Rule2026-19006
Whistleblower Award Determination
Primary source
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Published
September 16, 2026
Effective
October 16, 2026
Issuing agencies
Commodity Futures Trading Commission
Abstract
The Commodity Futures Trading Commission ("Commission" or "CFTC") is amending its rules implementing section 23 of the Commodity Exchange Act ("CEA"). Section 23 of the CEA and the Commission's implementing regulations provide for the payment of awards, subject to certain limitations and conditions, to whistleblowers who provide the Commission with information that aids in successful enforcement efforts. The Commission is adopting amendments, which are modeled on a similar provision in the Securities and Exchange Commission's ("SEC") regulations, to part 165 of its regulations to increase the efficiency, transparency, and predictability of whistleblower claims process, thereby protecting and enhancing the program's effectiveness in incentivizing whistleblowers to report. The amendments also include technical corrections to the whistleblower rules to reflect the Whistleblower Office's ("WBO") move in 2025, consistent with its adjudicatory functions, to the Office of the General Counsel ("OGC").
Full Text
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<title>Federal Register, Volume 91 Issue 178 (Wednesday, September 16, 2026)</title>
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[Federal Register Volume 91, Number 178 (Wednesday, September 16, 2026)]
[Rules and Regulations]
[Pages 58576-58593]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-19006]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 165
RIN 3038-AF74
Whistleblower Award Determination
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rule.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is amending its rules implementing section 23 of the
Commodity Exchange Act (``CEA''). Section 23 of the CEA and the
Commission's implementing regulations provide for the payment of
awards, subject to certain limitations and conditions, to
whistleblowers who provide the Commission with information that aids in
successful enforcement efforts. The Commission is adopting amendments,
which are modeled on a similar provision in the Securities and Exchange
Commission's (``SEC'') regulations, to part 165 of its regulations to
increase the efficiency, transparency, and predictability of
whistleblower claims process, thereby protecting and enhancing the
program's effectiveness in incentivizing whistleblowers to report. The
amendments also include technical corrections to the whistleblower
rules to reflect the Whistleblower Office's (``WBO'') move in 2025,
consistent with its adjudicatory functions, to the Office of the
General Counsel (``OGC'').
DATES: This rule is effective October 16, 2026.
FOR FURTHER INFORMATION CONTACT: Tyler S. Badgley, General Counsel,
<a href="/cdn-cgi/l/email-protection#790b0c151c14181210171e391a1f0d1a571e160f"><span class="__cf_email__" data-cfemail="1d6f687178707c7674737a5d7e7b697e337a726b">[email protected]</span></a>, 202-418-5000; Stephen Andrews, Deputy General
Counsel for Regulation, Office of the General Counsel,
<a href="/cdn-cgi/l/email-protection#2e5c5b424b434f454740496e4d485a4d00494158"><span class="__cf_email__" data-cfemail="d1a3a4bdb4bcb0bab8bfb691b2b7a5b2ffb6bea7">[email protected]</span></a>, 202-308-7563; Aaron Levine, Senior Advisor, Office
of the General Counsel, <a href="/cdn-cgi/l/email-protection#780a0d141d15191311161f381b1e0c1b561f170e"><span class="__cf_email__" data-cfemail="dba9aeb7beb6bab0b2b5bc9bb8bdafb8f5bcb4ad">[email protected]</span></a>, 646-746-9721; Raagnee
Beri, Director, Whistleblower Office, <a href="/cdn-cgi/l/email-protection#54263631263d14373220377a333b22"><span class="__cf_email__" data-cfemail="8efcecebfce7ceede8faeda0e9e1f8">[email protected]</span></a>, 202-418-5986;
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street NW, Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Summary of the Proposal, Comments Received, and Discussion
A. New Rule 165.9(d): The 30 Percent Presumption
B. Comments Received
C. Discussion
III. Technical Amendments to Rules 165.10(a)(7) and 165.15
IV. Related Matters
A. Regulatory Flexibility Act
B. Paperwork Reduction Act
C. Consideration of Benefits and Costs
D. Antitrust Considerations
E. Executive Orders 12866, 13563, and 14192
F. Congressional Review Act
I. Background
The CFTC's whistleblower program (``Program'') plays an important
role in promoting the fairness and integrity of the nation's
derivatives markets. By rewarding individuals who come forward and
provide original information about violations of the CEA or the
Commission's regulations (``Regulations''), the Program enhances the
Commission's enforcement efforts and helps deter illegal conduct.
Section 23 of the CEA establishes the Program,\1\ while part 165 of
the Regulations defines the Program's framework.\2\ Part 165 of the
Regulations provides for the payment of awards, subject to certain
limitations and conditions, to whistleblowers who provide the
Commission information that aids in successful enforcement efforts. To
qualify for an award, a whistleblower must voluntarily provide original
information about a violation of the CEA or the Regulations that leads
to a successful Commission enforcement action (judicial or
administrative) that results in monetary sanctions over $1 million
(``Covered Action''), or the successful enforcement of an action
brought by specified entities or organizations including the Department
of Justice.
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\1\ 7 U.S.C. 26.
\2\ 17 CFR part 165.
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(``Related Action'').\3\ The CEA and Regulations authorize an
aggregate award of between 10 and 30 percent of the amount of monetary
sanctions collected in the Covered Action and/or a Related Action for
successful claimants, which is paid from the CFTC Customer Protection
Fund (``CPF'').\4\ Throughout the process, whistleblowers who make a
claim for an award have a right to be represented by counsel.\5\
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\3\ See 7 U.S.C. 26(a)(1), (5), (b)(1); 17 CFR 165.2(e)
(defining ``covered judicial or administrative action''); 165.2(m)
(defining ``related action''); 165.5 (requirements for consideration
of an award); 165.7 (procedures for award applications in Commission
actions and related actions, and Commission award determinations);
165.11(a) (awards based on related actions).
\4\ 7 U.S.C. 26(b)(2). The CPF is funded through certain
monetary sanctions that the Commission collects and can receive
deposits or credits when the balance is at or below $100 million. 7
U.S.C. 26(g)(3)(A). In contrast, the SEC Investor Protection Fund--
the counterpart to the CPF for funding SEC whistleblower awards--has
a higher $300 million threshold. 15 U.S.C. 78u-6(g)(a)(3)(A)(i). If
amounts deposited or credited to the CPF are insufficient to pay a
whistleblower award, additional collected monetary sanctions equal
to the unsatisfied portion of the award are to be deposited or
credited to the CPF. 7 U.S.C. 26(g)(3)(B). Besides funding
whistleblower awards, the CPF also funds the operation of the WBO
and the Office of Customer Education and Outreach. See id. (g)(2);
U.S. Commodity Futures Trading Commission--Availability of the
Customer Protection Fund, B-321788 (GAO Aug. 8, 2011).
\5\ 7 U.S.C. 26(d)(1).
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The Commission retains discretion in determining whistleblower
award amounts.\6\ In exercising this discretion, the Commission must
consider certain statutorily specified factors, but it may not consider
the CPF balance.\7\ Rule 165.9 defines the factors the Commission
considers in determining a whistleblower award amount.\8\ Positive
factors that may increase an award include: the significance of the
information provided by the whistleblower, the degree of assistance
[[Page 58577]]
provided by the whistleblower, furtherance of the Commission's law
enforcement interest, and the whistleblower's participation in internal
compliance systems.\9\ Negative factors that may reduce an award
include whistleblower culpability, unreasonable reporting delay, and
interference with internal compliance and reporting systems.\10\ In
promulgating rule 165.9, the Commission expressed its intent that
whistleblower award amounts be determined based on an individualized
review of the circumstances surrounding each award.\11\
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\6\ Id. 26(c)(1)(A); 17 CFR 165.9.
\7\ 7 U.S.C. 26(c)(1)(B)(i)(I)-(III) (specifying the following
for consideration: information's significance; degree of the
assistance; programmatic interest; and enhanced ability to enforce
the CEA, protect customers, and encourage the submission of high-
quality information); id. 26(c)(1)(B)(ii) (prohibiting consideration
of the CPF balance); see also id. 26(c)(1)(B)(i)(IV) (authorizing
the Commission to consider other factors established by rule or
regulation).
\8\ 17 CFR 165.9.
\9\ Id. 165.9(b). The rule specifies subfactors that the
Commission may consider in assessing each positive factor.
\10\ Id. 165.9(c). The rule specifies subfactors that the
Commission may consider in assessing each factor that may decrease
an award.
\11\ See Whistleblower Incentives and Protection, 76 FR 53172,
53188 (Aug. 25, 2011) (``The Commission anticipates that the
determination of award amounts . . . will involve highly
individualized review of the circumstances surrounding each
award.'').
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Part 165 also defines the process by which Program awards are made,
with the WBO serving as administrator. Among other duties,\12\ the WBO
reviews whistleblower award claims and makes initial recommendations
regarding their disposition. In doing so, the WBO reviews the
circumstances surrounding each claim, with outreach where appropriate,
to other Commission staff including the Division of Enforcement
(``DOE''), or, for Related Actions, to the staff of other relevant
agencies.\13\ If a claimant appears eligible for an award, the WBO
analyzes each of the factors set out in CEA section 23(c) and rule
165.9.
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\12\ See 17 CFR 165.7(e)(1), (2), (f)(2), (g), (j) (specifying
various WBO duties).
\13\ Id. 165.7(f)(2).
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Designated Claims Review Staff (``CRS'')--consisting of three to
five individuals from various Commission divisions and offices--review
the WBO's initial recommendation and issue a preliminary determination
(``Preliminary Determination'') based on the WBO's analysis and
recommendations. A Preliminary Determination reflects the CRS's
assessment of whether a claim should be granted, and, if so, proposes a
percentage of the collected monetary sanctions for the award in the
Covered Action and any Related Actions.\14\ If a claimant disagrees
with a Preliminary Determination, the claimant may contest it by
submitting a written response.\15\ The CRS considers timely submitted
responses before making a proposed final determination (``Proposed
Final Determination''). The WBO notifies the Commission of each
Proposed Final Determination, and, within 30 calendar days, any
Commissioner may request Commission review of a Proposed Final
Determination.\16\ A Proposed Final Determination automatically becomes
a final order of the Commission (``Final Order'') if no Commissioner
requests review by the full Commission. If a Commissioner requests a
review, the Commission will review the record relied upon by Commission
staff in making its determination and will then issue a Final
Order.\17\ The OGC reviews all Preliminary Determinations and Proposed
Final Determinations for legal sufficiency before their issuance.\18\
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\14\ See id. 165.7(g)(1), (i); id. 165.15(a)(2).
\15\ Id. 165.7(g)(2). A claimant's failure to submit a timely
response to the Preliminary Determination results in the Preliminary
Determination becoming either the Final Order of the Commission or,
if an award was recommended, a Proposed Final Determination. Id.
165.7(h).
\16\ Id. 165.7(j).
\17\ Id. 165.7(i), (j).
\18\ Id. 165.7(k).
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By many metrics, the Program has been a success since it began
operating in 2011. Through the end of calendar year 2025, whistleblower
reports have contributed to successful enforcement actions resulting in
over $3.3 billion in financial remedies,\19\ including approximately
$160 million (excluding added interest) returned to harmed customers.
In fiscal year (``FY'') 2024, whistleblowers contributed information
relevant to approximately 42 percent of the Commission's enforcement
actions. Between 2014, when the Commission issued its first
whistleblower award, and the end of calendar year 2025, the Commission
granted 73 awards in 56 matters, totaling over $395 million in award
payments. As the agency's Director of Enforcement noted at the time,
``Timely reports to the CFTC are critical for enforcement [as they]
help prevent further harm to customers or market participants and hold
wrongdoers accountable to the fullest extent possible.'' \20\
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\19\ This figure reflects awards in Commission enforcement
actions and Related Actions as defined in 7 U.S.C. 26(a)(5) and 17
CFR 165.2(m).
\20\ Press Release, CFTC, CFTC Awards $4M to Two Whistleblowers
(Nov. 12, 2024), available at <a href="https://www.cftc.gov/PressRoom/PressReleases/9006-24">https://www.cftc.gov/PressRoom/PressReleases/9006-24</a>.
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Notwithstanding the Program's success, an important area for
improvement remains: the time required to process and issue awards for
meritorious claims. From 2012 to 2025, the average time from the
deadline for prospective whistleblowers to submit award claims to the
date of a Commission Final Order granting an award to meritorious
claimants averaged more than 2.5 years. The delay between claim
submission and award is a concern for the Commission, claimants, and
members of Congress, as delays could dampen incentives for potential
whistleblowers to participate in the Program.\21\
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\21\ See, e.g., Testimony of Michael Selig, Chairman of the
CFTC, before House Agriculture Committee (Apr. 14, 2026) (remarks of
Congressman Zach Nunn), available at <a href="https://www.pbs.org/newshour/politics/watch-live-cftc-chairman-testifies-before-house-panel-amid-scrutiny-of-prediction-markets">https://www.pbs.org/newshour/politics/watch-live-cftc-chairman-testifies-before-house-panel-amid-scrutiny-of-prediction-markets</a>, 3:16:28 mark); CFTC Whistleblower
Protection and Program Improvement Act of 2026, S. 5161, 119th Cong.
Sec. 4 (2026) (specifying one-year general deadlines for
Preliminary Determinations and Final Orders).
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The Commission believes the amendments adopted herein will help to
improve processing time and promote transparency in the awards process.
Before these amendments, Commission staff were required to analyze the
factors that may increase the amount of a whistleblower's award
regardless of the size of an award, including for smaller awards.\22\
This process consumed resources that otherwise could be devoted to
resolving larger, more complex matters. Responding to requests to
contest a Preliminary Determination, where a claimant has contested an
award of less than the maximum 30 percent award, can also consume
additional Commission time and resources.\23\
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\22\ See 7 U.S.C. 26(c)(1)(A), 17 CFR 165.9.
\23\ See 17 CFR 165.7(g)(2).
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The Commission expects the rule changes adopted herein will shorten
the time needed to resolve meritorious, smaller-dollar whistleblower
claims by limiting the scope of analysis and intra-agency review of the
appropriate award percentage. These resource savings will allow
Commission staff to concentrate on larger awards, facilitating the
Commission's ability to assess and pay larger award claims more
quickly. And, as explained below, the Commission expects that a
shortened award timeframe and more transparent, predictable process
will reinforce whistleblowers' incentives to participate in the
Program.
