RULE 19

Dodd-Frank (Securities & Commodities): Report to the SEC/CFTC

Dodd-Frank (Securities & Commodities): Report to the SEC/CFTC

SEC Chairman Gary Gensler’s First Ever Statement on Whistleblowing

Introduction

The Dodd-Frank Act is a prominent whistleblower legislation, often serving as a model for drafting new laws. It established robust whistleblower programs within the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).

Enacted in the wake of the 2008 financial crisis, the Act provides whistleblowers with comprehensive protections, including confidentiality, anonymity, minimum awards, and potential rewards for related actions.

Practice Tips

  • The sections of Dodd-Frank that relate to whistleblower rewards are Section 748 (Commodity Exchange Act) (7 U.S.C. § 26) and Sections 922-24 (Securities Exchange Act) (15 U.S.C. § 78u-6).
  • On June 13 and August 25, 2011, the SEC and CFTC published final rules implementing the Dodd-Frank whistleblower reward program.These regulations have been subsequently amended. The SEC’s Office of the Whistleblower publishes one of the best websites for whistleblowers: www.sec.gov/whistleblower. It posts all SEC award rulings and copies of the law and regulations.
  • The CFTC also publishes a similar highly useful website at www.whistleblower.gov.

Resources

The two main whistleblower reward laws in Dodd-Frank are codified at 7 U.S.C. § 26 (commodities);

The SEC and CFTC also have jurisdiction to investigate and pay rewards related to foreign corruption cases:

The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) published rules governing the whistleblower rewards provisions of Dodd-Frank. The SEC’s rules are codified at 17 C.F.R. 21F . To read the all SEC regulations see 17 C.F.R. Parts 240 and 249 (page 228). The CFTC rules are codified at 17 C.F.R. Part 165.

Reward claims must be filed as mandated under the rules of the SEC or CFTC. The failure to follow these procedures can result in the denial of a reward. These rules apply to both U.S. violations and violations related to foreign corruption.

Detailed explanations of these rules were published by the two commissions:

Additionally, on September 23, 2020, the SEC completed a second major rule making concerning its whistleblower program, which was published at:

In 2022 the SEC engaged in a third rulemaking proceeding. The Commission changed its rule on “related action” payments,” prohibited reducing the amount of an award in large cases, and made other amendments. 

The CFTC also amended its initial whistleblower rules:

Dodd-Frank Act, Public Law No. 111-203, 124 Statutes at Large 1376 (July 21, 2010), included a number of enhancements for whistleblower protections in addition to the reward laws. The following sections of Dodd-Frank enhance whistleblower rights:

  • § 748 creates a new section 23 of the Commodities Exchange Act that provides for mandatory whistleblower rewards and prohibits retaliation
  • § 922 creates a new 21F of the Securities Exchange Act that provides for mandatory whistleblower rewards and prohibits retaliation
  • §§ 922 and 929A contain the provisions that amended and improved the Sarbanes-Oxley whistleblower protections
  • § 924 requires the SEC to establish a special whistleblower office and enact regulations enforcing whistleblower rules
  • § 1507 establishes new whistleblower protections for employees who make protected disclosures related to the enforcement of the Bureau of Consumer Financial Protection
  • § 1079B(c) amended the False Claims Act anti-retaliation law to provide for a universal national three-year statute of limitations to file wrongful discharge/retaliation claims under the FCA

The legislative history of Dodd-Frank:

Prior to the passage of the Dodd-Frank Act, the Inspector General for the SEC concluded that the existing voluntary bounty program was gravely deficient:

The Office of Inspector General was also very critical of the SEC’s handling of the Madoff scandal and the whistleblowers who had stepped forward:

Quick Links

On June 29, 2018, the SEC proposed new rules for the whistleblower program.

Whistleblower advocates have condemned these rules. Read the new Proposed Rule.

Visit the SEC’s website regarding the new rules

Kohn, Kohn and Colapinto filed detailed rulemaking comments ensuring whistleblowers can collect “related action” rewards.

Kohn, Kohn and Colapinto filed detailed rulemaking comments on the proposed Dodd-Frank Act whistleblower reward program.

Stephen M. Kohn, Michael D. Kohn acting pro bono on behalf of the National Whistleblower Center Meeting Notes with the SEC Commissioners.

