) Any other documents that appear 

on the docket of the proceeding; and 

(7) Any statements by the 

Commission litigation staff, or the 

litigation staff involved in prosecuting 

the related action, to the Commission 

regarding: The significance of the 

information provided by the 

whistleblower to the success of the 

covered judicial or administrative action 

or related action; and/or the degree of 

assistance provided by the 

whistleblower and any legal 

representative of the whistleblower in a 

covered judicial or administrative action 

or related action. 

(b) The record upon which the award 

determination under § 165.7 shall be 

made shall not include any Commission 

pre-decisional or internal deliberative 

process materials related to the 

Commission or its staff’s determination: 

To file or settle the related covered 

judicial or administrative action; and/or 

whether, to whom and in what amount 

to make a whistleblower award. Further, 

the record upon which the award 

determination under § 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. 

§ 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, 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 the 

amount collected in a covered judicial 

or administrative action, where— 

(a) A ‘‘related action’’ is a judicial or 

administrative action that is brought by: 

(1) The Department of Justice; 

(2) An appropriate department or 

agency of the Federal Government, 

acting within the scope of its 

jurisdiction; 

(3) A registered entity, registered 

futures association, or self-regulatory 

organization; or 

(4) A State criminal or appropriate 

civil agency; and 

(b) The ‘‘related action’’ is based on 

the same original information that the 

whistleblower voluntarily submitted to 

the Commission and led to a successful 

resolution of the Commission’s judicial 

or administrative action. 

§ 165.12 Payment of awards from the fund, 

financing of customer education initiatives, 

and deposits and credits to the fund. 

(a) The Commission shall pay awards 

to whistleblowers from the Fund. 

(b) The Commission shall deposit into 

or credit to the Fund: 

(1) Any monetary sanctions collected 

by the Commission in any covered 

judicial or administrative action that is 

not otherwise distributed or ordered to 

be distributed, to victims of a violation 

of the Commodity Exchange Act 

underlying such action, unless the 

balance of the Fund at the time the 

monetary sanctions are collected 

exceeds $100,000,000. In the event the 

Fund’s value exceeds $100,000,000, any 

monetary sanctions collected by the 

Commission in a covered judicial or 

administrative action that is not 

otherwise distributed or ordered to be 

distributed to victims of violations of 

the Commodity Exchange Act the 

Commissions rules and regulations 

thereunder underlying such action, 

shall be deposited into the general fund 

of the U.S. Treasury. 

(2) In the event that the amounts 

deposited into or credited to the Fund 

under paragraph (b)(1) of this section 

are not sufficient to satisfy an award 

made pursuant to 165.7, then, pursuant 

to Section 23(g)(3)(B) of the Commodity 

Exchange Act; 

(i) An amount equal to the unsatisfied 

portion of the award; 

(ii) Shall be deposited into or credited 

to the Fund; 

(iii) From any monetary sanction 

collected by the Commission, in any 

judicial or administrative action brought 

by the Commission under the 

Commodity Exchange Act, regardless of 

whether it qualifies as an ‘‘covered 

judicial or administrative action’’; 

provided, such judicial or 

administrative action is based on 

information provided by a 

whistleblower. 

(c) The Commission shall undertake 

and maintain customer education 

initiatives. The initiatives shall be 

designed to help customers protect 

themselves against fraud or other 

violations of the Act, or the 

Commissions rules or regulations 

thereunder. The Commission shall fund 

the customer education initiatives, and 

may utilize funds deposited into the 

Fund during any fiscal year in which 

the beginning (October 1) balance of the 

Fund is greater than $10,000,000. The 

Commission shall budget on an annual 

basis the amount used to finance 

customer education initiatives, taking 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75748 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

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 thirty (30) days after the Final 

Order of the Commission is issued. 

(b) The record on appeal shall consist 

of: 

(1) The Contents of Record for Award 

Determination, as set forth in § 165.9; 

(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: 

(1) Where multiple whistleblowers are 

owed payments from the Fund based on 

awards that do not arise from the same 

Notice of Covered Action (or related 

action), priority in making these 

payments will be determined based 

upon the date that the Final Order of the 

Commission is made. If two or more of 

these Final Orders of the Commission 

are entered on the same date, those 

whistleblowers owed payments will be 

paid on a pro rata basis until sufficient 

amounts become available in the Fund 

to pay their entire payments. 