II. Summary of the Proposal, Comments Received, and Discussion
On June 15, 2026, the Commission proposed to amend part 165 of its
Regulations to increase the Program's overall efficiency, transparency,
and predictability (``Proposal'' or ``NPRM'').\24\ Specifically, the
Commission proposed adding new rule 165.9(d) to establish a 30 percent
presumption (the ``30 Percent Presumption,'' defined further below) for
whistleblowers under certain
[[Page 58578]]
conditions and to redesignate existing rule 165.9(d) as rule 165.9(e).
The NPRM also proposed technical corrections to the whistleblower rules
to update regulatory references to reflect the WBO move in 2025,
consistent with its adjudicatory functions, to the OGC.
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\24\ See Whistleblower Award Determination, 91 FR 35914 (June
15, 2026) (Notice of Proposed Rulemaking).
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The comment period for the Proposal closed on July 15, 2026. The
Commission received nine responsive comments.\25\ As discussed in more
detail below, most commenters generally supported proposed new rule
165.9(d) and the 30 Percent Presumption.\26\ One commenter criticized
the proposal.\27\
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\25\ See comments posted on <a href="http://Regulations.gov">Regulations.gov</a> from Emily Stulz
(posted June 23, 2026) (``Stulz Comment''); Stephen Hasegawa,
Partner at Phillips & Cohen LLP (posted July 14, 2026) (``Hasegawa
Comment''); Constantine Cannon LLP (posted July 14, 2026)
(``Constantine Cannon Comment''); National Whistleblower Center and
Kohn, Kohn, and Colapinto (posted August 10, 2026) (``National
Whistleblower Center Comment''); Meagan Nugent (posted July 14,
2026) (``Nugent Comment''); Better Markets (posted July 20, 2026)
(``Better Markets Comment''); The Anti-Fraud Coalition (posted July
20, 2026) (``TAF Coalition Comment''); H Street Law PLLC (posted
July 20, 2026) (``H Street Law Comment''); and An Individual Retail
Derivatives Market Participant (posted July 20, 2026) (``Anonymous
Comment''). An additional comment, submitted by BSM Supervisao de
Mercados (``BSM Comment''), a self-regulatory organization of
Brazilian capital markets, did ``not aim to discuss directly'' the
proposed amendments but to explain its own reporting model (which
does not include financial award to whistleblowers) with the
intention of supporting the CFTC in developing initiatives aimed at
maintaining market integrity and protecting investors.'' BSM Comment
at 1-2 (posted July 20, 2026) (``BSM Comment''). While the BSM
Comment did not directly address the Commission's proposal, the
Commission appreciates BSM's input and collaborative intent.
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A. New Rule 165.9(d): The 30 Percent Presumption
The Commission proposed new rule 165.9(d), which the Commission
modeled on an existing provision in the SEC whistleblower program
rules. Under proposed new rule 165.9(d), the Commission is adopting a
presumption under which any awardees would receive, in total, the 30
percent statutory maximum when (1) the amount collected in any Covered
and Related Action(s), in the aggregate, would yield a maximum award of
$5 million or less,\28\ and (2) the awardee(s) meet certain conditions,
set out in proposed new rule 165.9(d)(1)(ii)-(iv). Based on these
conditions, the 30 Percent Presumption would apply unless: (1) a
reduction would otherwise be warranted under rule 165.9(c)(1), the
claimant interfered with internal compliance or reporting systems under
rule 165.9(c)(3), or the claim triggers rule 165.17 (concerning awards
to whistleblowers who engage in culpable conduct); (2) the claimant
engaged in unreasonable reporting delay under rule 165.9(c)(2); \29\ or
(3) the Commission determines that applying the presumption would be
inappropriate either because the claimant's assistance was limited or
because such an award would otherwise be inconsistent with the public
interest or the objectives of the Program. If a whistleblower matter
that falls within the $5 million threshold for the 30 Percent
Presumption has multiple awardees and at least one meets the conditions
of proposed new rule 165.9(d)(1)(ii)-(iv), the total aggregate award
will be set at the maximum 30 percent level. If any of the awardees do
not satisfy the conditions in proposed new rule 165.9(d)(1)(ii) and
(iii), the Commission will allocate a greater share of the 30 percent
award to those awardee(s) who do. The Commission will assess the amount
for the awardees who do not satisfy the conditions in proposed new rule
165.9(d)(1)(ii) and (iii) by considering all relevant facts.
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\26\ See National Whistleblower Center Comment at 2 (stating
that ``the 30 Percent Presumption provides greater clarity and
predictability for whistleblowers and their counsel, helping them
understand at the outset what potential reward they can reasonably
expect''); Hasegawa Comment (believing ``that the Commission is
correct that the Proposed Rule will save staff time and will allow
the Commission to shift resources to the evaluation of whistleblower
awards in larger cases [and sharing the] hope that this, in turn,
will alleviate delays in resolution of award claims in larger
matters, and ultimately will reinforce incentives for whistleblowers
to come forward with information that aids the Commission's
enforcement of the commodities laws[,] I support the Proposed
Rule''); Constantine Cannon Comment at 2 (``We . . . fully support
the proposed 30% presumption [and] believe the agency's reasoning
strongly supports the rule change and the benefits it will bring to
the program.''); Nugent Comment at 1 (writing ``in support of the
Commission's proposed amendments to 17 CFR Part 165, specifically
the new 30 Percent Presumption at proposed section 165.9(d)'');
Better Markets Comment at 1 (``We agree with the Commission that the
rule will increase the whistleblower program's overall efficiency,
transparency, and predictability and potentially enhance
whistleblowers' incentives to report unlawful conduct; as a result,
the Commission should adopt the rule.''); TAF Coalition Comment at 2
(``We support the Whistleblower Rule Amendment, proposed new rule
165.9(d).''); Anonymous Comment at 1 (``This comment supports the
proposed 30 Percent Presumption.''); H Street Law Comment at 2
(characterizing the 30 Percent Presumption as ``a welcome
improvement'').
\27\ See Stulz Comment.
\28\ See new rule 165.9(d)(1), (2). A $5 million threshold for a
30 percent award corresponds to approximately $16.66 million in
collected monetary sanctions. Collections would fall under $16.66
million if the total monetary sanctions imposed are less than this
amount. Even if monetary sanctions exceed this amount, DOE staff who
worked on an action may have learned enough about the assets of the
responsible parties to reasonably anticipate that less than $16.66
million will ever be collected. If so, this fact would appear in the
record supporting the Proposed Final Determination and enable the
Commission to ``determine[ ] that it does not reasonably anticipate
that future collections would cause the statutory maximum award to
be paid to any whistleblower to exceed $5 million in the aggregate''
under new rule 165.9(d)(1)(i).
\29\ This exclusion may be waived at the Commission's discretion
based upon the claimant demonstrating that, in the circumstances,
doing so is consistent with the public interest and the Program's
objectives. See new rule 165.9(d)(1)(iii).
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As discussed in the Proposal, the Commission expects new rule
165.9(d) will enhance the efficiency, transparency, and predictability
of the Program and will reduce the delay in processing awards, thereby
incentivizing whistleblowers to report violations to the Commission.
First, the Commission expects the 30 Percent Presumption will
materially reduce the time for award determinations by improving
Commission staff's efficiency in processing award applications and
thereby enabling Commission staff to more timely process larger,
complex claims.\30\ Second, the Commission anticipates that the
amendment will reduce delays in granting awards to meritorious
whistleblowers, incentivizing potential whistleblowers to report
violations.\31\ Third, by making award percentages more transparent and
predictable through the 30 Percent Presumption for claims at or below
the $5 million threshold, proposed new rule 165.9(d) aims to strengthen
whistleblower incentives to report violations, as historical award data
suggests the rule would have resulted in higher payments in
approximately 30 percent of eligible matters.\32\ Fourth, proposed new
rule 165.9(d) is tailored to improve Program efficiency, transparency,
and predictability without sacrificing Program integrity or public
interests by (1) conditioning operation of the 30 Percent Presumption
on satisfaction of the specific safeguarding criteria and (2) retaining
the Commission's discretion in issuing whistleblower awards to ensure
the public interest is protected.\33\ Fifth, proposed new rule 165.9(d)
would better align the CFTC and the SEC whistleblower programs--a goal
that is consistent with the spirit of the Memorandum of Understanding
between the CFTC and SEC to guide inter-agency coordination and
collaboration.\34\
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\30\ 91 FR at 35917.
\31\ Id.
\32\ Id. at 35917-35918; see also National Whistleblower Center
Comment at 2 (``The presumption aligns with that well-established
fact, recognized by the SEC in a 2022 rulemaking, that high rewards
increase the likelihood of whistleblowers coming forward to
regulators with their information.'').
\33\ Id. at 35918.
\34\ See CFTC-SEC Harmonization Initiative, available at <a href="https://www.cftc.gov/harmonization">https://www.cftc.gov/harmonization</a>.
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[[Page 58579]]
B. Comments Received
The Commission received nine responsive comments. Most commenters
generally supported proposed new rule 165.9(d) and the 30 Percent
Presumption, while one criticized the proposal.
Constantine Cannon, H Street Law, Stephen Hasegawa of Phillips &
Cohen LLP, the National Whistleblower Center and Kohn, Kohn, and
Colapinto (``National Whistleblower Center''), Meagan Nugent, The Anti-
Fraud Coalition (``TAF Coalition''), Better Markets, and an anonymous
individual retail derivatives market participant supported the
Commission's adoption of the 30 Percent Presumption. Constantine
Cannon, a law firm that represents CFTC whistleblowers, ``fully
support[ed] the proposed 30% presumption,'' agreeing with the
Commission that ``the extended delay in [the Commission's] awards
determination process poses a significant disincentive for would-be
whistleblowers to report violations'' and noting that ``potential
whistleblowers . . . look to timing considerations as a significant
factor in assessing whether it is worth it for them to move forward
under the whistleblower program.'' \35\ The National Whistleblower
Center praised the 30 Percent Presumption, concluding that ``[t]his
reform serves the central purpose of the CEA's award provisions:
ensuring that whistleblowers can rely on a meaningful and predictable
opportunity when they assume the substantial personal and professional
risks of reporting.'' \36\ Similarly, H Street Law described the 30
Percent Presumption as ``a welcome improvement'' and expressed support
for ``the Commission's efforts to enhance the efficiency, transparency,
and predictability of whistleblower claim processing, and to preserve
and enhance whistleblower incentives.'' \37\ Hasegawa likewise
expressed support, stating that he ``appreciate[d] the Commission's
Proposed Rule establishing a presumptive 30% award in matters in which
the aggregate award will total no more than $5 million'' and that ``the
Commission is correct that the Proposed Rule will save staff time and
will allow the Commission to shift resources to the evaluation of
whistleblower awards in larger cases.'' \38\ Better Markets similarly
agreed with the Commission ``that the rule will increase the
whistleblower program's overall efficiency, transparency, and
predictability and potentially enhance whistleblowers' incentives to
report unlawful conduct'' and that the 30 Percent Presumption ``will
materially reduce the time for award determinations by improving the
Commission staff's efficiency in processing award applications.'' \39\
And TAF Coalition, whose membership includes two former CFTC WBO
Directors, ``applaud[ed] the Commission's decision to model the
Whistleblower Rule Amendments on a similar provision in the [SEC's]
regulations,'' noting that ``[t]he CFTC's Whistleblower Program has a
long history of modeling its rules, processes, and award determinations
on the SEC's regulations, internal operations, and determinations that
have proven to be effective and provide efficiency.'' \40\
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\35\ Constantine Cannon Comment at 2.
\36\ National Whistleblower Center Comment at 1.
\37\ H Street Law Comment at 1, 2. H Street Law also ``share[d]
the timing concerns raised by Constantine Cannon LLP.'' Id. at 1. H
Street Law wrote that ``many whistleblowers have noted [current]
delay[s] as a significant disincentive to reporting unlawful
conduct.'' Id. at 2.
\38\ Hasegawa Comment.
\39\ Better Markets Comment at 1, 2.
\40\ TAF Coalition Comment at 1-2.
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Individual commenters also provided detailed support that tracked
the Commission's specific rationale for the Proposal.\41\ Meagan Nugent
strongly supported proposed new rule 165.9(d), writing that, among
other things, the ``SEC's own experience with the model rule confirms
the approach works,'' and that the ``built-in safeguards prevent
overreach.'' \42\ And the anonymous individual retail derivatives
market participant supported adoption of the 30 Percent Presumption,
agreeing with the Commission that ``greater predictability may increase
willingness to report and to apply for an award,'' and that ``a
potential whistleblower cannot readily value an award within a
discretionary range of 10 to 30 percent, but can understand a
presumptive 30 percent outcome for claims within the proposed
threshold.'' \43\
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\41\ See Nugent Comment at 1; Anonymous Comment at 1.
\42\ Nugent Comment at 1. Nugent cited the SEC's 2021 Annual
Report to Congress and noted that ``the [30 percent] presumption's
application rate in qualifying cases climbed from 46 percent to 89
percent, with the SEC reporting increased consistency, greater
transparency for claimants and counsel, and faster processing.'' Id.
at 3.
\43\ Anonymous Comment at 1.
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Despite their overall support, several commenters suggested
modifications to the Proposal. The most commonly raised concern among
supporting commenters was that the 30 Percent Presumption was
``unlikely on its own to resolve'' whistleblower award delays.\44\
These commenters suggested additional modifications to proposed new
rule 165.9(d) to further target delays in issuing whistleblower awards.
The proffered refinements were to adopt specific time requirements,
such as six months, for issuing Preliminary Determinations and making
final awards; \45\ raise the maximum award level for application of the
30 Percent Presumption from $5 million to $15 million in awards; \46\
and provide for annual adjustment of the $5 million threshold to guard
against erosion of the proposed rule's intended benefits over time.\47\
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\44\ H Street Law Comment at 2; see also Constantine Cannon
Comment at 2 (doubts ``that the 30% presumption will go far enough
in tightening up the existing delay in making award decisions'' as
evidenced by ``still significant delays under the SEC whistleblower
program even though it has used the 30% presumption for several
years''); Better Markets Comment at 2 (the Commission could ``go
even further'' to reduce the time for award determinations).
\45\ Constantine Cannon Comment at 2; H Street Law Comment at 1-
2 (endorsing Constantine Cannon's suggestion). Constantine Cannon
additionally advocated that the Commission adopt the Department of
Justice's (DOJ's) ``much simpler'' process for making
``whistleblower (Relator) share determinations under the False
Claims Act''--which it characterized as ``often just a simple back
and forth between the whistleblower (and their counsel) and the DOJ
attorneys''--as a ``useful model for how the CFTC might improve its
approach.'' Constantine Cannon Comment at 3.
\46\ Better Markets Comment at 2.
\47\ H Street Law Comment at 1.
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Commenters also suggested additional rule refinements.\48\ Hasegawa
suggested adding a provision to eliminate the potential ``unintended
inconsistency in whistleblower awards'' that could arise under proposed
new rule 165.9(d) for meritorious whistleblowers in a subset of
matters.\49\ For instance, Hasegawa observed that a whistleblower whose
submission led to a recovery of $16.66 million in collected proceeds
would be eligible under the presumption to receive approximately $5
million, whereas a whistleblower whose information led to a recovery of
$17 million in collected proceeds could receive as little as $1.7
million, based on the statutory minimum of a 10 percent award.\50\ The
anonymous individual
[[Page 58580]]
retail derivatives market participant recommended the Commission adopt
changes to provide (1) that when the Commission does not apply the
presumption, the Preliminary Determination should identify the
particular provision relied upon and briefly explain the material facts
supporting that conclusion and (2) that a complete and well-organized
initial submission should not be found to reflect ``limited''
assistance solely because Commission staff did not request supplemental
cooperation from the whistleblower.\51\
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\48\ See Hasegawa Comment; Anonymous Comment. Another comment
requested the Commission link the proposed new rule to an increase
in the statutory CPF from $100 million to $300 million. H Street Law
Comment at 1. The statutory CPF cap amount is, however, beyond the
scope of the Commission's authority to alter; doing so requires an
act of Congress, see CEA section 23(g)(3)(A), 7 U.S.C. 26(g)(3)(A),
which H Street Law acknowledged. See H Street Law Comment at 1 (``We
support a legislative increase in the CPF threshold . . . .'').
\49\ Hasegawa Comment.
\50\ Id. The maximum award under the 30 Percent Presumption rule
is $5 million, which corresponds to collections of about $16.66
million. It is mathematically possible that a whistleblower who
would qualify for the presumption but for collections exceeding
$16.66 million would receive an award of less than 30 percent and
less than $5 million.
\51\ Anonymous Comment at 4-5. The comment reasons that, absent
the first ``discipline[], the discretionary grounds for displacing
the presumption could reintroduce the uncertainty the proposal is
intended to reduce''; and, regarding the second that a complete and
well-organized initial submission may provide substantial assistance
precisely because it enables staff to proceed without repeated
follow-up, and the absence of requests for supplemental cooperation
should not, standing alone, support a finding under proposed rule
165.9(d)(1)(iv)(A) that assistance was limited.'' Id. at 1.
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C. Discussion
Upon consideration of comments received, the Commission is adopting
new rule 165.9(d) as proposed. As noted above, the comments received
were broadly supportive of the rule and its core rationale of promoting
the efficiency and transparency of the Program and reducing delay in
processing whistleblower claims.
First, the Commission expects that new rule 165.9(d) will
materially reduce the time for award determinations by improving the
Commission staff's efficiency in processing award applications. This
will enable the Commission to process claims more quickly. The reasons
for the Commission's expectation are described below.
The SEC's experience under its own rule demonstrates the 30 Percent
Presumption is likely to increase consistency and transparency and
reduce delays. The Commission's expectation for improved efficiency and
shortened award times is based, in part, on the SEC's experience after
that agency adopted a similar presumption.\52\ A year after
promulgating rule 21F-6(c), the SEC reported that the ``30% presumption
has had a significant impact on [its] whistleblower program,''
``allowed for increased consistency among awards and greater
transparency to claimants and their counsel,'' and ``assisted . . . in
expediting the processing of award claims.'' \53\ Commenters also
described the SEC's ``parallel experience'' as a ``genuine natural
experiment with a comparable federal whistleblower program [that]
strongly supports the Commission's expectation that its own presumption
will produce similar efficiency gains.'' \54\
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\52\ Whistleblower Program Rules, 85 FR 70898, 70911-70912 (Nov.
5, 2020) (promulgating, among other rules, SEC rule 21F-6(c),
codified at 17 CFR 240.21F-6).
\53\ Securities and Exchange Commission, 2021 Annual Report to
Congress Whistleblower Program, 18 (2021), available at <a href="https://www.sec.gov/reports?aId=edit-tid&year=All&field_article_sub_type_secart_value=Reports+and+Publications-AnnualReports&tid=59">https://www.sec.gov/reports?aId=edit-tid&year=All&field_article_sub_type_secart_value=Reports+and+Publications-AnnualReports&tid=59</a>.
\54\ See Nugent Comment at 2-3; see also TAF Coalition Comment
at 3 (``[T]he proposed rule amendment, following the SEC's result,
should shorten the time required by the CFTC to resolve and pay
awards on small, meritorious whistleblower claims by limiting the
scope of analysis over the appropriate award percentage.'').
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While one commenter noted that ``there are still significant delays
under the SEC whistleblower program,'' the commenter did not deny that
the SEC's 30 percent presumption has reduced delays.\55\ Nor did the
commenter explain or provide quantitative information for its assertion
that the SEC whistleblower program still experiences ``significant
delays.'' The Commission therefore cannot evaluate the validity of this
claim.
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\55\ See Constantine Cannon Comment at 2.
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A significant portion of meritorious whistleblower claimants are
likely to fall within the 30 Percent Presumption. As discussed in more
detail in its Consideration of Benefits and Costs,\56\ the Commission's
historical experience suggests that the 30 Percent Presumption is
likely to apply to a sizeable portion--around 82 percent--of
meritorious whistleblower claims. For these claims, the new rule will
truncate the staff-intensive, frequently time-consuming process of
determining an appropriate award percentage because the scope of
analysis will be narrowed. TAF Coalition concurred in the Commission's
assessment, writing that, based on members' relevant experience under
part 165, precise award percentages are determined through a process
that is indifferent to the size of the claim, requiring essentially the
same degree of Commission staff time and attention to determine award
percentage levels with the same time dedication and precision for both
large and smaller awards and WBO attorneys and others who participate
in the award process must analyze the factors that may increase the
amount of a whistleblower's award irrespective of the size of an
award.\57\
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\56\ See infra Section IV.C.
\57\ See TAF Coalition Comment at 2.
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The 30 Percent Presumption will streamline the analysis required
for a significant portion of meritorious whistleblower claims. Under
new rule 165.9(d), award-determination analysis will be narrowed: for
claims within the $5 million threshold, the only rule 165.9(b) factor
Commission staff will need to consider is whether the whistleblower's
assistance was more than ``limited.'' \58\ Commission staff will not be
required to assess the whistleblower's degree of assistance at a more
granular level.\59\ Nor will Commission staff be required to make award
percentage recommendations relating to the significance of the
whistleblower's information, the Commission's law enforcement interest,
or the whistleblower's participation in internal compliance
systems.\60\ As a result, Commission staff can spend less time
analyzing criteria factors that may increase the amount of a
whistleblower award within the statutory range of 10 to 30 percent; and
the OGC's legal sufficiency review, described above, also will be
simplified insofar as the analysis of the award percentage is
streamlined.\61\
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\58\ New rule 165.9(d)(1)(iv).
\59\ See 17 CFR 165.9(b)(2).
\60\ See id. 165.9(b)(1), (3), (4).
\61\ By designating a 30 percent maximum award for all matters
within the $5 million threshold unless the 30 Percent Presumption is
overcome, new rule 165.9(d) will limit the scope of analysis
required to determine appropriate award percentages for the
significant portion of claims subject to awards of $5 million or
less.
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The 30 Percent Presumption is anticipated to help reduce requests
to contest Preliminary Determinations of recommended award percentages
for a significant share of claims. Applying the 30 Percent Presumption
to meritorious claims is expected to reduce incentives for claimants to
contest Preliminary Determinations or request reconsideration in cases
where the Preliminary Determination does not provide for the statutory
maximum award. Indeed, the Commission's analysis of the distribution of
past awards indicates that, had new rule 165.9(d) been in effect since
the Program's inception, approximately 30 percent of the matters with
awards of $5 million or less would likely have resulted in higher award
payments--i.e., at the statutory maximum of 30 percent based on the
Presumption. Some of the claimants in that subset of matters contested
their awards; had the 30 Percent Presumption been in operation, those
claimants would have had no
[[Page 58581]]
reason to contest the Preliminary Determination award percentage.
Reconsideration requests require additional Commission staff time
and resources to consider the issues and grounds advanced in the
claimant's response, along with any supporting documentation the
claimant provided.\62\ With fewer Preliminary Determinations subject to
contests, the Commission anticipates that staff resources that
otherwise would be required to handle reconsideration requests can be
redirected to more timely process awards in other matters. Commenters
addressing this point largely agreed: TAF Coalition, for instance,
reasoned that ``[t]he resource savings for matters with small awards
and the receipt of fewer Requests for Reconsideration would free WBO
and Commission staff to concentrate more on larger awards, facilitating
the WBO's and Commission's ability to assess and pay larger awards more
quickly.'' \63\
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\62\ See 17 CFR 165.7(i); see also TAF Coalition Comment at 3
(``Requests for Reconsideration take an extraordinary amount of time
and resources for the WBO attorney staff to review, process, and
prepare a recommendation for Commission consideration.'').
\63\ TAF Coalition Comment at 3.
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Streamlining the award process for claims subject to the 30 Percent
Presumption will help support whistleblowers' incentives to report
violations. First, as mentioned above, by reducing the staff time and
resources necessary to address claims in the significant portion of
meritorious claims that the Commission expects to qualify for the 30
Percent Presumption, the Commission will be able to devote resources to
other whistleblower matters. This includes assessing and awarding
claims in larger, potentially more complex, matters. With the benefit
of more focused staff attention, the Commission expects accelerated
processing of these matters as well.
Second, the Commission anticipates that new rule 165.9(d) will
guard against erosion of whistleblowers' incentives to report
violations to the Commission. As discussed in the Consideration of
Benefits and Costs section, extended delays in making awards
determinations following a whistleblower's claim submission diminish
the overall value of the award due to the time-value of money.\64\ This
reduction may adversely affect incentives for individuals to report
illegal activity, as noted by several commenters.\65\ Consequently,
significant delays may lead prospective whistleblowers to determine
that the reduced valuation resulting from longer wait times does not
justify the associated risks of disclosure. Insofar as the 30 Percent
Presumption reduces award application processing times for all claims
(small and large), as the Commission expects, potential whistleblowers
will be more likely to find it worthwhile to report violations and
apply for awards.\66\
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\64\ See infra Section IV.C.
\65\ See Constantine Cannon Comment at 2 (``The agency is
correct that the extended delay in its awards determination process
poses a significant disincentive for would-be whistleblowers to
report violations. We know this firsthand from our own dealings with
potential whistleblowers who look to timing considerations as a
significant factor in assessing whether it is worth it for them to
move forward under the whistleblower program.''); Nugent Comment at
3 (``Delay is not a neutral inefficiency; it directly reduces the
present value of an eventual award and, as the Commission
recognizes, can deter exactly the kind of prompt, high-quality
reporting the Program exists to encourage.'').
\66\ Accord Nugent Comment at 3 (``A rule that measurably
shortens that timeline for the great majority of smaller claims--
freeing staff time to focus on the largest, most complex matters--is
a direct and well-tailored response to a real problem [i.e., the
reporting disincentive delay can engender].'') One comment posits
that, absent hard deadlines for the Commission to complete certain
steps in the award process, ``would-be whistleblowers [could still
be dissuaded] from coming forward'' after new rule 165.9(d) is
effective. Constantine Cannon Comment at 2. The concern apparently
stems from the underlying premise that ``significant delays''--a
concept the comment does not further define or explain, as noted
previously--still occur in the SEC whistleblower program. Absent
stronger support for this underlying premise (including the
likelihood and relative degree of the potential dissuasion that the
commenter expects would linger with new rule 165.9(d) in effect),
the Commission is unable to assess and assign weight to the concern.
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Third, by designing new rule 165.9(d) to enhance Program
transparency and predictability, the Commission seeks to enhance the
incentives for whistleblowers to report violations to the Commission.
The criteria considered in determining award amounts are enumerated in
new rule 165.9 and are publicly available on the Commission's
whistleblower website, making them easily accessible to potential
whistleblowers and their counsel.\67\ With greater visibility into the
types of awards that may receive the statutory cap, whistleblowers will
have greater predictability in assessing potential rewards for the
submission of tips to assist the Commission's enforcement mission.\68\
The Commission anticipates that this is likely to increase
whistleblowers' willingness to participate in the Program. Analysis of
the distribution of past awards supports new rule 165.9(d)'s potential
to encourage whistleblower participation: had new rule 165.9(d) been in
effect since the Program's inception, approximately 30 percent of the
matters with awards of $5 million or less would likely have resulted in
higher award payments.
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\67\ See Commodity Futures Trading Commission Whistleblower
Program, Preliminary Decisions, <a href="https://www.whistleblower.gov/overview/preliminarydeterminations">https://www.whistleblower.gov/overview/preliminarydeterminations</a> (FAQs: ``What factors does the
CFTC consider in determining the amount of the award''). See also 7
U.S.C. 26(d) (delineating whistleblowers' right to be represented by
counsel). Because attorneys--who may submit tips and other
information to the Program for their anonymous clients (see id.
26(d)(2))--frequently represent whistleblowers on a contingency
basis, the Program's process and award-size potential affects
attorneys' incentives as well as whistleblowers'.
\68\ As a practical matter, both Preliminary Determinations and
Final Orders granting awards less than 30 percent to meritorious
whistleblower claimants should provide--in circumstances where the
Commission determines the 30 Percent Presumption inapplicable based
on operation of the conditions set out in new rule 165.9(d)(1)(ii)-
(iv)--the reasons for the Commission's determination. See 17 CFR
165.7(g)(1) (calling for the CRS's ``assessment'' in its Preliminary
Determination); id. CFR 165.7(i) (calling on the CRS to ``consider
the issues and grounds advanced in the claimant's response'' when a
claimant contests the Preliminary Determination). In any event,
Preliminary Determinations and Final Orders are subject to
reconsideration and appeal, respectively. See id. 165.7(g)(2)
(stating claimants' right to contest Preliminary Determinations);
id. 165.13 (stating claimants' right to appeal Final Orders to a
federal court of appeals with Preliminary Determinations to be
included in the record on appeal).
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Fourth, new rule 165.9(d) is tailored to preserve Program integrity
and avoid any conflict with the public interest.\69\ This tailoring is
achieved in two ways: (1) operation of the 30 Percent Presumption is
conditioned on a whistleblower's satisfaction of the safeguarding
criteria specified in subparagraphs 165.9(d)(1)(ii)-(iii) and (2) the
Commission retains discretion to determine appropriate award
percentages as described in subparagraphs 165.9(d)(1)(iii) and (iv).