Read the 2019 Whistleblower Programs Improvement Act, which includes significant improvements to the whistleblower reward and anti-retaliation provisions of the Dodd-Frank Act.

SEC Ruling Proceedings

Rulemaking Comments by Stephen M. Kohn

These fully rebutted the Chamber of Commerce’s assault on the Dodd-Frank and were heavily relied upon by the Commissioners for the final SEC Whistleblower Rules.

  • NWC Report to the SEC: “Impact of Qui Tam Laws on Internal Compliance” 
  • November 1, 2010 – Letter to SEC opposing corporate lobby position, including comments from Baker Donelson and Arent Fox.
  • November 22, 2010 – Letter to Chairman Schapiro explaining that Proposed Rules violate Congressional intent.
  • December 17, 2010 – Formal rulemaking letter with report entitled “Impact of Qui Tam Rules on Internal Compliance”.
  • December 18, 2010 – Updated “Impact of Qui Tam Rules on Internal Compliance” with corrected links.
  • January 25, 2011 – Materials for NWC’s meeting with SEC Division of Enforcement: Letter to Chairman Schapiro appling Chevron to Proposed Rules, marked-up version of Proposed Rules, updated NWC reported “Impact of Qui TamRules on Internal Compliance”, 10 C.F.R. 50.7 marked-up, Federal Acquisition Regulations, and 48 C.F.R. 52.203-13 marked-up.
  • February 10, 2011 – Letter to Commissioners explaining the proposed rules’ impact on the ability of US to enforce the Foreign Corrupt Practices Act.
  • March 7, 2011 – Letter to Chairman Schapiro responding to Chamber of Commerce’s incorrect attacks of the NWC’s December 17, 2010 report.
  • March 17, 2011 – Letter to SEC with provision-by-provision analysis of proposed rules with suggested revisions and justifications for revisions.
  • May 16, 2011 – Letter to Chairman Schapiro and Gensler regarding the impact of the first reported decision under the Dodd-Frank Act on the rulemaking process.

Comments by Commissioners introducing Final Rules

Comments by the Corporate Lobby

SEC/CFTC Rewards

CFTC Announces Approximately $7 Million Whistleblower Award

CTFC Announces Multiple Whistleblower Awards Totaling More than $5 Million

Provisions of Dodd-Frank directly related to Whistleblower Protection

  • Section 922 21F(a) qui tam for securities fraud: new qui tam rewards and incentives for whistleblowers who blow the whistle on securities violations 21F sub (H)(1) anti-retaliation provision for employees who file qui tam claims under securities law (H)(1)(A)(iii) anti-retaliation for employees who make disclosures under SOX, any violation of SEC art or who make protected disclosures under obstruction of justice act Claims filed in federal court – employees entitled to double back pay (B) statistical ratings organizations (Moody’s & Standard & Poor’s) now protected under SOX anti-retaliation provisions (C) SOX whistleblower protection act enhanced and amended to increase the statute of limitations, guarantee jury trials, and prohibit mandatory arbitration agreements.
  • Section 923 – Sarbanes-Oxley Act anti-retaliation Provisions.
  • Section 929A – SOX anti-retaliation law is clarified to ensure subsidiaries of publicly traded companies are fully protected under the whistleblower protection law.
  • Section 1057 – New whistleblower protection for employees who make disclosures to the newly created consumer protection board.
  • Section 1079(c) – Amends the False Claims Act anti-retaliation law to provide for universal national 3 year statute of limitations to file wrongful discharge claims under the False Claims Act.

U.S. Securities and Exchange Commission:

U.S. Commodity Futures Trading Commission:

Digital Realty v. Somers

The Securities and Exchange Commission’s Annual Reports on the Dodd-Frank Whistleblower Protection Program

The table below shows the top ten awards paid by the Commission since the reward laws were approved.

The Commodity Futures Trading Commission Annual Reports on the Dodd-Frank Whistleblower Protection Program

In response to the financial crisis of 2008 Congress enacted the Dodd-Frank Act.

David Colapinto explains how, years after Dodd-Frank, financial reform is still under attack.

Frequently Asked Questions

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Introduction: The Revolutionary Roots of Modern Whistleblowing

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