This is Part II of a four-part interview with Vincente Martinez, Director of the CFTC Whistleblower Office (WBO). Click here for Part I.
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As you are aware, many companies have expressed concerns about the lack of an internal reporting requirement for whistleblowers. What, if anything, do you have to say in response to critics who argue that this undermines their compliance programs?
The CFTC respects the value of internal compliance systems. In the preamble to our final Whistleblower Rules, the Commission “recognize[d] that internal compliance and reporting systems ought to contribute to the goal of detecting, deterring and preventing misconduct, including CEA violations,” and that the Commission “does not want to discourage employees from using such systems when they are in place.” Nevertheless, the Commission felt that it was “inappropriate to require whistleblowers to report violations internally to be eligible for an award.” Accordingly, the Commission sought to strike an “appropriate balance” between the interests of maintaining strong internal compliance systems and the interests of the whistleblower program by tailoring our Rules to provide incentives to whistleblowers to report internally, but not requiring them to do so.
Specifically, if a whistleblower first reports internally, we will consider that as a factor that may increase the amount of an award. Conversely, we will consider a whistleblower’s interference with an internal compliance system as a factor that may decrease the amount of an award.
A whistleblower may also be eligible for an award for reporting original information internally if the company later reports information to the CFTC that leads to a successful enforcement action. Under our Rules, all of the information provided by the company to the CFTC will be attributed to the whistleblower, which means that the whistleblower will get credit – and potentially a greater award – for information provided by the company to the CFTC in addition to the information originally reported by the whistleblower. But it is very important for whistleblowers and their representatives to know that they must file with the CFTC within 120 days of reporting internally.
If whistleblowers must be “first to report” in order to receive an award, won’t this policy discourage them from reporting internally?
No. If a whistleblower first reports internally, that information will be deemed to have been submitted to the CFTC on the date that it was reported internally if the whistleblower also reports it to us within 120 days of that date.
Some companies have concerns that the whistleblower rules encourage potential whistleblowers to disclose privileged, confidential, and even proprietary material that may support the whistleblower’s claim. What precautions is your office taking to help minimize the disclosure of this material?
Our Rules discourage the inappropriate submission of privileged communications and similar material. Both attorney-client privileged communications and information obtained in connection with the legal representation of a client cannot be considered part of the whistleblower’s independent knowledge when determining eligibility for an award. In other words, a whistleblower cannot be given credit for reporting such information, unless the disclosure is permitted by law or otherwise authorized. WBO also screens for such information by asking whistleblowers to identify in Form TCR “any information [that] was obtained from an attorney or in a communication where an attorney was present.”
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Tomorrow: Part III of the interview with Vincente Martinez of the CFTC Whistleblower Program.
Jessica Tillipman is a contributing editor of the FCPA Blog. She’s the Assistant Dean for Field Placement and Professorial Lecturer in Law at The George Washington University Law School. She also teaches an Anti-Corruption seminar that focuses on corruption control issues in government procurement.