With respect to the first factor, the Commission considers it
inappropriate to extend the benefit of the presumption to claimants who
were culpable in the violation, who interfered to a degree with
internal compliance or reporting systems, or (absent justifying case-
specific circumstances) who delayed reporting. Moreover, conditioning
the presumption on the absence of unreasonable reporting delays is
intended to incentivize prompt reporting. With respect to the second
factor, the Commission retains overall discretion in establishing award
percentages to incentivize strong and sustained whistleblower
assistance in the Covered Action or Related Action, see subparagraph
165.9(d)(1)(iv)(A), and to provide an overarching safeguard to protect
the public interest and the
[[Page 58582]]
Program's integrity, see subparagraph 165.9(d)(1)(iv)(B).\70\
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\69\ See Nugent Comment at 3 (``The retained safeguards are the
right way to balance speed against integrity.'').
\70\ The Commission equates the meaning of the term ``public
interest'' in subparagraphs (d)(1)(iii)'s and (iv)'s to the
considerations delineated in CEA section 15(a)(2), 7 U.S.C.
19(a)(2)--i.e., protection of market participants and the public;
efficiency, competitiveness, and financial integrity of markets;
price discovery; sound risk management practices; and other public
interest considerations.
---------------------------------------------------------------------------
Fifth, new rule 165.9(d) will further harmonize the CFTC and the
SEC whistleblower programs, which were both enacted by the Dodd-Frank
Wall Street Reform and Consumer Protection Act in 2010 (``Dodd-Frank
Act'').\71\ Doing so is consistent with the spirit of the Memorandum of
Understanding between the CFTC and SEC to guide inter-agency
coordination and collaboration.\72\ As noted above, SEC rule 21F-6(c)
currently provides for a conditional 30 percent presumption for matters
where the 30 percent award would yield a total payment of $5 million or
less and served as the model for new rule 165.9(d).\73\ Because it is
not unusual for affiliated market participants or entities to be
subject to regulation or oversight by both the CFTC and the SEC (and
unlawful conduct by some actors may implicate the jurisdiction of both
agencies), the Commission views consistency between the two
whistleblower programs to be of value.\74\ By modeling new rule
165.9(d) on the SEC's corresponding provision, the Commission intends
to incentivize whistleblower participation in the Program by ensuring
that potential whistleblowers perceive the Program as equally
worthwhile and accessible as the SEC whistleblower program.\75\
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\71\ The programs are codified at 7 U.S.C. 26 and 15 U.S.C. 78u-
6, respectively. The SEC and CFTC whistleblower programs share a
common statutory origin, having been enacted contemporaneously by
the Dodd-Frank Act to achieve common policy objectives--namely, to
incentivize the disclosure of violations and deter misconduct in the
financial markets. This shared origin, the parallel structure of the
two programs, and the fact that certain market participants and
conduct fall within the overlapping jurisdictional reach of both
agencies support a harmonized interpretive approach.
\72\ See Memorandum of Understanding between the U.S. Securities
and Exchange Commission and the U.S. Commodity Futures Trading
Commission Regarding Harmonization in Areas of Common Regulatory
Interest (Mar. 11, 2026), available at <a href="https://www.sec.gov/files/mou-sec-cftc-2026.pdf">https://www.sec.gov/files/mou-sec-cftc-2026.pdf</a>.
\73\ See 17 CFR 240.21F-6.
\74\ This is particularly true because members of the legal bar
who represent whistleblowers may be less likely to seek potential
whistleblower clients for, or represent whistleblowers in, the
CFTC's Program if they view it as less desirable than the SEC
whistleblower program.
\75\ Accord Nugent Comment at 3 (``A Commission program that is
meaningfully less predictable than its SEC counterpart risks losing
valuable tips to that uncertainty, or discouraging a report
altogether. Aligning the $5 million threshold with the SEC's
existing rule . . . removes an unnecessary source of that
uncertainty[.]'').
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Finally, the Commission is unconvinced that commenters' various
suggested modifications would improve new rule 165.9(d) materially, if
at all. And, in some cases, the Commission believes that alternatives
offered by commenters could undermine the goals of this rulemaking. The
Commission discusses its reasons for declining to adopt these
commenters' recommendations below.
Specific Time Requirements. Constantine Cannon recommended that the
Commission adopt specific time limits, such as six months, for issuing
Preliminary Determinations and making final awards.\76\ The Commission
declines to adopt this recommendation.
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\76\ Constantine Cannon Comment at 2.
---------------------------------------------------------------------------
Because award determinations are not one-size-fits-all,\77\
establishing a uniform timeframe within which Preliminary
Determinations and Final Orders must be issued will not help the
Commission manage its caseload of claims or ensure reasoned decision-
making, even with options for reasonable extensions of time in certain
cases.\78\ Award determinations vary in complexity; some, for example,
require extensive information gathering from outside sources that can
be time-consuming. Because the complexity of claims and the time needed
to resolve claims vary significantly, mandating resolution of claims
(particularly more complex ones) within a strict timeframe risks
undermining Program integrity.\79\ Moreover, adopting additional
procedural requirements could undermine new rule 165.9(d)'s efficiency
goals by requiring Commission staff to justify extensions of time or to
defend against legal challenges regarding what constitutes a
``reasonable extension[ ] of time'' in ``legitimate[ ]'' matters.\80\
Accordingly, the Commission is not persuaded that establishing new time
limits would be beneficial or appropriate for the Program.
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\77\ In fact, the 30 Percent Presumption, is just that--a
presumption. It does not eliminate Commission discretion to
determine appropriate award percentages as described in section
165.9(d)(1), including where the Commission determines application
of the 30 Percent Presumption is inappropriate or contrary to the
public interest.
\78\ See Constantine Cannon Comment at 2.
\79\ Award consistency, fairness, and reasoned decision-making
are foreseeable casualties in rushed scenarios.
\80\ See Constantine Cannon Comment at 2 (``And to the extent
there are matters where the agency legitimately needs more time,
there can be accommodations built in to allow for reasonable
extensions of time, perhaps as overseen by the CFTC Whistleblower
Office.''). Similarly, to the extent a regulatory deadline could
invite legal challenges in matters where claimants assert deadlines
were not adhered to or prejudiced their award in some way, agency
resources would be diverted, undermining the efficiency gains under
new rule 165.9(d).
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The Commission also concludes that Constantine Cannon's suggestion
to model the CFTC's process on the DOJ's administration of the False
Claims Act (``FCA'') is inapposite and beyond the scope of this
rulemaking.\81\ In this rulemaking, the Commission proposed to improve
the existing award process by incorporating the 30 Percent Presumption
within part 165 of its Regulations. Further, because the whistleblower
programs enacted as part of the Dodd-Frank Act--including both the
CFTC's and SEC's \82\--do not contain an equivalent to the False Claims
Act's qui tam mechanism, the Commission does not view the DOJ's process
as an appropriate model for administering the Program. Under CEA
section 23,\83\ determining whether a claimant is eligible for an award
requires a factual inquiry and application of the statute and
whistleblower rules by Commission staff.\84\ Depending on how a qui tam
litigation proceeds (i.e., whether the government intervenes),
whistleblower awards (as Constantine Cannon notes) are based on
negotiations with ``the DOJ attorneys who worked on the matter and are
best situated to assess the whistleblower's contribution and
appropriate share of the recovery within the statutory range'' and can
take ``weeks'' or ``months'' to resolve.\85\ This structure differs
from that of both the CFTC and SEC whistleblower programs, which were
enacted by the Dodd-Frank Act.\86\ Adopting such a structure would
undermine the goal of further harmonization with the SEC whistleblower
program and sacrifice the associated benefits for market
participants.\87\
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\81\ See id. at 3.
\82\ See Public Law 111-203, 124 Stat. 1376, 1739 (adding
Section 23 to the CEA, codified at 7 U.S.C. 26), and 124 Stat. 1841
(adding Section 21F to the Securities Exchange Act of 1934, codified
at 15 U.S.C. 78u-6).
\83\ 7 U.S.C. 26.
\84\ See generally 31 U.S.C. 3729 et seq. See also Dep't of
Justice Criminal Resource Manual, ``932. Provisions for the Handling
of Qui Tam Suits Filed Under the False Claims Act,'' available at
<a href="https://www.justice.gov/archives/jm/criminal-resource-manual-932-provisions-handling-qui-tam-suits-filed-under-false-claims-act">https://www.justice.gov/archives/jm/criminal-resource-manual-932-provisions-handling-qui-tam-suits-filed-under-false-claims-act</a>.
\85\ Constantine Cannon Comment at 3.
\86\ See section 748 of the Dodd-Frank Act, codified at 7 U.S.C.
26 (CFTC Whistleblower Program); section 922, codified at 15 U.S.C.
78u-6 (SEC Whistleblower Program).
\87\ The Commission also notes that changes to its Program
mirroring the FCA would likely require statutory changes, in
addition to major restructuring of the Regulations.
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Annual inflation adjustments of the $5 million threshold. H Street
Law suggested that the Commission
[[Page 58583]]
incorporate an annual indexing provision into new rule 165.9(d) to
prevent the ``real value of [the $5 million] threshold [from] erod[ing]
over time.'' \88\ The Commission declines to adopt this suggestion.
---------------------------------------------------------------------------
\88\ H Street Law Comment at 1.
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While annual inflation adjustments are a commonly used and readily
automated regulatory tool, the Commission is not adopting automatic
indexing for the $5 million threshold at this time. A fixed threshold
promotes harmonization with the SEC's 30 percent presumption and avoids
year-to-year boundary disputes in matters that span multiple calendar
or fiscal years, thereby preserving the 30 Percent Presumption's goal
of a simpler, faster process for small-dollar awards. The Commission
believes that implementing indexing would still require recurring
updates to internal guidance, forms, claimant communications, and
award-calculation workflows to track which threshold applies at each
stage of multi-year cases, resulting in administrative costs and
complexity that run counter to those efficiencies. Because the
threshold determines whether a claim receives the default 30 Percent
Presumption or a full factor-by-factor analysis, annual changes would
cause otherwise similar cases to toggle across index dates, invite
disputes about the applicable threshold (e.g., by claim, order, or
collection date), and complicate case management. The Commission
believes that maintaining a fixed $5 million threshold preserves
predictable incentives and operational stability. In addition, the SEC
whistleblower program rules do not provide for automatic inflation
indexing, so adopting such a provision would not further the
Commission's harmonization goals. To the extent, however, the
Commission determines in the future that the $5 million threshold has
failed to keep pace with inflation, the Commission retains its
statutory authority to engage in rulemaking to update the threshold, as
appropriate.
Ensuring that, where collections are above $16.66 million, the
associated award is $5 million or more. The Hasegawa Comment expressed
concern that a whistleblower who is entitled to the 30 Percent
Presumption in a case where the Commission recovers $16.66 million in
collected proceeds could obtain a larger settlement than a
whistleblower in a case where the Commission recovers collections
between $16.66 million to just under $50 million, but the whistleblower
is not entitled to the 30 Percent Presumption due to the higher
collection amount and is awarded less than the $5 million.\89\ To
address this concern, Hasegawa proposed that the Commission add a
provision to new rule 165.9(d) under which ``the Commission shall apply
its ordinary rules to evaluate and calculate awards in matters in which
collected proceeds exceed the amount for which the presumption could
apply, provided that, absent applicability of the same enumerated
exceptions described in the Proposed Rule, the aggregate award in those
cases shall fall within the statutory range and shall be no less than
$5 million.'' \90\ The Commission understands Hasegawa's proposal to
require that the Commission ensure that a whistleblower in this
circumstance be guaranteed a minimum recovery of $5 million.
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\89\ Hasegawa Comment.
\90\ Id.
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Hasegawa's observation presents a mathematical possibility under
new rule 165.9(d). But the Commission's experience in administering
whistleblower awards to date has not substantiated this concern.
Indeed, in prior matters where the aggregate award was below $5 million
and collections in the underlying matters were over $16.66 million, the
awardee(s) would not have satisfied new rule 165.9(d)(1)(ii)-(iv)'s
conditions to qualify for a 30 percent award.
Furthermore, with new rule 165.9(d) in place, awardees in matters
with collections between $16.66 million and $50 million will not
receive less than they merit under the standard application of the
criteria and positive factors in rule 165.9(a)-(b). As noted above, the
Commission has not observed instances in which a meritorious
whistleblower would have received less than a whistleblower qualifying
for the 30 Percent Presumption. In addition, the Commission cannot
credit the concern that the new rules will result in ``weaker
incentives for whistleblowers to bring cases resulting in large
recoveries than for whistleblowers whose information results in smaller
recoveries.'' \91\ Whistleblowers do not know at the time they bring
their information whether it will contribute to a successful CFTC
enforcement action, much less what the amount of collections will be.
The 30 Percent Presumption will only be applied to increase awards that
qualify; it will not operate to decrease any awards. As a result, it
should only further incentivize whistleblowers to come forward. For
these reasons, and to promote further harmonization with SEC rule 21F-
6(c), the Commission declines to modify new rule 165.9(d) to provide
for automatic increases for any awards where collections exceed the
threshold for the 30 Percent Presumption.
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\91\ Id.
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Written explanation when the 30 Percent Presumption is not applied
to a potentially eligible claim.\92\ One commenter suggested that new
rule 165.9(d) should require the Preliminary Determination to include a
provision-specific written explanation in cases in which the 30 Percent
Presumption is not applied to a potentially eligible claim. The
Commission declines to adopt this suggestion.
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\92\ Anonymous Comment at 1, 4-5.
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Rule 165.7(g)(1) already requires that Preliminary Determinations
``set[ ] forth a preliminary assessment'' of each whistleblower
claim.\93\ This ``assessment'' entails the application of all relevant
part 165 rules, including those in new rule 165.9(d) pertaining to the
30 Percent Presumption. Accordingly, the Commission disagrees with the
contention that the requested modification is needed to avoid
``reintroduc[ing] the uncertainty the proposal is intended to reduce.''
\94\ On the contrary, the existing part 165 framework, within which new
rule 165.9(d) will operate, guards against such uncertainty. For this
reason, and because the modification would unnecessarily reduce
harmonization between new rule 165.9(d) and SEC rule 21F-6(c), the
Commission declines to make this modification.
