New CFTC Rules Formalize Whistleblower Regulations

On May 22, 2017, the US Commodity Futures Trading Commission amended and supplemented several CFTC regulations to strengthen anti-retaliation protections for whistleblowers under the Commodity Exchange Act. These amendments, in general, make the CFTC’s whistleblower protections consistent with those afforded by Securities and Exchange Commission rules and reinforce the need for private fund managers that are registered as commodity pool operators or commodity trading advisors to take affirmative steps to avoid violating federal regulations regarding whistleblowing.

Section 748 of the 2010 Dodd-Frank Act amended the Commodity Exchange Act by adding a new Section 23, titled “Commodity Whistleblower Incentives and Protection,”1 which directed the CFTC to establish an incentive program that would reward whistleblowers who voluntarily provide the CFTC with information leading to successful enforcement actions for violations of the CEA. The CFTC subsequently adopted whistleblower protection provisions, in Part 165 of the CFTC Rules, as part of a broader rulemaking effort to implement the bounty program envisioned in Section 23 of the CEA.

On May 22, 2017, the CFTC adopted several amendments to Part 165, including several changes intended to prevent frustration of the CFTC’s promotion of whistleblower reporting efforts through employer enforcement of confidentiality and similar agreements.2 The main changes resulting from these amendments are: