Whistleblower Provisions Regulation

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Dodd-Frank Timeline, Whistleblower Provisions, CFTC
Final Rule Issue Effective Date Proposed Amendment
August 4, 2011 October 24, 2011 August 30, 2016

At its November 10, 2010 open meeting, the CFTC approved a rule proposal regarding the establishment of whistleblower incentives and protection.<ref>Open Meeting on Fourth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 7, 2011.</ref> Also, the Securities and Exchange Commission proposed its whistleblower program on November 3, 2010 to reward individuals that provide the agency with tips that lead to successful enforcement actions.<ref>http://www.sec.gov/news/press/2010/2010-213.htm. SEC. Retrieved on April 27, 2011.</ref>

Background for CFTC Rule[edit]

The Dodd-Frank Act directs the CFTC to issue final rules regarding the issuance of monetary rewards to individuals who provide information that leads to fines or sanctions in excess of $1 million. The act gives discretion as to the amount, only stating that it could be "between 10 and 30 percent of the sanctions collected."

The CFTC Proposal[edit]

The Whistleblower rule proposal maintains the "discretionary power" of the commission with regard to the amount awarded to informants. Criteria used in the determination include:

  • Significance of the information;
  • Degree of assistance provided;
  • Programmatic interest; and
  • Other criteria.

Awards may be denied to certain government employees and other persons deemed "statutorily ineligible."

Also included in the proposal are provisions for protection of whistleblowers from employer retaliation.

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Background for SEC Rule[edit]

Under the SEC proposed rule, a whisteblower must voluntarily provide the SEC with original information about a violation of federal securities laws, which leads to a successful enforcement by the agency where the SEC obtains monetary sanctions totaling more than $1 million.

The SEC Proposal[edit]

The proposed rules state that a whistleblower, to be considered for a reward, must:

  • In general, a whistleblower is deemed to have provided information voluntarily if the whistleblower has provided information before the government, a self-regulatory organization or the Public Company Accounting Oversight Board asks for it.
  • Original information must be based upon the whistleblower’s independent knowledge or independent analysis, not already known to the Commission and not derived exclusively from certain public sources.
  • A whistleblower’s information can be deemed to have led to successful enforcement in two circumstances: (1) if the information results in a new examination or investigation being opened and significantly contributes to the success of a resulting enforcement action, or (2) if the conduct was already under investigation when the information was submitted, but the information is essential to the success of the action and would not have otherwise been obtained.
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