(2) Where multiple whistleblowers are 

owed payments from the Fund based on 

awards that arise from the same Notice 

of Covered Action (or related action), 

they will share the same payment 

priority and will be paid on a pro rata 

basis until sufficient amounts become 

available in the Fund to pay their entire 

payments. 

§ 165.15 Delegations of authority. 

(a) Delegation of Authority to the 

Executive Director. The Commission 

hereby delegates, until such time as the 

Commission orders otherwise, to the 

Executive Director or to any 

Commission employee under the 

Executive Director’s supervision as he 

or she may designate, the authority to 

take the following actions to carry out 

this Part 165 and the requirements of 

Section 23(h) of Commodity Exchange 

Act. 

(1) Delegated authority to deposit 

collected monetary sanctions into the 

Fund and the payment of awards 

therefrom shall be with the concurrence 

of the General Counsel and the Director 

of the Division of Enforcement or of 

their respective designees. 

(2) [Reserved] 

(b) [Reserved] 

§ 165.16 No immunity. 

The Commodity Whistleblower 

Incentives and Protections provisions 

set forth in Section 23(h) of Commodity 

Exchange Act and this Part 165 do not 

provide individuals who provide 

information to the Commission with 

immunity from prosecution. The fact 

that you may become a whistleblower 

and assist in Commission investigations 

and enforcement actions does not 

preclude the Commission from bringing 

an action against you based upon your 

own conduct in connection with 

violations of the Commodity Exchange 

Act and the Commission’s regulations. If 

such an action is determined to be 

appropriate, however, the Commission’s 

Division of Enforcement will take your 

cooperation into consideration in 

accordance with its sanction 

recommendations to the Commission. 

§ 165.17 Awards to whistleblowers who 

engage in culpable conduct. 

In determining whether the required 

$1,000,000 threshold has been satisfied 

(this threshold is further explained in 

§ 165.7) for purposes of making any 

award, the Commission will not take 

into account any monetary sanctions 

that the whistleblower is ordered to pay, 

or that are ordered against any entity 

whose liability is based primarily on 

conduct that the whistleblower 

principally directed, planned, or 

initiated. Similarly, if the Commission 

determines that a whistleblower is 

eligible for an award, any amounts that 

the whistleblower or such an entity pay 

in sanctions as a result of the action or 

related actions will not be included 

within the calculation of the amounts 

collected for purposes of making 

payments pursuant to § 165.14. 

§ 165.18 Staff communications with 

whistleblowers from represented entities. 

If you are a whistleblower who is a 

director, officer, member, agent, or 

employee of an entity that has counsel, 

and you have initiated communication 

with the Commission relating to a 

potential violation of the Commodity 

Exchange Act, the Commission’s staff is 

authorized to communicate directly 

with you regarding the subject of your 

communication without seeking the 

consent of the entity’s counsel. 

§ 165.19 Nonenforceability of certain 

provisions waiving rights and remedies or 

requiring arbitration of disputes. 

The rights and remedies provided for 

in this Part 165 of the Commission’s 

regulations may not be waived by any 

agreement, policy, form, or condition of 

employment including by a predispute 

arbitration agreement. No predispute 

arbitration agreement shall be valid or 

enforceable if the agreement requires 

arbitration of a dispute arising under 

this Part. 

Appendix A to Part 165—Guidance 

With Respect to the Protection of 

Whistleblowers Against Retaliation 

Section 23(h)(1) of the Commodity 

Exchange Act prohibits employers from 

engaging in retaliation against 

whistleblowers. This provision provides 

whistleblowers with certain protections 

against retaliation, including: A federal cause 

of action against the employer, which must 

be filed in the appropriate United States 

district court within two (2) years of the 

employer’s retaliatory act; and potential relief 

for prevailing whistleblowers, including 

reinstatement, back pay, and compensation 

for other expenses, including reasonable 

attorney’s fees. Specifically, Section 23(h)(1) 

of Commodity Exchange Act provides: 

(A) In General.—No employer may 

discharge, demote, suspend, threaten, harass, 

directly or indirectly, or in any other manner 

discriminate against, a whistleblower in the 

terms and conditions of employment because 

of any lawful act done by the 

whistleblower— 

(i) In providing information to the 

Commission in accordance with subsection 

(b); or 

(ii) In assisting in any investigation or 

judicial or administrative action of the 

Commission based upon or related to such 

information. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75749 

(B) Enforcement. (i) Cause of Action.—An 

individual who alleges discharge or other 

discrimination in violation of subparagraph 

(A) may bring an action under this subsection 

in the appropriate district court of the United 

States for the relief provided in subparagraph 

(C), unless the individual who is alleging 

discharge or other discrimination in violation 

of subparagraph (A) is an employee of the 

Federal Government, in which case the 

individual shall only bring an action under 

section 1221 of title 5, United States Code. 