---------------------------------------------------------------------------
\93\ 17 CFR 165.7(g)(1); id. 165.13(b)(2) (noting that the
record on appeal of any Final Order of the Commission relating to a
whistleblower award determination shall consist of the Preliminary
Determination and the Final Order of the Commission as set forth in
Sec. 165.7.).
\94\ See Anonymous Comment at 1.
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Assistance and cooperation. The anonymous commenter also
recommended that the Commission clarify that limited assistance may not
be inferred solely from the absence of requests for what the commenter
calls ``supplemental cooperation.'' \95\ The Commission declines to
adopt this modification. New rule 165.9(d)(1)(iv)(A) provides for the
Commission to consider ``the relevant facts and circumstances'' in
determining whether an awardee's assistance was ``limited.'' Moreover,
the Commission conducts a holistic review of each whistleblower claim,
including the degree of assistance provided. Accordingly, the
Commission does not find adoption of the proposed recommendation
warranted.
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\95\ Id. at 1, 4-5.
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Additional comments. Finally, several commenters requested that the
Commission acknowledge or address certain topics in the final rule's
[[Page 58584]]
preamble, rather than in rule text. One requested that the Commission,
in order to make the rule ``stronger and easier to evaluate going
forward,'' commit to report annually on the rate at which the 30
Percent Presumption is applied or overridden and the impact on average
award-processing times.\96\ The Commission declines, however, to adopt
additional reporting obligations as part of this rulemaking.
Introducing additional administrative burden in this manner would
undermine the goal of promoting Program efficiency. Another requested
that the Commission specify that ``the final rule expresses no view on
[whether a retail customer admitted directly as a self-clearing member
is subject to the statutory whistleblower exclusion set out in CEA
section 23(c)(2)(A)] is a `member of a registered entity' and state
that the Commission intends to solicit focused public input [on the
issue] through a separate process'' \97\--an issue that the Commission
notes is beyond the scope of this rulemaking.
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\96\ Nugent Comment at 4. Doing so, according to the comment,
``would let the Commission, Congress, and the public confirm that
the $5 million threshold continues to perform as modeled, and would
provide a ready evidentiary basis for any future adjustment.'' Id.
\97\ Anonymous Comment at 2.
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The Stulz Comment asserted that the Commission's rules should
``protect whistleblowers from being targeted, not given money[, which
incentivizes people] to make up things, or create problems that aren't
actually there.'' \98\ On this basis, Stulz argued that new rule
165.9(d) could ``increase the amount of fraudulent claims . . . [and]
increase workload.'' \99\ The Commission finds this comment
unpersuasive. Under the CEA and the Commission's Regulations,
whistleblowers enjoy robust protection, which proposed new rule
165.9(d) would in no way diminish if adopted.\100\ In addition, the
Commission considers the risk that the 30 Percent Presumption would
trigger frivolous or fraudulent claims that significantly increase
Commission staff workload to be slight for several reasons. First, the
30 Percent Presumption only affects award percentages for meritorious
whistleblower claimants, not a whistleblower's eligibility for
award.\101\ Second, while the commenter expressed concern that
frivolous reports may be filed to target disfavored individuals,
Commission staff can typically screen out frivolous claims with limited
effort before proceeding with a full inquiry. Finally, adverse
incentives to file frivolous or fraudulent whistleblower claims are
more likely to arise from higher-value awards, not the smaller-value
awards of $5 million or less that the 30 Percent Presumption is
designed to address.\102\
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\98\ Stulz Comment.
\99\ Id.
\100\ See 7 U.S.C. 26(h); 7 CFR 165.20.
\101\ Additionally, the act of filing a false claim renders a
claimant ineligible for a whistleblower award. 17 CFR 165.6(a)(5).
\102\ See 17 CFR 165.9(a)(5) (specifying ``[p]otential adverse
incentives from oversize awards'' as a factor for the Commission to
consider in determining award amounts); Whistleblower Incentives and
Protection, 76 FR 53172, 53189 (Aug. 25, 2011) (Rule subsection
165.9(a)(5) was added to part 165 in response to comment from
Senator Carl Levin expressing ``concern that excessive monetary
incentives may lead to misreporting causing investigative waste.'').
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Additional Alternatives. In its Consideration of Benefits and Costs
in Section IV.C below, the Commission also considers three additional
alternatives: (1) hiring additional WBO staff to improve the agency's
capacity to process claims; (2) applying the 30 Percent Presumption in
matters where the award at the 30 percent maximum would be $2 million
or less; and (3) applying the 30 Percent Presumption in matters where
the award at the 30 percent maximum would be $15 million or less. As
explained in its Consideration of Benefits and Costs, the Commission
concludes that the 30 Percent Presumption is likely to be more
effective in achieving the goals of this rulemaking than these
alternatives.
III. Technical Amendments to Rules 165.10(a)(7) and 165.15
The NPRM also proposed technical corrections to its whistleblower
rules to update references in part 165 to reflect the WBO's 2025
transfer from the DOE to the OGC, in light of the WBO's adjudicatory
functions.\103\ As a result of the WBO's transfer, several references
in rules 165.10(a)(7) and 165.15 to the WBO's placement within the
Commission's operating structure had become outdated. Accordingly, the
Commission proposed technical corrections to remove several references
to the DOE and to reflect the WBO's placement within the OGC.
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\103\ Keynote Address of Acting Chairman Caroline D. Pham, ISDA
Annual General Meeting (May 15, 2025), available at <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/opapham15">https://www.cftc.gov/PressRoom/SpeechesTestimony/opapham15</a>.
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The National Whistleblower Center expressed support for these
technical corrections and the Commission's decision to locate the WBO
in the OGC. It asserted that the move ``reinforce[s] the impartiality
of award decisions . . . and legitimates the CFTC's award decisions.''
\104\ In contrast, TAF Coalition criticized the WBO's move to the
Office of the General Counsel. TAF Coalition stated that it
``disagree[d] strongly with Commission's decision to give general
authority to administer the whistleblower program to the General
Counsel, and accordingly, move the WBO from supervision by the Director
of the [DOE], to the General Counsel.'' \105\ TAF Coalition also
asserted that the Commission's proposed technical corrections did not
comport with notice-and-comment requirements under the Administrative
Procedure Act.\106\
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\104\ National Whistleblower Center Comment at 3.
\105\ TAF Coalition Comment at 3. TAF Coalition argued that
General Counsel oversight of WBO staff is not consistent with
Commission Regulations and that the OGC is not suited to supervising
the WBO but should be limited to reviewing the WBO awards for
``legal sufficiency.'' Id. at 4-5.
\106\ See id. (arguing that ``moving administration of the WBO
from the Director of the DOE to the CFTC's General Counsel requires
the CFTC to publish a Proposed Rule and provide the public with an
opportunity for comment'')
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The Commission finds TAF Coalition's arguments unavailing. As a
threshold matter, the Commission retains discretion to organize its
staffing in the manner most appropriate for carrying out its legal
mandates under the CEA.\107\ The Commission exercised this discretion
to transfer the WBO to the CFTC's OGC in 2025 to reflect the WBO's
adjudicatory functions. The technical amendments merely reflect this
reorganization. Moreover, TAF Coalition argues that the Commission's
rules limit the OGC to performing legal sufficiency review and prohibit
OGC staff from participating in the WBO claims review process in any
other manner.\108\ But neither the Commission's rules nor the CEA limit
the OGC to performing legal sufficiency review, nor do they prohibit
OGC staff from playing additional roles in the review process.\109\
Accordingly, the Commission rejects TAF Coalition's argument.
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\107\ See, e.g., 7 U.S.C. 2(a)(12) (``The Commission is
authorized to promulgate such rules and regulations as it deems
necessary to govern the operating procedures and conduct of the
business of the Commission.''); id. 16(b)(1) (``The Commission shall
have the authority to employ such investigators, special experts,
Administrative Law Judges, clerks, and other employees as it may
from time to time find necessary for the proper performance of its
duties and as may be from time to time appropriated for by
Congress.'').
\108\ See TAF Coalition Comment at 3-4.
\109\ See, e.g., Estate of Jennions v. CFTC, 183 F.4th 858, 866
(D.C. Cir. 2026) (determining that CFTC reasonably rejected claims
of undue involvement by CFTC's OGC during the claims review
process).
---------------------------------------------------------------------------
In addition, the Commission provided notice to the public in the
NPRM and an opportunity to comment on the technical corrections
designed to reflect the move of the WBO to OGC and to reflect General
Counsel supervision of WBO. While rules of agency organization,
practice, and procedure
[[Page 58585]]
are generally exempt from the notice-and-comment requirements of the
APA,\110\ the Commission in its discretion chose to provide the public
with an opportunity to comment on these technical revisions.
Accordingly, the Commission finds TAF Coalition's procedural argument
unconvincing.
---------------------------------------------------------------------------
\110\ 5 U.S.C. 553(b)(A) (excepting rules of agency organization
from notice-and-comment rulemaking requirements).
---------------------------------------------------------------------------
For these reasons, the Commission declines to accept TAF
Coalition's request to republish a notice regarding the technical
corrections and is adopting these technical corrections to update
references in part 165, as proposed.
IV. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''),\111\ requires agencies to
consider whether the rules they propose and promulgate will have a
significant economic impact on a substantial number of small entities
and, if so, provide a regulatory flexibility analysis with respect to
such impact. Section 604 of the RFA \112\ requires an agency to
undertake a final regulatory flexibility analysis of a rule's effects
on small entities unless the Chairman certifies that the rule, if
adopted, would not have a significant economic impact on a substantial
number of small entities.\113\
---------------------------------------------------------------------------
\111\ 5 U.S.C. 601-612.
\112\ Id. 604.
\113\ Id. 605(b).
---------------------------------------------------------------------------
Only individuals are eligible for participation in the Commission's
whistleblower program. The amendments would apply only to an
individual, or individuals acting jointly, who provide information
relating to the violation of the CEA or Commission regulations. By
definition, companies and other entities cannot be whistleblowers.\114\
Consequently, the persons that would be subject to the rule amendments
are not ``small entities'' under the RFA.
---------------------------------------------------------------------------
\114\ 7 U.S.C. 26(a)(7).
---------------------------------------------------------------------------
Accordingly, the Chairman, on behalf of the Commission, hereby
certifies under 5 U.S.C. 605(b) that the regulations, as adopted
herein, will not have a significant economic impact on a substantial
number of small entities. This document serves as notification to the
Small Business Administration of the Commission's certification of no
effect.
B. Paperwork Reduction Act
The Paperwork Reduction Act (``PRA'') \115\ imposes certain
requirements on federal agencies including the Commission in connection
with their conducting or sponsoring any collection of information as
defined by the PRA. The rule amendments being adopted herein do not
impose any new information collection requirements within the meaning
of the PRA. Accordingly, the requirements imposed by the PRA are not
applicable to this rule.
---------------------------------------------------------------------------
\115\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------
C. Consideration of Benefits and Costs
1. Introduction
CEA section 15(a) requires the Commission to consider the benefits
and costs of its actions before promulgating a regulation under the CEA
or issuing certain orders.\116\ Section 15(a) further specifies that
the costs and benefits shall be evaluated in light of the following
five factors: (1) protection of market participants and the public; (2)
efficiency, competitiveness, and financial integrity of futures
markets; (3) price discovery; (4) sound risk management practices; and
(5) other public interest considerations. The discussion below
addresses the Commission's statutory CEA section 15(a) obligation.\117\
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\116\ 7 U.S.C. 19(a).
\117\ In conducting its analysis, the Commission is informed by
Executive Order 12866, Regulatory Planning and Review, 58 FR 51735
(Oct. 4, 1993), as supplemented by Executive Order 14215, Ensuring
Accountability for All Agencies, 90 FR 10447 (Feb. 24, 2025).
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As described above, the Commission is adopting new rule 165.9(d) to
establish a presumption that, unless certain factors that may decrease
an award are present, the Commission will set the award at the
statutory maximum of 30 percent in matters where the total awards in
the Covered Action and any Related Actions do not exceed $5 million.
This new rule will improve the efficiency, transparency, and
predictability of processing whistleblower award applications and to
align the Commission's approach with SEC rule 21F-6(c).\118\ Under the
current framework, every meritorious claim, regardless of award size,
undergoes an individualized, factor-by-factor review to determine an
appropriate award percentage. Applying this highly tailored analysis to
smaller-dollar matters, however, can be disproportionately resource-
intensive and tax Commission resources--thereby extending timelines for
issuing final awards. Delays, in turn, may weaken incentives for
individuals to report violations. Reduced whistleblowing activity,
should it occur, could impair the Commission's ability to enforce the
CEA and its regulations effectively, diminish deterrence, and
ultimately hinder the Commission's broader mission of protecting market
participants and the public; supporting market efficiency,
competitiveness, and market integrity; and ensuring sound price
discovery and risk management.
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\118\ The amendments would also redesignate current Sec.
165.9(d) as new Sec. 165.9(e) and make technical corrections in
part 165 to update regulatory references to reflect the WBO's 2025
move, consistent with its adjudicatory functions, from the DOE to
the OGC. These amendments are ministerial and not expected to
generate benefits or costs.
---------------------------------------------------------------------------
With one exception, commenters did not directly address the
Commission's consideration of the benefits and costs of new rule
165.9(d).\119\ However, several comments supported new rule 165.9(d)
and some comments proposed modifications to new rule 165.9(d) or
suggested alternative approaches. In the analysis below, the Commission
evaluates, within the scope of this rulemaking, the benefits and costs
of each feasible alternative proposed by commenters and the
alternatives identified in the NPRM.\120\
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\119\ See Nugent Comment at 3 (``Applying its own historical
data, the Commission estimates that had the presumption been in
effect for the Program's entire twelve-year history, total
additional payouts from the Customer Protection Fund would have been
under $4 million--roughly $333,000 per year on average, about one
percent of total award dollars paid since 2014, and under two
percent of the Fund's balance at the end of FY2025. That is a
modest, well-bounded cost against the benefits of faster processing,
reduced administrative burden, and stronger whistleblower
incentives, and I urge the Commission to adopt the proposal on that
basis.''). Another comment, without referencing the Commission's
cost-benefit consideration directly, said that it ``should better
explain why $5 million is the appropriate threshold'' instead of a
higher one that ``could allow the Commission to reduce processing
times even further.'' Better Markets Comment at 2. Additionally,
several commenters raised economic arguments bearing on the benefits
and costs of new rule 165.9(d). Those arguments, including points
concerning the present value of delayed awards, the calibration of
the $5 million threshold, potential adverse incentives for awards
with higher dollar values, the liquidity implications for the CPF,
and the appropriate evidentiary weight to assign to the SEC's
experience, are addressed as relevant in the discussion.
