Category Archives: Whistleblowers

CFTC Begins Its Enforcement of NDA Rule with Action Against Trafigura

Photo courtesy of the author

On June 17, 2024, Trafigura Trading LLC (“Trafigura”) agreed to pay $55 million to settle charges brought by the Commodity Futures Trading Commission (“CFTC”) that they “traded gasoline while in knowing possession of material nonpublic information, . . . manipulated a fuel oil benchmark to benefit its futures and swaps positions,” and notably that they violated CFTC Regulation 165.19(b) by “requir[ing] its employees to sign employment agreements, and request[ing] that former employees sign separation agreements containing non-disclosure provisions prohibiting them from disclosing company information, with no exception for law enforcement agencies or regulators.” This is the CFTC’s first enforcement of Regulation 165.19(b).

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Shining a Light on the Shadows: A Data-Driven Look at Global Anti-Corruption Efforts

by Leonardo Borlini

Photo courtesy of the author

Corruption has been the target of significant international efforts in recent decades. A complex web of international treaties and monitoring mechanisms has emerged, aiming to curb this global scourge. But how effective are these efforts? Are countries truly implementing and complying with their international anti-corruption commitments?

In my recent study, Compliance Mechanisms as a Diagnostic and Prognostic Tool for the Evolution of the International Anti-Corruption Cooperation: A Data-Driven Study, forthcoming in 22(2) International Constitutional Law Journal (2024), I try to shed light on these questions. Using innovative text-as-data analysis, the study delves into the vast trove of evaluation and compliance reports produced by the monitoring mechanisms established by the main international anti-corruption. The findings offer a comprehensive assessment of the successes, failures, and enduring challenges in global anti-corruption cooperation.

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Consumer Financial Protection Bureau Stands Up to Protect Whistleblowers from Overly Broad NDAs

by Benjamin Calitri

Photo courtesy of author

Protections for whistleblowers from overly expansive non-disclosure agreements (NDAs) aimed at preventing whistleblowers from providing information to law enforcement and regulators have been expanding exponentially in the past year. The Securities and Exchange Commission’s (SEC) enforcement of Rule 21F-17(a) has gained teeth by increasing the monetary sanctions for enforcement. The Commodity Futures Trading Commission (CFTC) took its first enforcement of Regulation 165.19(b) against Trafigura for the use of NDAs meant to silence whistleblowers. The latest agency to take action against overly expansive NDAs is the Consumer Financial Protection Bureau (CFPB), which has announced that their employee protection regulation applies to NDAs that seek to silence whistleblowers.

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PCCE to Host Senior DOJ Officials on September 17th to Discuss Newly-Announced Whistleblower Program

Photos of speakers

On September 17th, 2024, the Program on Corporate Compliance and Enforcement will host U.S. Department of Justice officials Nicole Argentieri and Brent Wible as well as other experts for a discussion on the Department of Justice’s newly-announced whistleblower pilot program.

After PDAAG Argentieri’s remarks, Brent Wible will engage in a moderated fireside chat and will be taking questions from the audience.

Following remarks and the fireside chat, there will be a moderated panel discussion by a panel of experts in corporate enforcement, compliance, and whistleblower programs from both the private sector and government. Panelists include:

Jane Norberg, Partner, Arnold & Porter LLP
Preston Pugh, Partner, Crowell & Moring LLP
Daniel Richman, Paul J. Kellner Professor of Law, Columbia Law School
Max Rodriquez, Principal and Founder, Law Office of Max Rodriguez
Andrew Weissman, Professor of Practice, NYU School of Law

The event will be in-person only at NYU School of Law. Check-in will open at 5:30 pm. The program will begin 6 PM in Lipton Hall at 108 W 3rd Street, Lower Level, New York NY 10012. There will be a reception following the event from 8:00 – 8:30 PM.

Pre-registration is required to attend. Click here to register. We expect that 2 credits of NY CLE will be offered for attendees who sign in and out at the venue.

We look forward to seeing you!

DOJ Launches New Whistleblower Incentive Program

by Kevin Chambers, Terra Reynolds, Douglas K. Yatter, and Lilia B. Vazova

From left to right: Kevin Chambers, Terra Reynolds, Douglas K. Yatter, and Lilia B. Vazova. (Photos courtesy of Latham & Watkins LLP)

DOJ’s pilot program aims to fill gaps in existing federal whistleblower programs and incentivize prompt corporate self-disclosure alongside individual whistleblower tips.

Following the March 2024 announcement of its intention to introduce a new corporate whistleblower incentive program, on August 1, 2024, the Department of Justice (DOJ) launched a three-year pilot program for rewarding whistleblowers who alert DOJ to significant corporate misconduct. DOJ’s new program, modeled after whistleblower programs run by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), may generate a significant number of tips about potential misconduct and adds an important new dimension for companies’ compliance measures and handling of investigations.