(ii) Subpoenas.—A subpoena requiring the 

attendance of a witness at a trial or hearing 

conducted under this subsection may be 

served at any place in the United States. 

(iii) Statute of Limitations.—An action 

under this subsection may not be brought 

more than 2 years after the date on which the 

violation reported in subparagraph (A) is 

committed. 

(C) Relief.—Relief for an individual 

prevailing in an action brought under 

subparagraph (B) shall include— 

(i) Reinstatement with the same seniority 

status that the individual would have had, 

but for the discrimination; 

(ii) The amount of back pay otherwise 

owed to the individual, with interest; and 

(iii) Compensation for any special damages 

sustained as a result of the discharge or 

discrimination, including litigation costs, 

expert witness fees, and reasonable attorney’s 

fees. 

BILLING CODE 6351–01–P 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75750 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.000</GPH>
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75751 

BILLING CODE 6351–01–C 

Privacy Act of Statement 

The Privacy Act requires that the 

Commodity Futures Trading Commission 

(CFTC) inform individuals of the following 

when asking for information. This form may 

be used by anyone wishing to provide the 

CFTC with information concerning a 

violation of the Commodity Exchange Act or 

the Commission’s regulations. If you are 

submitting this information for the 

Commission’s whistleblower award program 

pursuant to Section 23 of the Commodity 

Exchange Act, the information provided will 

enable the Commission to determine your 

eligibility for payment of an award. This 

information may be disclosed to Federal, 

state, local, or foreign agencies responsible 

for investigating, prosecuting, enforcing, or 

implementing laws, rules, or regulations 

implicated by the information consistent 

with the confidentiality requirements set 

forth therein. Furnishing the information is 

voluntary, but a decision not to do so may 

result in you not being eligible for award 

consideration. 

Questions concerning this form may be 

directed to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1151 

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

Submission Procedures 

• After completing this From TCR, please 

send it to the Commission: electronically via 

the Commission’s Web site; by mail to the 

Commodity Futures Trading Commission, 

Three Lafayette Centre, 1151 21st Street, 

NW., Washington, DC 20581; or by facsimile 

to (202) XXX–XXXX. 

• You have the right to submit information 

anonymously. 

• If you are submitting information for the 

Commission’s whistleblower award program, 

you must submit your information using this 

Form TCR. In addition to submitting your 

information by this method, you must also 

submit a declaration on From WB–DEC. The 

Form WB–DEC can be printed out from the 

Commission’s Web site or obtained from the 

Commission, and it must be manually signed 

by you under penalty of perjury. 

Instructions for Completing Form TCR 

Section A: Information About You 

Questions 1–3: Please provide the 

following information about yourself: 

Æ Last name, first name, and middle 

initial; 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.001</GPH>
75752 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

Æ Complete address, including city, state 

and zip code; 

Æ Telephone number and, if available, an 

alternative number where you can be 

reached; 

Æ Your e-mail address (to facilitate 

communications, the Commission strongly 

encourages you to provide your e-mail 

address); and 

Æ Your preferred method of 

communication. 

Question 4: Describes your occupation, for 

example which of the following provides 

the best description: 

Æ Accountant, attorney, auditor, brokerdealer, compliance officer, financial 

representative, foreign officer, fund manager, 

investment advisor, commodity trading 

adviser, investor, customer, company officer 

or senior manager, trader, floor broker, 

government official (federal, state, or local), 

law enforcement personnel (federal, state, or 

local), or other (specific). 

Section B: Information About Your Attorney. 

Complete This Section Only If Your Are 

Represented By An Attorney In This 

Matter. 

Questions 1–4: Provide the following 

information about the attorney 

representing you in this matter: 

Æ Attorney’s name; 

Æ Firm name; 

Æ Complete address, including city, state 

and zip code; 

Æ Telephone number and fax number; and 

Æ E-mail address. 

Section C: Tell Us About The Individual 

And/Or Entity You Have A Complaint 

Against. If your complaint relates to more 

than two individuals and/or entities, you 

may attach additional sheets. 