\120\ See infra SectionIV.C.5 (``Regulatory Alternatives'');
supra Section II.B and II.C (``Comments Received'' and
``Discussion'').
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The Commission provides below a qualitative assessment of the
benefits and costs of the final amendments and considered regulatory
alternatives and, where feasible, quantified estimates of those
economic effects. The Commission is unable to quantify certain economic
effects because the Commission does not have, and in certain cases
cannot reasonably obtain, data necessary to inform Commission
estimates. Further, even in cases where the Commission has data,
certain economic effects cannot practicably be
[[Page 58586]]
quantified due to the number and type of assumptions necessary. In
particular, the Commission recognizes that significant structural
changes continue to occur in the financial markets within its
jurisdiction, and that the number, nature, and complexity of future
enforcement matters--and related whistleblower claims--cannot be
predicted with precision. As a result, any estimate of the net effects
of the amendments is subject to uncertainty and cannot be expressed
with a narrow confidence interval. The Commission's inability to
quantify particular benefits and costs does not imply that such
economic effects are less significant than quantified effects.
2. Baseline
The baseline against which the benefits and costs of the new rule
are measured consists of the existing legal framework for the Program
and the Commission's implementation of that framework.
The current regulatory framework requires an individualized,
factor-by-factor review to determine the appropriate percentage award
of every meritorious claim, regardless of award size. Section 23 of the
CEA directs the Commission to pay awards of 10 to 30 percent of
collected monetary sanctions to eligible whistleblowers whose original
information leads to a successful Covered Action or Related
Action.\121\ Under the existing rules in part 165, including rule 165.7
(procedures for award applications) and rule 165.9 (criteria for
determining amount of award), every meritorious claim, regardless of
award size, undergoes an individualized, factor-by-factor review. That
multi-factor review considers positive factors, including the
significance of the information, degree of assistance, programmatic
interest, and participation in internal compliance systems, and factors
that may decrease an award, including culpability or involvement,
unreasonable delay, and interference with internal compliance systems,
to determine the appropriate award percentage.\122\
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\121\ See 7 U.S.C. 26(b).
\122\ See 17 CFR 165.9(b), (c); see generally Whistleblower
Incentives and Protection, 76 FR 53172 (Aug. 25, 2011);
Whistleblower Award Process, 82 FR 24487 (May 30, 2017).
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The absence of any streamlined mechanism for small claims in part
165 contrasts with the SEC whistleblower program, which, in 2020,
adopted a presumption to award qualifying claimants the statutory 30
percent maximum in matters involving total awards of $5 million or
less.\123\
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\123\ See Whistleblower Program Rules, 85 FR 70898, 70911-70912
(Nov. 5, 2020) (promulgating, among other rules, SEC rule 21F-6(c),
codified at 17 CFR 240.21F-6).
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Because the staff review process under part 165 is labor-intensive
and time-consuming for all submissions, the average interval from
claim-submission deadline to final award order has been over 2.5
years.\124\ The longer the interval between the claim deadline and
claim-award resolution, the greater the reduction of an expected
award's present value, which may diminish the economic incentives for
individuals to report potential violations. Challenges to Preliminary
Determinations, especially when the recommended award is less than the
statutory maximum, can impose additional wait-times for award
applicants.\125\ Staff time devoted to reviewing challenges in smaller-
dollar cases divert efforts that otherwise would be expended towards
processing other claims, potentially ones with greater impact or
significance. As a result, resources spent on smaller matters may delay
the resolution of other cases, ultimately extending overall award
processing times and reducing the Program's effectiveness.
---------------------------------------------------------------------------
\124\ There is significant variance in individual case
processing times where some matters resolve within a year of the
application deadline, while, as one commenter notes, others can
extend four or more years beyond the deadline. See Constantine
Cannon Comment at 1. Multi-claimant matters and those in which
Preliminary Determinations are contested are likely to exceed this
average.
\125\ See 17 CFR 165.7(g)(2) (process for claimants to contest
preliminary award); id. 165.13(a) (claimants' right to appeal final
Commission order). Unlike the amount of an SEC whistleblower award,
the amount of a CFTC whistleblower award is subject to judicial
challenge. Compare 15 U.S.C. 78u-6(f) with 7 U.S.C. 26(f)(2).
---------------------------------------------------------------------------
Based on awards the Commission issued through calendar year 2025,
whistleblower submissions have contributed to legal judgments for more
than $3.3 billion in financial remedies and the return of approximately
$160 million to harmed customers. From 2014--the year of the
Commission's first whistleblower award--through calendar year 2025, the
Commission granted 73 awards across 56 orders, amounting to more than
$395 million. In FY 2024, whistleblowers were involved in approximately
42 percent of the Commission's enforcement actions.\126\
---------------------------------------------------------------------------
\126\ See Commodity Futures Trading Commission Whistleblower
Program and Customer Education Initiatives 2024 Annual Report, 8
(Oct. 2024), available at <a href="https://www.whistleblower.gov/sites/whistleblower/files/2024-11/FY24%20Customer%20Protection%20Fund%20Annual%20Report%20to%20Congress.pdf">https://www.whistleblower.gov/sites/whistleblower/files/2024-11/FY24%20Customer%20Protection%20Fund%20Annual%20Report%20to%20Congress.pdf</a>.
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Tables 1-3, below, show Program performance metrics under the
existing framework. They are labeled as follows to provide common
references for the metrics presented: ``awards'' refers to award
payments issued to individual awardees; ``orders granting awards''
refers to Commission actions issuing formal decisions that confer
awards in specific enforcement matters where a single order may cover
multiple awardees; ``percent of total award dollars'' refers to
percentage calculated against aggregate dollars paid in whistleblower
awards during the stated period. Table 1 presents the distribution of
the number of whistleblower tips (received via Form TCR \127\), award
applications (received via Form WB-APP \128\), awards, and orders
granting awards from FY 2012 through the first quarter of FY 2026
(which ended on December 31, 2025).\129\ Table 2 presents the
distribution of whistleblower awards received by each awardee across
award size buckets during the same time period. Table 3 presents the
distribution of orders granting whistleblower awards (a given order
might have multiple awardees) across award size buckets during the same
period.
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\127\ See 17 CFR 165.3(a) (prescribing that whistleblowers
submit original information via a Form TCR to be eligible for
award); id. part 165 App. B (Form TCR and Form WP-APP).
\128\ See id. 165.7(b) (prescribing that whistleblowers submit a
Form WB-APP to file a claim to receive a whistleblower award); id.
part 165 App. B (Form TCR and Form WP-APP).
\129\ Fiscal years begin on October 1 of the prior calendar year
and end on September 30 of the calendar year. For example, FY 2026
began on October 1, 2025, and will end on September 30, 2026.
Table 1--Distribution of the Number of Whistleblower Tips, Award Applications, Awards, and Orders Granting
Awards FY 2012-Q1 (Starting October 1, 2012) Through FY 2026-Q1 (Ending December 31, 2025)
----------------------------------------------------------------------------------------------------------------
Orders granting
FY Forms TCR Forms WB-APP Awards awards
----------------------------------------------------------------------------------------------------------------
2012....................................................... 58 16 0 0
2013....................................................... 138 12 0 0
2014....................................................... 227 38 1 1
[[Page 58587]]
2015....................................................... 232 47 1 1
2016....................................................... 273 59 2 2
2017....................................................... 465 74 0 0
2018....................................................... 760 120 5 5
2019....................................................... 455 117 5 5
2020....................................................... 1,030 140 16 11
2021....................................................... 961 140 6 6
2022....................................................... 1,506 152 10 5
2023....................................................... 1,530 301 7 5
2024....................................................... 1,744 317 15 12
2025....................................................... 1,697 203 3 2
2026 Q1.................................................... 360 18 2 1
----------------------------------------------------------------------------------------------------------------
Table 2--Distribution of Whistleblower Awards Received by Each Awardee Across Award Size Buckets
[Through December 31, 2025]
----------------------------------------------------------------------------------------------------------------
Percent of total Percent of total
Range Number of awards award count award dollars *
----------------------------------------------------------------------------------------------------------------
$2 million or less........................................ 52 71 4
Over $2 million to $5 million............................. 8 11 6
Over $5 million to $10 million............................ 6 8 12
Over $10 million to $15 million........................... 3 4 10
Over $15 million to $25 million........................... 2 3 11
Over $25 million.......................................... 2 3 56
-----------------------------------------------------
Total................................................. 73 100 100
----------------------------------------------------------------------------------------------------------------
* Figures do not sum to 100% due to rounding.
Table 3--Distribution of Orders Granting Whistleblower Awards Across Award Size Buckets
[Through December 31, 2025]
----------------------------------------------------------------------------------------------------------------
Percent of total Percent of total
Range Number of orders order count * award dollars *
----------------------------------------------------------------------------------------------------------------
$2 million or less........................................ 34 61 3
Over $2 million to $5 million............................. 9 16 7
Over $5 million to $10 million............................ 6 11 12
Over $10 million to $15 million........................... 3 5 10
Over $15 million to $25 million........................... 2 4 11
Over $25 million.......................................... 2 4 56
-----------------------------------------------------
Total................................................. 56 100 100
----------------------------------------------------------------------------------------------------------------
* Figures do not sum to 100% due to rounding.
Awards are concentrated at the lower end of the distribution where
approximately 71 percent of awards were at or under $2 million
(representing about four percent of total award dollars paid to
whistleblowers). When measured by the Commission's orders granting
awards, about 61 percent of these orders were for $2 million or less,
making up roughly three percent of total payouts. Approximately 82
percent of awards were at or under $5 million and collectively
represented about 10 percent of total award dollars paid to
whistleblowers. Similarly, 77 percent of orders granting awards were
for $5 million or less, accounting for about 10 percent of total
payouts.\130\
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\130\ The Commission has continued to resolve Covered Actions
for which the imposed monetary sanctions are small enough that a 30
percent award would not exceed $5 million.
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Of the 43 matters with $5 million or less in awards from the start
of the Program through December 31, 2025, 12 matters had award
percentages of less than 30 percent. If those 12 matters instead had
awards of 30 percent of the recovered amounts, the total CPF payouts
would have increased by less than $4 million over the entire period. To
put that amount in context, the CPF had an available balance of over
$200 million as of September 30, 2025.\131\
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\131\ See CFTC Whistleblower Program, 2025 Annual Report, at 3,
21-2.
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3. Benefits
Relative to the baseline and after consideration of comments, the
Commission believes that amended rule 165.9 will improve the efficiency
of whistleblower-award processing, by conserving Commission staff
resources in processing applicants' submissions and reducing the
potential for administrative and judicial contests. The amended rule
will also support the effectiveness of the Program and the
[[Page 58588]]
Commission's enforcement mission by enhancing the predictability and
procedural clarity of the award process for prospective whistleblowers
and strengthening incentives for timely and high-quality
reporting.\132\
---------------------------------------------------------------------------
\132\ The Commission is unaware of metrics to monetize these
benefits and so generally discusses them qualitatively when it
cannot do so quantitatively.
---------------------------------------------------------------------------
Amended rule 165.9 is expected to improve the efficiency of the
Program. The 30 Percent Presumption will reduce the average time and
resources required for the WBO and the Commission to review smaller-
dollar matters by reducing the circumstances where staff must engage in
the full factor-by-factor analysis specified in rule 165.9(b) and (c).
Specifically, when the 30 Percent Presumption applies, the award amount
will be conditionally set at the 30 percent statutory maximum unless
certain factors that may decrease an award are present.\133\ In such
cases, Commission staff will not be required to conduct a granular
analysis for the following positive factors: (1) the significance of
the whistleblower's information; (2) the degree of assistance provided
by the whistleblower (beyond confirming that assistance was not
limited); (3) the Commission's interest in deterring violations; and
(4) participation in internal compliance systems.\134\ Assessing all
these positive factors can be labor intensive. For example, evaluating
the degree of assistance may entail reviewing hundreds of pages of
investigative records and correspondence, while determining
significance or deterrence involves cross-referencing enforcement
outcomes and market impacts. Based on historical data, the Commission
anticipates that streamlining the award determination process for
matters under the $5 million threshold would eliminate the need for
individualized analysis on these points for approximately 82 percent of
awards, thereby substantially reducing administrative burden.\135\
Accordingly, the Commission believes that removing these requirements
is likely to result in a substantial decrease in award-processing time.
In addition to a reduction in award-processing time, the average claim-
award-resolution time will potentially be further reduced insofar as
there are fewer disputes seeking higher award percentages, when the
maximum is awarded by operation of the 30 Percent Presumption.\136\
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\133\ Because the 30 Percent Presumption does not apply where
factors that may decrease an award are present (including
culpability, unreasonable delay, or interference with internal
compliance systems), the amended rule 165.9 will avoid unintended
costs associated with over-inclusive awards that might otherwise
offset the efficiency gains of the amendments. Accord Nugent Comment
at 3 (``The retained safeguards are the right way to balance speed
against integrity.'').
\134\ Commission staff will continue to evaluate the factors in
rule 165.9(c) to determine whether the presumption applies under new
rule 165.9(d).
\135\ See supra section IV.C.2.
\136\ A single-claimant award at the 30-percent level eliminates
any incentive for that claimant to contest the award percentage in
the Preliminary Determination or appeal the Final Determination.
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Notwithstanding the uncertainty associated with evolving markets,
the Commission's experience supports the expectation that the volume
and complexity of potential enforcement matters will increase over
time, making streamlined review of smaller-dollar claims progressively
more important for maintaining Program effectiveness. Specifically, as
new products, trading technologies, and market structures emerge, the
Commission expects, based on its experience, that the number and
complexity of potential enforcement matters will grow as well,
expanding the potential need for whistleblower assistance in the
process.\137\ Accordingly, the Commission believes it is reasonable to
expect that streamlined review of smaller-dollar claims will become
increasingly important for maintaining Program effectiveness.\138\
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\137\ For example, the Commission has observed significant
recent growth in event contracts--i.e., derivatives contracts,
typically with a binary payoff structure, based on the outcome of an
underlying occurrence or event--and the prediction markets that
trade them. See Prediction Markets, 91 FR 12516, 12517 nn.9-10 and
accompanying text (Mar. 16, 2026) (advanced notice of proposed
rulemaking). Insider trading in these expanding prediction markets
is a particular focus for the Commission's enforcement effort. See
David I. Miller, CFTC Director of Enforcement, Public Remarks and
New York University Law School--CFTC Enforcement Priorities, Insider
Trading in the Prediction Markets and Cooperation with the CFTC
(Mar. 31, 2026), available at <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/opamiller1">https://www.cftc.gov/PressRoom/SpeechesTestimony/opamiller1</a>.