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The Supreme Court’s Business Docket: October Term 2023 in Review

by John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Akua Abu

Left to right: John F. Savarese, Kevin S. Schwartz, Noah B. Yavitz, Adam L. Goodman, and Akua F. Abu. (Photos courtesy of the authors)

In early July, the Supreme Court concluded its most consequential Term in years, with a flood of decisions on contentious issues ranging from abortion access to the regulation of social media companies and gun possession to presidential immunity. The Court’s business docket was no less active. While the Consumer Financial Protection Bureau narrowly survived a constitutional challenge to its funding mechanism, the Court’s conservative majority elsewhere struck body blows to the administrative state—including the long-anticipated reversal of the Chevron doctrine of judicial deference to agency interpretation of ambiguous statutes. Beyond this headline-grabbing showstopper, the Court issued a string of commercially significant decisions, affecting bankruptcy, arbitration, securities, and employment law. We summarize below the key business decisions from this Term and flag a few key cases to watch in the coming Term.

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State Immunity and the False Claims Act

By Joshua M. Baker

Photo courtesy of the Young Law Firm.

While litigation under the False Claims Act (FCA) generally can be rather complex, bringing actions under this statute against state agencies involves the additional issue of potential immunity under the Eleventh Amendment. The inquiry as to whether a given state agency can successfully assert such immunity is nuanced and the analysis will vary depending on the jurisdiction in which the case is brought. At the most basic level, the resolution of this issue depends on how the agency is treated under state law. Specifically, courts will look at factors such as how much autonomy the agency has from the state government as such and how much of its funding comes from the state.

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Will the Justice Department’s “90-Day Sprint” Creating a New Whistleblower Program Permit Confidential or Anonymous Reporting?

by Stephen M. Kohn

Photo courtesy of Kohn, Kohn & Colapinto LLP

On March 7, 2024, in speech before the American Bar Association, Deputy Attorney General Lisa Monaco announced a “90-day sprint” to establish a new Justice Department whistleblower program. The DAG’s reason for announcing the new program was clear:

Ever since Dodd-Frank created whistleblower programs at the SEC and the CFTC, those agencies have received thousands of tips, paid out many hundreds of millions of dollars, and disgorged billions in ill-gotten gains from corporate bad actors.

Yet both programs, and similar ones at IRS and FinCEN — by their very nature — are limited in scope. They only cover misconduct within their agencies’ jurisdictions. . .

These programs have proven indispensable — but they resemble a patchwork quilt that doesn’t cover the whole bed. They simply don’t address the full range of corporate and financial misconduct that the Department prosecutes.

So, we are filling these gaps.

The critical issue facing the Justice Department is precisely how they will “fill these gaps.” Among the most pressing concerns is confidentiality. Whistleblower advocates have uniformly asked the Justice Department to permit anonymous and confidential reporting as is currently permitted by the U.S. Securities and Exchange Commission (SEC) under the highly successful Dodd-Frank Act. However, the U.S. Department of Justice (DOJ) has historically not permitted anonymous or confidential whistleblower disclosures to the department. The current DOJ-approved procedures require all “human sources” to undergo an extensive background screening making anonymous reporting impossible. Even when a whistleblower is granted confidential informant status, the current procedures permit the DOJ to waive confidentiality essentially at-will.

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Head of DOJ Criminal Division Announces Voluntary Self-Disclosure Program for Individuals at PCCE’s 10th Anniversary Conference

On April 15, 2024, the NYU Law Program on Corporate Compliance and Enforcement (PCCE) held its 10th Anniversary Conference, featuring keynote speakers Nicole Argentieri, Principal Deputy Assistant Attorney General and Head of DOJ’s Criminal Division; Gurbir Grewal, Director of Enforcement, SEC; and Andrea Griswold, Deputy U.S. Attorney, SDNY, among other distinguished speakers. More information on the conference can be found here. At the conference, Principal Deputy Assistant Attorney General Argentieri first announced a new voluntary self-disclosure program for individuals. A blog post by her, which describes the program and provides links to more information, is republished below.

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Empirical Data Supports Efforts to Reform Internal Corporate Whistleblower Protections

by Stephen M. Kohn, Alyce Petit, Kate Reeves, and Geoff Schweller

Left to Right: Stephen M. Kohn, Alyce Petit, Kate Reeves and Geoff Schweller (photos courtesy of authors)

Corporate whistleblowers who report through internal compliance channels face higher rates of retaliation than those who report externally to the government, according to research published in a working paper on the Social Science Research Network (SSRN).

An analysis of 8-years worth of Dodd-Frank Act and Sarbanes-Oxley Act (SOX) whistleblower retaliation cases found that over 90% of the cases involved internal whistleblowers.

These findings are of particular importance in light of Congressional efforts to amend the Dodd-Frank Act to extend anti-retaliation protections for internal whistleblowers. They also validate the importance of regulations by the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) that explicitly do not require whistleblowers to make internal reports prior to qualifying for a reward under the Dodd-Frank.

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