Question 1: Choose the following that best 

describes the individual or entity to 

which your complaint relates: 

Æ 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). 

Æ For Entities: bank, commodity trading 

advisor, commodity pool operator, 

commodity pool, futures commission 

merchant, hedge fund, introducing broker, 

major swap participant, retail foreign 

exchange dealer, swap dealer, unknown, or 

other (specify). 

Questions 2–4: For each subject, provide 

the following information, if known: 

Æ Full name; 

including city, state and zip code; 

Æ Telephone number; 

Æ E-mail address; and 

Æ Internet address, if applicable. 

Section C: Tell Us About Your Complaint. 

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

that the alleged conduct began. 

Question 2: Choose the option that you 

believe best describes the nature of your 

complaint. If you are alleging more than 

one violation, please list all that you 

believe may apply. Use additional 

sheets, if necessary. 

Æ Theft/misappropriation; 

Æ Misrepresentation/omission (false/ 

misleading marketing/sales literature; 

inaccurate, misleading or non-disclosure by 

commodity pool operator, commodity trading 

advisor, futures commission merchant, 

introducing broker, retail foreign currency 

dealer, swap dealer, or their associated 

person(s); false/material misstatements in 

any report or statement; 

Æ Ponzi/pyramid scheme; 

Æ Off-exchange foreign currency, 

commodity, or precious metal fraud; 

Æ Registration violations (including 

unregistered commodity pool operator, 

commodity trading advisor, futures 

commission merchant, introducing broker, 

retail foreign currency dealer, swap dealer, or 

their associated person(s)); 

Æ 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); 

Æ 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); 

Æ Sales and advisory practices 

(background information on past violations/ 

integrity; breach of fiduciary duty/ 

responsibility; churning/excessive trading; 

cold calling; conflict of interest; a bout of 

authority in discretionary trading; failure to 

respond to client, customer or participant; 

guarantee against loss; promise to profit; high 

pressure sales techniques; instructions by 

client, customer or participant not followed; 

investment objectives not followed; 

solicitation methods (non-cold calling, 

seminars); 

Æ Customer accounts (unauthorized 

trading); identity theft affecting account; 

inaccurate valuation of Net Asset Value; or 

Æ Other (analyst complaints; market maker 

activities; employer/employee disputes; 

specify other). 

Question 3: Indicate whether you were in 

the past, or are currently, an officer, 

director, employee, consultant, or 

contractor of the entity to which your 

complaint relates. 

Question 4a: Indicate whether you have 

taken any prior action regarding your 

complaint, including whether you 

reported the violation to the entity, 

including the compliance office, 

whistleblower hotline or ombudsman; 

complained to the Commission, another 

regulator, a law enforcement agency, or 

any other agency or organization; 

initiated legal action, mediation or 

arbitration, or initiated any other action. 

Question 4b: If you answered ‘‘yes’’ to 

question 4a, provide details, including 

the date on which you took the action(s) 

described, the name of the person or 

entity to whom you directed any report 

or complaint and the contact information 

for the person or entity, if known, and 

the complete case name, case number, 

and forum of any legal action you have 

taken. Use additional sheets, if 

necessary. 

Question 5: State in detail all the facts 

pertinent to your complaint. Attach 

additional sheets, if necessary. 

Question 6: Describe all supporting 

materials in your possession, custody or 

control, and the availability and location 

of additional supporting materials not in 

your possession, custody or control. 

Attach additional sheets, if necessary. 

Question 7: Describe how you obtained the 

information that supports your 

allegation. If any information was 

obtained from a public source, identify 

the source with as much particularity as 

possible. Attach additional sheets, if 

necessary. 

Question 8: Please provide any additional 

information you think may be relevant. 

BILLING CODE 6351–01–P 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75753 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.002</GPH>
75754 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.003</GPH>
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75755 

BILLING CODE 6351–01–C 

Privacy Act Statement 

This notice is given under the Privacy Act 

of 1974. The Privacy Act requires that the 

Commodity Futures Trading Commission 

(CFTC) inform individuals of the following 

when asking for information. The 

information provided will enable the 

Commission to determine your eligibility for 

payment of an award pursuant to Section 23 

of the Commodity Exchange Act. This 

information may be disclosed to Federal, 

state, local, or foreign agencies responsible 

for investigating, prosecuting, enforcing, or 

implementing rules, or regulations 

implicated buy the information consistent 

with the confidentiality requirements set 

forth in Section 23 of the Commodity 

Exchange Act and part 165 of the 

Commissions regulations hereunder. 