\138\ The Commission's analysis is grounded in historical
Program data, which, combined with the markets' highly dynamic
natures, renders it unable to more precisely quantify the likely
magnitude of expected efficiency gains ex ante.
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The SEC's experience with its analogous provision, SEC rule 21F-
6(c), provides empirical evidence of the efficiency gains the
Commission expects from new rule 165.9(d).\139\ According to the SEC's
2021 annual report to Congress, after implementation of the SEC
whistleblower program rules, the SEC rule 21F-6(c) presumption was
applied in approximately 89 percent of cases with award amounts not
exceeding $5 million, compared to 46 percent of cases in which the
statutory 30 percent maximum was awarded before the amendments. The
report further notes that this presumption increased consistency and
transparency and expedited the processing of award claims in FY
2021.\140\
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\139\ One commenter asserted that the SEC has continued to
experience some delays. See Constantine Cannon Comment at 2.
However, the presence of some residual delays in SEC review of
larger matters does not undercut the rule's expected efficiency
benefit for smaller matters; rather, they reinforce the rationale
for the rule's goal of promoting efficient resource allocation to
free up resources for reviewing higher dollar claims.
\140\ Securities and Exchange Commission, 2021 Annual Report to
Congress Whistleblower Program at 18 (2021), available at <a href="https://www.sec.gov/reports?aId=edit-tid&year=All&field_article_sub_type_secart_value=Reports+and+Publications-AnnualReports&tid=59">https://www.sec.gov/reports?aId=edit-tid&year=All&field_article_sub_type_secart_value=Reports+and+Publications-AnnualReports&tid=59</a>.
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In addition, new rule 165.9(d) is expected to support the
effectiveness of the Program and the Commission's enforcement mission.
The Commission expects that new rule 165.9(d) will encourage
whistleblower reporting by improving the predictability and procedural
transparency of the award process. The amendments will increase
reporting incentives in at least three ways. First, some meritorious
whistleblowers will receive higher awards than they would under the
status quo, which the Commission expects will incentivize prompt
reporting. The Commission's analysis of historical award data suggests
that, of the 43 matters with $5 million or less in awards,
approximately 30 percent (12 matters) would have received a larger
award had new rule 165.9(d) been in effect.
Second, even for those whistleblowers that would have received 30
percent under the current rule 165.9, prompt processing of smaller-
dollar awards may encourage timely reporting. Economic theory and
common experience suggest that shorter, more predictable timelines
reinforce the incentive to report promptly by increasing the perceived
value of prospective awards.\141\ By shortening average processing
time, new rule 165.9(d) should mitigate timing-related disincentives
and help preserve the Program's ability to attract high-quality
information.\142\
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\141\ According to the time value of money, the longer the time
required to make an award, the lower the present value of the award
becomes to the claimant at the time of applying. As a result, if the
delay between application and award becomes too long, a potential
whistleblower, based on his or her circumstances, may decide that
the cost of becoming a whistleblower would outweigh the present
value of the whistleblower award. Accord Nugent Comment at 3
(``Delay is not a neutral inefficiency; it directly reduces the
present value of an eventual award and, as the Commission
recognizes, can deter exactly the kind of prompt, high-quality
reporting the Program exists to encourage.''); H Street Law Comment
at 2 (``Unfortunately, many whistleblowers have noted [the delay
whistleblowers may experience] as a significant disincentive to
reporting unlawful conduct.'')
\142\ The magnitude of this incentive distortion could be
material to whistleblowers. For illustrative purposes, assuming a
discount rate of three percent, a conservative approximation of an
individual's opportunity cost of waiting, a $1 million award delayed
by 2.5 years has a present value of approximately $929,000, a
reduction of roughly seven percent. At a four-year delay, the same
award is worth approximately $888,000, a reduction of roughly 11
percent.
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[[Page 58589]]
Third, harmonizing rule 165.9 with SEC rule 21F-6(c) for smaller-
dollar claims should help ensure that the CFTC's Program is viewed as
offering fair and comparable incentives, thereby encouraging
participation and improving the overall functioning of the federal
whistleblower framework. Ultimately, by strengthening incentives for
individuals to provide timely, high-quality information, new rule
165.9(d) may also conserve enforcement resources by reducing the
Commission resources necessary to identify possible misconduct.
Also, new rule 165.9(d) includes appropriate conditions to ensure
that the 30 Percent Presumption does not result in outcomes contrary to
the public interest.\143\ Where factors that may decrease an award are
present (including culpability, unreasonable delay, or interference
with internal compliance systems), the presumption does not apply. And
the Commission retains authority to modify award amounts where applying
the maximum percentage would be inappropriate considering public
interest concerns. These safeguards are intended to avoid unintended
costs associated with over-inclusive awards (i.e., awards at the
statutory-maximum percentage notwithstanding that the claimant's
assistance was limited or duplicative; the presence of one or more
factors that may decrease an award (culpability, unreasonable delay, or
interference with internal compliance systems); inconsistency with
Program objectives or the public interest; or unduly awarding one
claimant relative to another in a multi-claimant award allocation).
---------------------------------------------------------------------------
\143\ Accord Nugent Comment at 3 (``The retained safeguards are
the right way to balance speed against integrity.'')
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4. Costs
Based on historical experience and subject to acknowledged
uncertainty about future market conditions and enforcement activity,
the Commission believes that new rule 165.9(d) will result in a limited
and manageable increase in award payments from the CPF and will not
impose additional burdens on whistleblowers seeking to provide tips or
apply for awards or on the Commission in administering the Program. The
Commission also believes that the 30 Percent Presumption is unlikely to
meaningfully increase the incentives to submit meritless whistleblower
claims.
With respect to the CPF, the Commission recognizes that new rule
165.9(d) will increase payments for the subset of awards at or under
the $5 million threshold compared to awards calculated under existing
part 165. Using Program data from 2014 through the end of calendar year
2025, the Commission identified 43 matters with $5 million or less in
awards, representing approximately 10 percent of the total award
dollars paid over that period. If the 30 Percent Presumption had
applied to these 43 matters, the Commission's analysis indicates that
total CPF payouts would have increased by less than $4 million during
the entire period the Program has been operated \144\ (i.e., equivalent
to an average of roughly $333,000 per year over 2014-2025). Four
million dollars is approximately one percent of the more than $395
million in whistleblower awards issued since 2014 through calendar year
2025 and less than two percent of the FY 2025 CPF balance.\145\ Because
awards are paid as a fixed percentage (10 to 30 percent) of collected
monetary sanctions and the CPF is statutorily replenished from
collections when balances are insufficient to pay awards, the
Commission does not view the potential increase in CPF withdrawals as
threatening to the CPF's continued efficacy or its ability to support
the Program's statutory functions.\146\
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\144\ See supra note 131 and accompanying text.
\145\ See CFTC Whistleblower Program, 2025 Annual Report, at 3,
21-21 (includes CPF balance sheet showing available balance of
$212,679,118 as of Sept. 30, 2025); see also Nugent Comment at 3
(characterizing the amount as ``a modest, well-bounded cost against
the benefits of faster processing, reduced administrative burden and
stronger whistleblower incentives'').
\146\ The Commission acknowledges that these estimates rely on
the Program's historical experience and that future effects are
subject to uncertainty. The derivatives markets overseen by the
Commission are experiencing significant structural evolution--
including new products, new intermediaries, changing market
dynamics, and new trading technologies; all this adds uncertainty
regarding the number, nature, and size of future enforcement actions
and related whistleblower claims. And, as noted previously, the
Commission lacks discretion to consider the CPF balance in its
determination of award amount. 7 U.S.C. 26(c)(1)(B)(ii); 17 CFR
165.9(d); see also 7 U.S.C. 26(b)(1) (the Commission ``shall pay''
awards to qualifying whistleblowers).
---------------------------------------------------------------------------
The Commission does not anticipate that new rule 165.9(d) will
impose material claim application or processing costs on whistleblowers
or the Commission. The new rule neither changes the information that
whistleblowers must provide to submit a tip or apply for an award, nor
does it alter the substantive eligibility requirements under part 165.
Accordingly, the Commission expects no incremental burden on award
claimants. Likewise, the amended rule introduces no new administrative
compliance obligations for the WBO or the Commission, and therefore,
should not increase administrative burden or operating costs.
A commenter expressed concern that the 30 Percent Presumption would
generate adverse incentives by inducing individuals to submit meritless
or manufactured claims in an effort to obtain a guaranteed maximum
award.\147\ Although any change to part 165 that increases the expected
award for the average claim could increase the corresponding incentives
to submit a whistleblower claim, the Commission believes that the 30
Percent Presumption is unlikely to meaningfully increase the number of
meritless claims. First, the 30 Percent Presumption affects only the
award percentage for meritorious claims--i.e., those that have already
been determined to provide original information that led to a
successful Covered Action. The 30 Percent Presumption does not alter
part 165's eligibility requirements, the original information standard,
or the criteria for successful Covered Actions. Second, the economic
literature on whistleblower and informant incentive programs indicates
that the risk of adverse incentives from monetary awards is most
pronounced at larger award levels, where the incentive to inflate
claims is highest relative to the risk of detection.\148\ Awards of $5
million or less are relatively modest in the context of financial
markets enforcement and are unlikely to produce the type of incentive-
driven claim inflation that characterizes high-value award
environments. Third, meritless claims (i.e., those lacking original
information tied to a specific, demonstrable violation) are typically
identifiable by Commission staff at an early screening stage with
minimal analytical effort, limiting the marginal screening cost they
impose. Accordingly, the Commission does not view the potential for
adverse incentives as a meaningful cost of new rule
[[Page 58590]]
165.9(d) that would offset its expected efficiency and incentive
benefits.
---------------------------------------------------------------------------
\147\ See Stulz Comment.
\148\ Cf. Paolo Buccirossi, Giovanni Immordino, and Giancarlo
Spagnolo, Whistleblower Rewards, False Reports, and Corporate Fraud,
51 Eur. J.L. & Econ. 443 (2021) (arguing that while very large
awards--defined mathematically based on the whistleblower's net
economic trade-offs, rather than a specific monetary value--lead to
fraudulent reporting, when the risk of retaliation is severe, these
large rewards are needed and so are tougher sanctions against
fraudulent reports).
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5. Regulatory Alternatives
In developing new rule 165.9(d), the Commission considered several
alternatives.
a. Increasing WBO Staffing
The Commission considered increasing WBO staffing to accelerate
processing as an alternative. While additional WBO staff is likely to
improve processing capacity, this alternative standing alone would not
address the procedural inefficiencies of the current framework.
Moreover, staffing increases would require recurring and certain costs.
For example, the Commission estimates the annual salary burden for
hiring one data analyst at the CT-13 grade and two attorney-advisors at
the CT-14 grade would be $512,497 per year, excluding benefits.\149\ By
contrast, the 30 Percent Presumption's incremental impact on awards is
bounded and contingent. With respect to funding sources, awards are
paid from the CPF, which also funds the WBO and the Office of Customer
Education and Outreach. In cases where additional staffing is not
eligible to be funded from the CPF, it would require appropriated
dollars, making the Presumption's CPF-based impact comparatively
preferable.
---------------------------------------------------------------------------
\149\ This figure was calculated using the Commission's 2026 pay
table and the lowest wage specified in the CT-13 and CT-14 wage
bands for employees in Washington, DC, respectively.
---------------------------------------------------------------------------
b. Using a Lower or Higher Threshold
The Commission also considered a lower presumption threshold of $2
million.\150\ A $2 million threshold would forfeit the benefits
associated with harmonization with SEC rule 21F-6(c), which the
Commission views as important for reducing inter-agency disparities
that can influence whistleblower behavior in cross-jurisdictional
contexts. It would also apply the presumption to fewer matters,\151\
thereby diminishing potential gains in timeliness, participation, and
administrative efficiency.\152\
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\150\ This is an approach initially proposed but ultimately not
adopted by the SEC. See Whistleblower Program Rules, 85 FR at 70910-
70911.
\151\ That is, approximately 71% of awards by count at $2
million or less versus 82% at $5 million or less. See Table 2,
supra.
\152\ Id. (showing only a four percent difference in total award
dollars at the $2 million-capped level versus the $5 million-capped
level).
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The Commission also evaluated whether the 30 Percent Presumption
should apply to matters with awards up to $15 million, consistent with
a proposed whistleblower rulemaking by the Financial Crimes Enforcement
Network (``FinCEN''), a bureau of the U.S. Department of the
Treasury.\153\ The economic objective in setting the threshold for the
presumption's application is to maximize administrative efficiency (by
covering as many claims as possible under the presumption) while
avoiding two countervailing costs--increased pressure on the CPF and
the loss of the individualized factor analysis that is crucial for the
most valuable, higher-dollar matters. Historically, 77 percent of
orders granting awards were for $5 million or less, accounting for
about 10 percent of total payouts. Moving from a $5 million threshold
to a $15 million threshold would increase coverage by 12 percentage
points (from approximately 82 percent to approximately 94 percent of
awards by count), while increasing the associated share of total award
dollars subject to the presumption by 22 percentage points (from
approximately 10 percent to 32 percent). That is, adopting a threshold
above $5 million increases the likelihood that the benefits from
increased claim processing efficiency will be offset by an increase in
the average payment amount from the CPF. Additionally, a higher
threshold may be more likely to include matters where the stakes are
sufficiently substantial that the individualized factor analysis has
the most value in ensuring the award outcomes are equitable and
proportionate to each claimant's contribution. Replacing that analysis
with a blanket presumption in those matters would increase the risk of
over- or under-awarding claimants in higher value cases--a cost that
could undermine Program integrity and have a greater impact on the CPF.
---------------------------------------------------------------------------
\153\ See Whistleblower Incentives and Protections, 91 FR 16328,
16339 (Apr. 1, 2026) (Financial Crimes Enforcement Network,
Department of Treasury; proposed 31 CFR 1010.930(e)(3)(iv)--Certain
Awards of $15 Million or Less).
