CFTC Issues Proposed Rules to Expand Its Whistleblower Authority: The CFTC Proposes New Rules Granting the CFTC the Power to Bring Enforcement Actions and Prohibiting the Enforcement of Confidentiality Clauses in Employment Agreements

Sullivan & Cromwell LLP - September 8, 2016

On August 30, 2016, the Commodity Futures Trading Commission (the “CFTC”) issued a notice of proposed rulemaking (the “Proposed Rules”) to amend its regulations to enhance the process for reviewing whistleblower claims and to make related changes to clarify staff authority to administer the whistleblower program.  In addition, the Proposed Rules reinterpret the CFTC’s authority under the Commodity Exchange Act (the “CEA”) with respect to retaliation against whistleblowers and to make certain rule amendments to implement that expanded authority.  The Proposed Rules would allow the CFTC to bring enforcement actions against entities that retaliate against a whistleblower and would prohibit the enforcement of confidentiality clauses in employment contracts that would frustrate the whistleblower program.  These changes would resolve inconsistent interpretations of their respective authorizing statutes by the Securities and Exchange Commission (the “SEC”) and the CFTC and may signal a period of more aggressive enforcement by the CFTC with respect to whistleblower actions.