Furnishing the information is voluntary, but 

a decision not to do so may result in you not 

being eligible for award consideration. 

Questions concerning this form may be 

directed to the Commodity Futures Trading, 

Three Lafayette Centre, 1151 21st Street, 

NW., Washington, DC 20581. 

General Information 

Submitting information for the CFTC’s 

whistleblower award program is a two-step 

process. First, you must provide us with your 

information by competing a Form TCR (‘‘Tip, 

Complaint, or Referral’’), instructions set 

forth on the form, and sending it to the 

Commission: electronically via the 

Commission’s website; by mail to the 

Commodity Futures Trading Commission, 

Three Lafayette Centre, 1151 21st Street, 

NW., Washington, DC 20581; or by facsimile 

to (202) XXX–XXXX. 

• Submitting your information to the 

Commission is the first step. If you want to 

be considered for a whistleblower award, you 

must also submit this Form WB–DEC and it 

must be manually signed under penalty of 

perjury. 

• If you submitted your information 

electronically through the Commission’s 

website, the Commission must receive your 

completed Form WB–DEC within 30 days of 

your submission. If you did not submit your 

information electronically but instead are 

submitting your information on Form TCR, 

you must submit your declaration on Form 

WB–DEC at the same time that you submit 

your Form TCR. 

Follow the instructions set forth below for 

submitting this Form WB–DEC. 

• If you follow these steps, and the 

information you submit leads to the 

successful enforcement of a CFTC judicial or 

administrative action, or a related action, you 

will have an opportunity at a later date to 

submit a claim for an award. That is a 

separate process and is described in our 

whistleblower rules, which are available on 

the Commission’s Web site [insert link]. 

• You have the right to submit information 

anonymously. If you are doing so, please skip 

Part I of these instructions and proceed 

directly to Part II. Otherwise, please begin by 

following the instructions in Part I. 

Part I: Instructions for Filers who are 

Disclosing Their Identity 

You are required to complete Sections A, 

C, D, and E of this form. If you are 

represented by an attorney in this matter, you 

must also complete Section B. Specific 

instructions for answering these questions 

can be found in Part IV below. 

If you previously submitted your 

complaint electronically through the 

Commission’s website, you may submit this 

Form WB–DEC to us in any of the following 

ways: 

Æ By mailing or delivering the signed form 

to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 

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

XXXX; or 

Æ By faxing the signed form to (202) XXX– 

XXXX; or 

Æ By scanning and emailing the form in 

PDF format to [insert e-mail address]. 

Please note that the Commission must 

receive your Form WB–DEC within thirty (30) 

days of when you submitted your information 

to us through the Commission’s website. 

If you did not previously submit your 

complaint electronically through the CFTC’s 

website, but instead intend to send us a Form 

TCR, then you must submit your completed 

Form TCR and your declaration on this Form 

WB–DEC together. You may do so in one of 

two ways: 

• By mailing or delivering the Form TCR 

and the signed Form WB–DEC to the 

Commodity Futures Trading Commission, 

Three Lafayette Centre, 1155 21st Street, 

NW., Washington, DC 20581–XXXX; or 

• By faxing the Form TCR and the signed 

Form WB–DEC form to (202) XXX–XXXX. 

Part II: Instructions for Anonymous Filers 

If you are submitting information 

anonymously, you may be represented by an 

attorney in this matter. If you are applying for 

a whistleblower award, you must be 

represented by an attorney in connection 

with such application. 

In order for you to be eligible for a 

whistleblower award, your attorney must 

retain your signed original of Form WB–DEC 

in his or her records, and submit both your 

Form WB–APP (if you filled one out instead 

of submitting your complaint to us 

electronically) and a Form WB–DEC 

completed by the attorney declaration to the 

Commission. You are encouraged to confirm 

that your attorney followed these steps. 

Part III: Instructions for Attorneys 

Representing Anonymous Whistleblowers 

Obtain a completed and signed original of 

Form WB–DEC from your client. You must 

retain this signed original in your records 

because it may be required at a later date 

upon request of CFTC staff and prior to the 

payment a whistleblower award. 

You must prepare your own Form WB– 

DEC, completing only Sections B, C and F. 

Specific instructions for answering these 

questions can be found in Part IV below. 

You must submit your client’s application 

on Form WB–APP and your attorney 

declaration on this Form WB–DEC together. 

