cftcOn May 22, 2017, the U.S. Commodity Futures Trading Commission (“CFTC” or the “Commission”) adopted several additions to its whistleblower rules.  Among other things, the amendments expand the Commission’s power to pursue anti-retaliation claims on behalf of whistleblowers and, like the SEC, now prohibit confidentiality agreements that “impede” a whistleblower’s communications with the CFTC.   The CFTC first proposed some form of these amendments to its Whistleblower Rules last year.

The Dodd-Frank Act amended the Commodity Exchange Act (“CEA”) and established the CFTC’s whistleblower program, which provides monetary incentives to individuals who report possible violations of the CEA that lead to a successful enforcement action, as well as privacy, confidentiality, and anti-retaliation protections for whistleblowers who share information or assist the CFTC.  Notably, the statutory language governing the CFTC’s authority to enforce the anti-retaliation provisions of Dodd-Frank is nearly identical to the language governing the SEC, and neither statute expressly empowers either agency with the ability to pursue anti-retaliation claims on behalf of whistleblowers.  Until now, the two agencies had different views on the scope of their authority to enforce the anti-retaliation provisions of Dodd-Frank.

While the CFTC previously concluded that it lacked statutory authority to enforce the anti-retaliation provisions of the CEA, the Commission has now abandoned that position and concluded that it has can “bring an action against an employer who retaliates against a whistleblower, irrespective of whether the whistleblower qualifies for an award.”  The CFTC highlighted that, in determining whether retaliation occurred, it will also consider actions that an employer takes after a whistleblower reported internally but before providing information to the Commission. The Commission carves out the whistleblower’s right to pursue a private cause of action against the employer regardless of the Commission’s efforts.

The CFTC’s amendments also prohibit employers from using confidentiality and pre-dispute arbitration agreements to impede an individual from communicating with the CFTC about a possible violation of the CEA by. These amendments bring the CFTC’s Whistleblower Rules in line with the SEC’s, and are particularly significant in light of the SEC’s charges against employers who used employment agreements that required employees to waive their right to receive whistleblower awards from the SEC.  It follows that the CFTC is also likely to find any such waivers impermissible.

The CFTC also adopted procedural and technical amendments aimed at increasing the transparency of the whistleblower claim process and expanding eligibility requirements. In particular, the CFTC clarified that to qualify for an award, whistleblowers can notify Congress, another law enforcement agency or a foreign regulator first, and then have 180 days (as opposed to 120) to share the information with the CFTC.

The Director of the Division of Enforcement, James McDonald, explained that “[t]he Commission’s approval of these rules today will further strengthen and enhance our efforts to protect customers and promote market integrity.”  These amendments are therefore consistent with other efforts the CFTC has made over the past three years to encourage reporting  and “harmonize the [CFTC’s] Whistleblower Rules with those of the SEC.”

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Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.

Photo of Noa Baddish Noa Baddish

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups. Noa is also the Administrative…

Noa M. Baddish is a senior counsel in the Labor & Employment Law Department. She is a member of the Sports, Employment Litigation & Arbitration, Class and Collective Action, Wage & Hour and Whistleblower & Retaliation Practice Groups. Noa is also the Administrative Lead of the Class, Collective and Complex Action Practice Group.

Noa specializes in defending employers in various industries, such as sports, media and entertainment, on a wide variety of matters. With a particular focus on class and collective actions, Noa has successfully defended numerous organizations against complex employment-related claims. Noa’s approach to class and collective action defense is rooted in a thorough understanding of both federal and state employment laws. Noa’s expertise spans topics ranging from wage and hour disputes to discrimination and harassment claims. Noa is well-versed in the intricacies of class and collective action procedures, which allows her to provide comprehensive defense strategies tailored to each client’s objectives and circumstances.

Noa also has experience navigating proceedings before government agencies such as the Equal Employment Opportunity Commission (“EEOC”), including Commissioner Charges and those involving complex, large-scale issues such as claims of pattern or practice discrimination.

Noa also works closely with clients to develop proactive compliance strategies, focused on minimizing the risk of litigation. Noa has particular expertise in advising clients on how to conduct reorganizations or restructuring of businesses, otherwise known as “RIFs” and is experienced in all of the technicalities that come along with these types of group-wide employment actions.

Noa was recognized as a Rising Star by New York Super Lawyers from 2015 through 2020. She has authored and contributed to several articles and newsletters on employment and labor topics, including “Managing Legal and Reputational Risks When Right-sizing Your Workforce,” LegalDive (December 2022), “Mediating Employment Disputes,” LexisNexis (June 2019), “Supreme Court Says that Equitable Tolling Cannot Extend Rule 23(f) Deadline,” Proskauer’s Employee Benefits & Executive Compensation Blog (February 2019), “FLSA Turns 80: The Evolution of ‘Employee’ Status,” LAW360 (June 2018), and “CFTC Whistleblower Awards On The Horizon,” Proskauer’s Corporate Defense and Disputes Blog (May 2015).

Prior to coming to Proskauer, Noa served as Assistant General Counsel to the New York City Mayor’s Office of Labor Relations and defended the Mayor and City agencies against both employee grievances at arbitration and improper practice petitions before the Board of Collective Bargaining. Prior to that, she was a Law Clerk to Judge Ellen L. Koblitz of the Appellate Division of the New Jersey Superior Court.

While in law school, Noa served on the Executive Board as Notes and Articles Editor of the Fordham Urban Law Journal.