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c. Adopting a Minimum Amount for Awards Over the Threshold
The Commission also assessed a commenter's concern that the $5
million threshold could ``create weaker incentives for whistleblowers
to bring cases resulting in large recoveries than for whistleblowers
whose information results in smaller recoveries'' because awards above
a certain threshold would not be subject to the 30 Percent
Presumption.\154\ The commenter recommended that the Commission modify
the proposal to establish a $5 million award-floor applicable in the
event that a meritorious claimant contributed to an award that was too
large to trigger the 30 Percent Presumption, but would receive an award
of less than $5 million based on the Commission's individualized claim
review.\155\
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\154\ See Hasegawa Comment (raising concern that whistleblowers
in matters where collections are above $16.66million and below $50
million might, under a limited, theorized set of circumstances, be
awarded less than $5 million, and urging the Commission to modify
new rule 165.9(d) to incorporate a $5 million award-floor applicable
if the theorized circumstances actually arose).
\155\ Id.
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The principal cost of line-drawing in threshold-based rules is the
differential outcomes at the margin and, under the new rule 165.9(d),
the Commission acknowledges that it is possible that a successful
claimant might receive an aggregate award of less than $5 million in a
matter where collections exceed the 30 Percent Presumption threshold.
However, in evaluating incentives, whistleblowers cannot know with
certainty whether their information will contribute to a CFTC
enforcement action, much less what amount of collections will result
from a whistleblower tip at the time they submit information. And,
because the Presumption will operate to provide the statutory maximum
in a greater share of claims, the Commission anticipates that the
Presumption likely will incentivize rather than disincentivize
whistleblower assistance.
Moreover, there is insufficient evidence to suggest the
circumstance identified by the commenter is likely to result in
materially inequitable outcomes. All awards above the threshold would
be subject to an appropriate, individualized assessment. Based on the
Commission's experience to date, in every matter where collections
exceeded $16.66 million but the aggregate award fell below $5 million,
the awardee(s) would not have satisfied the conditions in new rule
165.9(d)(1)(ii)-(iv) necessary to qualify for a 30 percent award.\156\
Accordingly, the Commission does not expect that the individualized
factor analysis of new rule 165.9(d)(1)(ii)-(iv) will produce
materially less favorable outcomes to claimants in the potentially
impacted zone. Incorporating a separate threshold or other adjustment
mechanism would add administrative cost and increase complexity because
staff would need to perform both the Sec. 165.9(d)(1)(ii)-(iv)
exceptions analysis and an additional, threshold specific determination
(including documenting outcomes, updating guidance and workflows, and
[[Page 58591]]
tracking thresholds across multi-claimant matters), thereby increasing
procedural steps and potential disputes. It would also reduce
harmonization with SEC rule 21F-6(c), and the Commission's experience
indicates the incremental benefit would be limited given the rarity of
the identified circumstance.
---------------------------------------------------------------------------
\156\ See supra Section II.C.
---------------------------------------------------------------------------
d. Automatic Inflation Adjustments
The Commission considered whether to include a predetermined
adjustment mechanism in amended rule 165.9, such as indexing to
inflation. As one commenter stated, the $5 million nominal threshold
will erode in real value over time, causing an increasing share of
cases to fall above the threshold and progressively reducing the rule's
coverage.\157\ The Commission acknowledges potential inflation impacts
but assesses this risk to be limited because the historical
distribution of awards has been heavily concentrated at the lower end
of the dollar range. In 2025, 71 percent of all awards were at or below
$2 million. The award distribution would have to shift substantially
toward the $5 million threshold before there would be a material
decline in awards subject to the 30 Percent Presumption. However,
because the Commission is sensitive to the continuing efficacy of the
Presumption, the Commission will monitor the annual distribution of
awards relative to the $5 million threshold. The Commission retains
discretion to consider adjustments to the threshold if the data
indicate an erosion of the rule's effectiveness.
---------------------------------------------------------------------------
\157\ H Street Law Comment at 1.
---------------------------------------------------------------------------
e. Adopting Additional Process Requirements for the Commission
As suggested by a commenter, the Commission considered whether to
adopt specific time requirements for Preliminary and Final Award
Determinations.\158\ Mandatory processing deadlines would reduce staff
flexibility to allocate resources according to case complexity,
undermining Commission staff's ability to engage in the thorough,
individualized evaluations required for more complex, higher-value
matters. Furthermore, the Commission anticipates that the
administrative costs of tracking and ensuring compliance with fixed
deadlines, and the potential litigation exposure if deadlines were
missed, could exceed the efficiency gains that the 30 Percent
Presumption is designed to achieve.
---------------------------------------------------------------------------
\158\ See Constantine Cannon Comment at 2.
---------------------------------------------------------------------------
Another commenter suggested a requirement that Preliminary
Determinations include a provision-specific written explanation when
the 30 Percent Presumption is overridden.\159\ Even without a specific
requirement in new rule 165.9(d), Commission staff must document and
analyze relevant analytical criteria in Preliminary Determinations for
which the 30 Percent Presumption is not applied due to the presence of
factors that may decrease an award; this is done as a matter of sound
administrative practice and pursuant to the review requirements under
rules 165.7 and 165.13. Including additional documentation requirements
under rule 165.9 would impose additional procedural costs, without
meaningfully improving the substantive quality and transparency of the
determinations.
---------------------------------------------------------------------------
\159\ See Anonymous Comment at 1, 4-5.
---------------------------------------------------------------------------
f. Making the Factors More Prescriptive
The Commission also considered whether to make the factors
considered when determining whether the 30 Percent Presumption applies
more prescriptive. For example, a commenter suggested a statement that
limited assistance may not be inferred solely from the absence of
requests for supplemental cooperation. Because the existing framework
for evaluating the degree of assistance provided by the claimant
requires an individualized assessment based on the claimant's
contribution to the Commission's investigation, the suggested amendment
would increase complexity without altering the substantive standard and
would risk generating interpretive disputes about other factors not
addressed by the clarification, resulting in additional costs.
6. Section 15(a) Factors
Section 15(a)(2) of the CEA requires the Commission to consider the
costs and benefits of its actions in light of five factors: (1)
protection of market participants and the public; (2) efficiency,
competitiveness, and financial integrity of the futures markets; (3)
price discovery; (4) sound risk management practices; and (5) any other
public-interest considerations.\160\ The following discussion
synthesizes the Commission's consideration of these factors with
respect to new rule 165.9(d), based on the Program's historical data
and subject to recognized uncertainty regarding the number, nature, and
complexity of future whistleblower matters.
---------------------------------------------------------------------------
\160\ 7 U.S.C. 19(a)(2).
---------------------------------------------------------------------------
The Commission believes that new rule 165.9(d) is likely to enhance
the protection of market participants and the public by improving
incentives for the timely, high-quality reporting of potential
violations through more predictable award-percentage outcomes and
streamlined processing for matters where the statutory-maximum payout
would be $5 million or less. In addition, the Commission anticipates
that the amendments will promote more timely and accurate reporting,
which strengthens the Commission's ability to detect, deter, and
remediate violations that could harm market participants, distort
market integrity, or undermine confidence in derivatives markets.
The Commission expects new rule 165.9(d) to promote efficiency by
streamlining award-percentage determinations for matters in which the
statutory-maximum payout would be $5 million or less, a cohort that
accounts for approximately 82 percent of awards by count in historical
Program data. Improved Program efficiency is likely to bolster
enforcement program effectiveness, which in turn supports market
competitiveness and enhances overall market integrity by increasing the
likelihood that harmful conduct will be detected and addressed. Because
new rule 165.9(d) does not introduce new reporting, recordkeeping, or
compliance obligations, it is not expected to impose new burdens on
registrants or other market participants.
Although new rule 165.9(d) would not directly impact price-
formation mechanisms, the Commission anticipates potential indirect
contributions to more accurate price discovery. By enhancing the
Program's efficiency, transparency and predictability--thereby
shortening award timelines and reinforcing whistleblower incentives to
report--new rule 165.9(d) would operate in service of the Commission's
enforcement mission to deter and prosecute misconduct. Misconduct that
impairs market transparency, distorts prices, or affects liquidity is
more likely to be identified and addressed when whistleblowers have
reliable incentives and predictable award outcomes. By enhancing the
Commission's ability to detect misconduct early and deploy enforcement
resources more efficiently, the new rule supports the statutory
objective of fostering fair, orderly, and transparent markets.
Market participants rely on the integrity of derivatives markets to
hedge and manage risk effectively. The Commission believes that insofar
as new rule 165.9(d), for reasons already identified, strengthens
deterrence of
[[Page 58592]]
misconduct and accelerates the Commission's response to potential
violations, it will support sound risk-management practices indirectly
by accelerating the identification and remediation of misconduct that
can create operational, counterparty, or market-wide risks. By
reinforcing the incentive for whistleblowers to promptly report
information that may reveal systemic risks, operational failures, or
abusive conduct, new rule 165.9(d) enhances the Commission's ability to
address emerging threats to market integrity.
The Commission believes that new rule 165.9(d) is likely to advance
additional public-interest considerations. First, the new rule is
expected to conserve public resources by improving administrative
efficiency with limited additional CPF drawdown. Second, the Commission
believes that aligning the $5 million threshold with SEC rule 21F-6(c)
fosters consistency across the two whistleblower programs, which serves
the public interest in effective legal enforcement across financial
markets, supporting market integrity, market participant protection,
and public trust in regulatory systems.
A. Antitrust Considerations
CEA section 15(b) \161\ requires the Commission to consider the
public interests protected by the antitrust laws and to take actions
involving the least anti-competitive means of achieving the objectives
of the CEA. The Commission received no comments specifically addressing
this issue. The Commission foresees no negative impact accruing to the
public interests protected by the antitrust laws from new rule
165.9(d). Accordingly, in its view, new rule 165.9(d) is consistent
with the least anti-competitive means of achieving the objectives of
the CEA.
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\161\ 7 U.S.C. 19(b).
---------------------------------------------------------------------------
B. Executive Orders 12866, 13563, and 14192
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; and distributive
impacts). Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as any regulatory action that is likely to result
in a rule that may: (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, or the President's priorities.
OMB has determined that this action is not a significant regulatory
action as defined in Executive Order 12866, as amended, and therefore
it was not subject to Executive Order 12866 review.
This action is not an Executive Order 14192 regulatory action
because it is not a significant regulatory action under E.O. 12866.
F. Congressional Review Act
Pursuant to the Congressional Review Act,\162\ the Office of
Information and Regulatory Affairs designated this rule as not a
``major rule,'' as defined by 5 U.S.C. 804(2).
---------------------------------------------------------------------------
\162\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------
List of Subjects in 17 CFR Part 165
Administrative practice and procedure, Government employees,
Investigations, Whistleblowing.
For the reasons stated in the preamble, the Commodity Futures
Trading Commission amends 17 CFR part 165 as follows:
PART 165--WHISTLEBLOWER RULES
0
1. The authority citation for part 165 continues to read as follows:
Authority: 7 U.S.C. 2, 5, 9, 12a(5), 13a, 13a-1, 13b, and 26.
Sec. 165.7 [Amended]
0
2. In Sec. 165.7(e)(1), remove the words ``by the Director of the
Division of Enforcement''.
0
3. In Sec. 165.9:
0
a. Redesignate paragraph (d) as paragraph (e); and
0
b. Add new paragraph (d).
The addition reads as follows:
Sec. 165.9 Criteria for determining amount of award.
* * * * *
(d) Additional considerations in connection with certain awards of
$5 million or less. (1) This paragraph (d) applies when the Commission
is considering any meritorious award application where:
(i) The statutory maximum award of 30 percent of the monetary
sanctions collected in any covered and related action(s), in the
aggregate, is $5 million or less, and the Commission determines that it
does not reasonably anticipate that future collections would cause the
statutory maximum award to be paid to any whistleblower to exceed $5
million in the aggregate;
(ii) None of the negative award factors specified in paragraph
(c)(1) or (c)(3) of this section were found present with respect to the
claimant's award application and the award claim does not trigger Sec.
165.17 (concerning awards to whistleblowers who engage in culpable
conduct);
(iii) The claimant did not engage in unreasonable reporting delay
under paragraph (c)(2) of this section (although the Commission, in its
discretion, may in certain limited circumstances determine to waive
this criterion if the claimant can demonstrate that doing so based on
the facts and circumstances of the matter is consistent with the public
interest and the objectives of the whistleblower program); and
(iv) The Commission does not otherwise determine in its discretion
that application of the enhancement afforded by this paragraph (d)
would be inappropriate because either:
(A) The whistleblower's assistance in the covered action or related
action (as assessed under paragraph (b)(2) of this section) was, under
the relevant facts and circumstances, limited; or
(B) Providing the enhancement would be inconsistent with the public
interest, or the objectives of the whistleblower program.
(2) If the Commission determines that the criteria in paragraph
(d)(1) of this section are satisfied, the resulting payout to a
claimant for the original information that the claimant provided that
led to one or more successful covered or related action(s),
collectively, will be the maximum allowed under the statute.
(3) Notwithstanding paragraph (d)(2) of this section, if two or
more claimants qualify for an award in connection with any covered
action or related action and at least one of those claimants' award
applications qualifies under paragraph (d)(1) of this section, the
aggregate amount awarded to all meritorious claimants will be the
statutory maximum. In allocating that amount among the meritorious
claimants, the Commission will consider whether an individual
claimant's award application satisfies paragraphs (d)(1)(ii) and (iii).
Sec. 165.10 [Amended]
0
4. In Sec. 165.10(a)(7), remove the words ``Division of Enforcement''.
0
5. Revise Sec. 165.15 to read as follows:
[[Page 58593]]
Sec. 165.15 Administering the whistleblower program.
(a) Specific authorities--(1) Payments, deposits, and credits. The
Executive Director is authorized to deposit into or credit collected
monetary sanctions to the Fund, and to make payment of awards
therefrom, with the concurrence of the General Counsel, or of their
respective designees.
(2) Designation of claims review staff. The Claims Review Staff
referenced in Sec. 165.7 shall be composed of no fewer than three and
no more than five staff members from at least two of the Commission's
Offices or Divisions (except the Office of the General Counsel) who
have not had direct involvement in the underlying enforcement action,
as designated by the General Counsel in consultation with the Executive
Director.
(3) Disclosure of whistleblower identifying information. The
General Counsel is authorized on behalf of the Commission to exercise
its discretion to disclose whistleblower identifying information under
Sec. 165.4(a).
(b) General authority to administer the program. The General
Counsel shall have general authority to administer the whistleblower
program except as otherwise provided under this part.
Issued in Washington, DC, on September 14, 2026, by the
Commission.
Robert Sidman,
Deputy Secretary of the Commission.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix to Whistleblower Award Determination--Commission Voting
Summary
On this matter, Chairman Selig voted in the affirmative. No
Commissioner voted in the negative.
[FR Doc. 2026-19006 Filed 9-15-26; 8:45 am]
BILLING CODE 6351-01-P
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