You may do so in one of two ways: 

Æ By mailing or delivering the Form WB– 

APP and the signed Form WB–DEC to the 

Commodity Futures Trading Commission, 

Three Lafayette Centre, 1155 21st Street, 

NW., Washington, DC 20581–XXXX; or 

Æ By faxing the Form WB–APP and the 

signed Form WB–DEC to (202) XXX–XXXX. 

Part IV: Instructions for Completing Form 

WB–DEC 

Section A: Submitter’s Information 

Questions 1–3: Provide the following 

information about yourself: 

• First and last name, and middle initial; 

• Complete address, including city, state 

and zip code; 

• Telephone number and, if available, an 

alternate number where you can be 

reached; and 

• E-mail address. 

Section B: Information about Your Attorney. 

Complete this section only if you are 

represented by an attorney in this matter. 

You must be represented by an attorney, and 

this section must be completed, if you intend 

to apply for a whistleblower award 

anonymously. 

Questions 1–4: Provide the following 

information about the attorney 

representing you in this matter: 

• 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 

information was submitted to the 

Commission. 

Question 2a: Provide the date on which the 

TCR was submitted to the Commission. 

Question 2b: Provide the name of the 

individual or entity to which your 

complaint relates. 

Question 3a: Indicate whether the submitter 

or counsel have had any 

communication(s) with the Commission 

concerning this manner. 

Question 3b: If you answered ‘‘yes’’ to 

question 3a, provide the name of the SEC 

staff member with whom the submitter 

or counsel communicated. 

Question 4a: Indicate whether the submitted 

or counsel have provided the 

information being submitted to the CFTC 

to any other agency or organization. 

Question 4b: If you answered ‘‘yes’’ to 

question 4a, provide details, including 

the name of the agency or organization, 

the date on which you provided your 

information to the agency or organization 

and any other relevant details. 

Question 4c: Provide a name and contact 

information for your point of contact at 

the other agency or organization, if 

known. 

Section D: Eligibility Requirements 

Question 1: State whether you are currently, 

or were at the time you acquired the 

original information that you submitted 

to the CFTC a member, officer, or 

employee of the Department of Justice 

the Securities and Exchange 

Commission; the Comptroller of the 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

75756 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

Currency, the Board of Governors of the 

Federal Reserve System, the Federal 

Deposit Insurance Corporation, the 

Office of Thrift Supervision; National 

Credit Union Administration Board, 

registered entity, a registered futures 

association, a self-regulatory 

organization or; any law enforcement 

organization. 

Question 2: State whether you provided the 

information submitted to the CFTC 

pursuant to a cooperation agreement 

with the Commission or with any other 

agency or organization. 

Question 3: State whether you are a spouse, 

parent, child or sibling of a member or 

employee of the Commission, or whether 

you reside in the same household as a 

member or employee of the Commission. 

Question 4: State whether you acquired the 

information you are providing to the 

CFTC from any individual described in 

Question 1 through 3 of this Section. 

Question 5: If you answered ‘‘yes’’ to 

questions 1 though 4, please provide 

details. 

Question 5a: State whether you provided the 

information identified submitted to the 

CFTC before you (or anyone representing 

you) received any request, inquiry or 

demand from the CFTC, Congress, or any 

other federal, state or local authority, or 

any self regulatory organization about a 

matter to which the information your 

submission was relevant. 

Question 5b: If you answered ‘‘no’’ to 

questions 5a, please provide details. Use 

additional sheets if necessary. 

Question 6a: State whether you are the 

subject or target of a criminal 

investigation or have been convicted of 

a criminal violation in connection with 

the information upon which your 

application for award is based. 

Question 6b: If you answered ‘‘yes’’ to 

question 9a, please provide details, 

including the name of the agency or 

organization that conducted the 

investigation or initiated the action 

against you, the name and telephone 

number of your point of contact at the 

agency or organization, if available and 

the investigation/case name and number, 

if applicable. Use additional sheets, if 

necessary. If you previously provided 

this information on Form WB–DEC, you 

may leave this question blank, unless 

your response has changed since the 

time you submitted your Form WB–DEC. 

Section E: Declaration 

To be completed and signed by person 

submitting the information 

Section F: Counsel Certification 

To be completed and signed by attorney for 

an anonymous person submitting 

information 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2

Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75757 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.004</GPH>
75758 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.005</GPH>
Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 75759 

BILLING CODE 6351–01–P 

Privacy Act Statement 

This notice is given under the Privacy Act 

of 1974. The Privacy Act requires that the 

Commodity Futures Trading Commission 

(CFTC or Commission) inform individuals of 

the following when asking for information. 

