The CFTC offers two mechanisms to protect whistleblowers submitting tips to its office: confidential filings and an anti-retaliation lawsuit.
Confidential and Anonymous Filings
Although references to whistleblower protections generally indicate the anti-retaliation provisions of the Dodd-Frank Act, the ability to keep your status as a whistleblower confidential is an important protection for whistleblowers. The Dodd-Frank Act requires the CFTC to treat submissions as confidential and not disclose information “which could reasonably be expected to reveal the identity of a whistleblower.” See 7 U.S.C § 26(h)(2). The general prohibition on disclosure of the whistleblower’s identity can only be overridden in limited circumstances. Individuals who wish to have further assurances of confidentiality can submit both their initial tip and their subsequent award claim form anonymously. Only when a whistleblower collects their award do they have to identify themselves to the CFTC. A whistleblower attorney can advise you further about maintaining your privacy while reporting derivatives fraud.
The Dodd-Frank Act modified the Commodity Exchange Act to offer protection to whistleblowers who suffer retaliation by their employer in connection with their whistleblower activities. Specifically, the Exchange Act now provides a federal cause of action to whistleblowers who are discharged, demoted, suspended, harassed or otherwise discriminated against by their employer because of any lawful act done in providing information to the CFTC or assisting with the investigations and enforcement actions that result. Government employees, however, must instead rely on 5 U.S.C § 1221 which provides for corrective action from the Merit Systems Protection Board in certain reprisal cases. See § 26(h)(1)(B)(i).
In order to fall within the scope of the protections, the employee must be a whistleblower. A whistleblower for the purpose of the CFTC anti-retaliation provisions is an individual that submits a Form TCR to the CFTC whistleblower office and has a reasonable belief they are reporting information concerning a violation of the Commodity Exchange Act or a CFTC Rule. See § 165.2(p)(2). The Final Fact Sheet from the Office of Public Affairs about the Final Regulations Regarding Whistleblower Incentives and Protections indicates that the cause of action is available to individuals who have submitted to the CFTC after July 16, 2011, the date the Dodd-Frank Act took effect.
The question of whether the protections for CFTC whistleblowers extend to pre-submission activities, internal reporting and disclosure of confidential documents has not been litigated. However, it is worth noting that the SEC cases applying whistleblower protections to internal reports have been based on § 21F(h)(1)(A)(iii) of the Securities Exchange Act, which is not present in the Commodity Exchange Act. Furthermore, the SEC does not specifically require a whistleblower to submit a Form TCR for purposes of the retaliation protection. Cf. § 240.21F-2.
A whistleblower is eligible for the anti-retaliation protections in Section 23(h)(1) of the Commodity Exchange Act even if they are not eligible for a reward.
Post Dodd-Frank Arbitration Agreements are Invalid.
The Dodd-Frank Act precludes the enforcement of pre- and post-dispute arbitration agreements for whistleblower retaliation claims. However, there is disagreement between courts whether the Dodd-Frank Act applies the pre-dispute arbitration bar retroactively. Some courts have allowed arbitration clauses made prior to the effective date of Dodd-Frank to apply to the anti-retaliation cause of action.
No CFTC Enforcement of Retaliation Provisions
The CFTC will not currently bring an action of your behalf if your employer retaliates against you. It is the obligation of the whistleblower to bring a lawsuit to enforce the anti-retaliation protections. Unlike the SEC which has issued rules to allow it to take action to protect whistleblowers from prohibited employer conduct, the CFTC declined to issue rules to that effect when it adopted the Dodd-Frank Act.
Remedies for Retaliation
The whistleblower must bring a lawsuit in an appropriate district court of the United States within two years of the retaliatory conduct. If the whistleblower is successful in the lawsuit, they are entitled to reinstatement, back pay plus interest, and compensation for special damages including litigation costs, expert witness fees and attorney’s fees.
If you fear retaliation for reporting misconduct or derivatives fraud to the CFTC, Eric L. Young and McEldrew Young can advise you of your rights. Please call 1-800-590-4116 or contact us for a free case evaluation.