The CFTC recently issued its final rules outlining the procedures, forms and standards that a potential whistleblower must follow to make a claim and receive an award.  The rules will be located at 17 CFR Part 165 and will become effective October 24, 2011.  Here are the highlights:

• the Commission harmonized its rules with those of the SEC; 
• there is no requirement that the whistleblower report the information internally to be eligible for an award but the Commission may increase the award if the whistleblower complied with internal reporting requirements;
• a whistleblower who complied with an entity’s internal reporting requirements could be eligible for an award if the entity later reports information to the Commission that leads to a successful Commission action; 
• the Commission created a one step process for whistleblowers to submit claims and information, which requires filling out the new Form TCR (“Tip, Complaint or Referral”); 
• a whistleblower may aggregate claims to meet the $1,000,000 threshold to receive an award; 
• as a prerequisite to be considered for an award, a whistleblower must voluntarily provide information that led to a successful resolution of a covered Commission action, must comply with any additional staff requests for information, testimony or evidence and, if requested, enter into a confidentiality agreement with the Commission; 
• whistleblowers with potential civil or criminal liability remain eligible for an award but a whistleblower who is criminally convicted is ineligible;   
• to apply for an award that exceeds the $1,000,000 threshold, the whistleblower must file a Form WB-APP, which allows the whistleblower to “make his case” as to why he should be entitled to an award, within 90 calendar days after the Commission posts the imposition of sanctions on its website;   
• the total aggregate award a whistleblower could receive equals 10 to 30 percent of the award; 
• The criteria for determining the amount of an award include: character of the enforcement action, damages to customers, timeliness and reliability of the whistleblower, whether the whistleblower encouraged others to participate in the enforcement action, any unique hardships, the degree to which the whistleblower took steps to prevent violations from occurring or continuing, the efforts to remediate any harm, whether the information related only to a portion of the claim, the culpability of the whistleblower, whether the whistleblower unreasonably delayed the reporting and whether the whistleblower interfered or hindered internal compliance and reporting systems; and 
•  a whistleblower may appeal an award to the appropriate U.S. Circuit Court of Appeals within 30 days after the Commission’s final order.