The information provided will enable the 

Commission to determine your eligibility for 

payment of an award pursuant to Section 23 

of the Commodity Exchange Act. This 

information may be disclosed to Federal, 

state, local, or foreign agencies responsible 

for investigating, prosecuting, enforcing, or 

implementing the laws, rules, or regulations 

implicated by the information consistent 

with the confidentiality requirements set 

forth in Section 23 of the Commodity 

Exchange Act and part 165 of the 

Commissions regulations thereunder. 

Furnishing the information is voluntary, but 

a decision not to do so may result in you not 

being eligible for award consideration. 

Questions concerning this form may be 

directed to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1151 

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

General 

This form should be used by persons 

making a claim for a whistleblower award in 

connection with information provided to the 

CFTC or to another agency in a related 

action. In order to be deemed eligible for an 

award, you must meet all the requirements 

set forth in Section 23 of the Commodities 

Exchange Act and the rules hereunder. 

You must sign the Form WB–APP as the 

claimant. If you provided your information to 

the CFTC anonymously, you must now 

disclose your identity on this form and your 

identity must be verified in a form and 

manner that is acceptable to the CFTC prior 

to the payment of any award. 

• If you are filing your claim in connection 

with information that you provided to the 

CFTC, then Form WB–APP and any 

attachments thereto, must be received by the 

CFTC within sixty (60) days of the date of the 

Notice of Covered Action or the date of a 

final judgment in a related action to which 

the claim relates. 

• If you are filing your claim in connection 

with information you provided to another 

agency in a related action, then your Form 

WB–APP, and any attachments there to, must 

be received by the CFTC within sixty (60) 

days of the date of a final judgment in the 

related action to which the claim relates. 

You must submit your Form WB–APP to us 

in one of the following two ways: 

• By mailing or delivering the signed form 

to the Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 

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

• 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; 

• Complete address, including city, state 

and zip code; 

• Telephone number and, if available, an 

alternate number where you can be 

reached; and 

• E-mail address 

Section B: Attorney’s Information. If you are 

represented by an attorney in this matter, 

provide the information requested. If you are 

not representing an attorney in this matter, 

leave this Section blank. 

Questions 1–4: Provide the following 

information about the attorney 

representing you in this matter: 

• 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 

your original information was submitted 

to the CFTC. 

Question 2a: Provide the date on which you 

submitted your TCR (Tip, Complaint or 

Referral) information to the CFTC. 

Question 2b: Provide the name of the 

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

complaint related. 

Section D: Notice of Covered Action 

The process for making a claim for a 

whistleblower award begins with the 

publication of a ‘‘Notice of a Covered Action’’ 

on the Commission’s Web site. This notice is 

published whenever a judicial or 

administrative action brought by the 

Commission results in the imposition of 

monetary sanctions exceeding $1,000,000. 

The Notice is published on the Commission’s 

Web site subsequent to the entry of a final 


mstockstill on DSKH9S0YB1PROD with PROPOSALS2EP06DE10.006</GPH>
75760 Federal Register / Vol. 75, No. 233 / Monday, December 6, 2010 / Proposed Rules 

judgment or order in the action that by itself, 

or collectively with other judgments or 

orders previously entered in the action, 

exceeds the $1,000,000 threshold. 

Question 1: Provide the date of the Notice of 

Covered Action to which this claim 

relates. 

Question 2: Provide the notice number of the 

Notice of Covered Action. 

Question 3a: Provide the case name 

referenced in Notice of Covered Action. 

Question 3b: Provide the case number 

referenced in Notice of Covered Action. 

Section E: Claims Pertaining to Related 

Actions 

Question 1: Provide the name of the agency 

or organization to which you provided 

your information. 

Question 2: Provide the name and contact 

information for your point of contact at 

the agency or organization, if known. 

Question 3a: Provide the date on which that 

you provided your information to the 

agency or organization referenced in 

question E1. 

Question 3b: Provide the date on which the 

agency or organization referenced in 

question E1 filed the related action that 

was based upon the information you 

provided. 

Question 4a: Provide the case name of the 

related action. 

Question 4b: Provide the case number of the 

related action. 

Section F: Eligibility Requirements 

Question 1: State whether you are currently, 

or were at the time you acquired the 

original information that you submitted 

to the CFTC a member, officer, or 

employee of the Department of Justice, 

the Securities and Exchange 

Commission, the Comptroller of the 

Currency, the Board of Governors of the 

Federal Reserve System, the Federal 

Deposit Insurance Corporation, the 

Office of Thrift Supervision, National 

Credit Union Administration Board, 

registered entity, a registered futures 

association, a self-regulatory 

organization or; any law enforcement 

organization. 

Question 2: State whether you provided the 

information submitted to the CFTC 

pursuant to a cooperation agreement 

with the Commission or with any other 

agency or organization. 

Question 3: State whether you are a spouse, 

parent, child or sibling of a member or 

employee of the Commission, or whether 

you reside in the same household as a 

member or employee of the Commission. 

Question 4: State whether you acquired the 

information you are providing to the 

CFTC from any individual described in 

Question 1 through 3 of this Section. 

Question 5: If you answered ‘‘yes’’ to 

questions 1 though 4, please provide 

details. 

Question 5a: State whether you provided the 

information identified submitted to the 

CFTC before you (or anyone representing 

you) received any request, inquiry or 

demand from the CFTC, Congress, or any 

other federal, state or local authority, or 

any self regulatory organization about a 

matter to which the information your 

submission was relevant. 

Question 5b: If you answered ‘‘no’’ to 

questions 5a, please provide details. Use 

additional sheets if necessary. 

Question 6a: State whether you are the 

subject or target of a criminal 

investigation or have been convicted of 

a criminal violation in connection with 

the information upon which your 

application for award is based. 

Question 6b: If you answered ‘‘yes’’ to 

question 9a, please provide details, 

including the name of the agency or 

organization that conducted the 

investigation or initiated the action 

against you, the name and telephone 

number of your point of contact at the 

agency or organization, if available and 

the investigation/case name and number, 

if applicable. Use additional sheets, if 

necessary. If you previously provided 

this information on Form WB–DEC, you 

may leave this question blank, unless 

your response has changed since the 

time you submitted your Form WB–DEC. 

Section G: Entitlement to Award 

Use this section to explain the basis for 

your belief that you are entitled to an award 

in connection with your submission of 

information to us or to another agency in 

connection with a related action. Specifically 

address how you believe you voluntarily 

provided the Commission with original 

information that led to the successful 

enforcement of a judicial or administrative 

action filed by the Commission, or a related 

action. Refer to § 165.11 of this part for 

further information concerning the relevant 

award criteria. You may attach additional 

sheets, if necessary. 

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

Commission to consider, and subparagraph 

(a)(1) through (4) provides that in 

determining the amount of an award, the 

Commission will evaluate the following 

factors: (a) The significance of the 

information provided by a whistleblower to 

the success of the Commission action or 

related action; (b) the degree of assistance 

provided by the whistleblower and any legal 

representative of the whistleblower in the 

Commission action or related action; (c) the 

programmatic interest of the Commission in 

deterring violations of the securities laws by 

making awards to whistleblowers who 

provide information that leads to the 

successful enforcement of such laws; and (d) 

whether the award otherwise enhances the 

Commission’s ability to enforce the 

Commodity Exchange Act, protect customers, 

and encourage the submission of high quality 

information from whistleblowers. Address 

these factors in your response as well. 

Section G: Declaration 

This section must be signed by the 

claimant. 

By the Commission. 

Dated: November 10, 2010. 

David Stawick, 

Secretary. 

Statement of Chairman Gary Gensler 

Proposed Rules for Implementing the 

Whistleblower Provisions of Section 23 

of the Commodity Exchange Act 

I support the proposed rulemaking to 

establish a program for whistleblowers 

as mandated by the Dodd-Frank Act. 

Congress enacted these provisions to 

incentivize whistleblowers to come 

forward with new information about 

potential fraud in the financial markets. 

The proposed rulemaking authorizes the 

Commission to provide a monetary 

award to whistleblowers when their 

original information results in a 

successful enforcement action. The rule 

also provides that moneys recovered 

will fund new customer education 

initiatives to protect the public. The 

proposed rules encourage persons with 

knowledge to come forward and assist 

the Commission in identifying, 

investigating and prosecuting potential 

violations of the Commodity Exchange 

Act. 

[FR Doc. 2010–29022 Filed 12–3–10; 8:45 am] 

BILLING CODE 6351–01–P 

mstockstill on DSKH9S0YB1PROD with PROPOSALS2