Whistleblower Lawyer News has learned that the Commodity Futures Trading Commission (CFTC) today announced an award of approximately $30 million to a whistleblower who voluntarily provided key original information that led to successful enforcement action. Previously, the highest award amount paid to a CFTC whistleblower was in March 2016 of more than $10 million (see CFTC Press Release 7351-16)
The award is the largest award made by the CFTC’s Whistleblower Program to date and is the fifth award made by the program. The CFTC’s Whistleblower Program was created by section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The CFTC pays monetary awards to eligible whistleblowers who voluntarily provide the CFTC with original information on violations of the CEA that leads the CFTC to bring a successful enforcement action resulting in monetary sanctions exceeding $1,000,000. By law, the CFTC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. Under the Dodd-Frank Act, employers may not retaliate against whistleblowers for reporting possible violations of the CEA to the CFTC. The Whistleblower Program has become an integral component in the agency’s enforcement arsenal,” said CFTC Chairman, J. Christopher Giancarlo. “We hope that an award of this magnitude will incentivize whistleblowers to come forward with valuable information and provide notice to market participants that individuals are reporting quality information about violations of the Commodity Exchange Act [CEA].” James McDonald, Director of the Division of Enforcement, stated: “Whistleblower submissions have become a significant part of our enforcement program, allowing us to pursue violations we might otherwise have been unable to detect. That’s one reason why we’ve worked hard to expand our Whistleblower Program, including by increasing the protections afforded to whistleblowers that come forward. I expect the Whistleblower Program to contribute even more substantially to our enforcement efforts going forward.” Whistleblowers are eligible to receive between 10 percent and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund established by Congress and financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from harmed investors to fund the program. The award today is a demonstration of the program’s commitment to reward those who provide quality information to the CFTC,” said Christopher Ehrman, Director of the CFTC’s Whistleblower Office. “The number of leads the office receives continues to grow each year by the hundreds. We hope that this award will continue to facilitate the upward momentum and success of the CFTC’s Whistleblower Program by attracting those with knowledge of wrongdoing to come forward.”
Prerequisites & Eligibility Requirements
The Whistleblower Rules specify the prerequisites and eligibility requirements. Prerequisites include:
- Whistleblower information must be provided voluntarily, prior to a request, inquiry, or demand for information
- The information must be original information not previously known to the Commission, but if the whistleblower is the original source of the information, it would be deemed original information
- The information must have led to a successful resolution of CFTC action or a Related Action
- The whistleblower, upon CFTC staff’s request, must provide certain additional information.
- The whistleblower must have submitted an award application (Form WB-APP) in response to a Notice of Covered Action or a final judgment in a Related Action or both
Who can be a whistleblower eligible for an award?
A whistleblower eligible for an award can be any individual who sends the Commission a Form TCR containing information about a potential violation of the Commodity Exchange Act. Examples range from a corporate officer or insider, to a trader or market observer, to an investor or fraud victim. A company or another entity is not eligible to be a whistleblower. Rules 165.2(p), 165.3
However, not every person who files a TCR will be eligible for an award. To be eligible, a whistleblower must “voluntarily” provide the Commission with “original information” about a violation. Those terms are explained in these FAQs. Also, certain persons including certain government and self-regulatory personnel, and persons convicted of a crime related to the conduct at issue in the whistleblower matter are ineligible for an award. Rules 165.5(a), 165.6
Can I submit my whistleblower tip anonymously?
Yes. You can file your Form TCR anonymously, with or without a lawyer’s help. Because the Commission may need to contact you for more information, and because ongoing cooperation, while the Commission is investigating a matter, is a factor in determining any award amount, you should provide some means of contact, such as an email address or telephone number. Also, there are detailed requirements for making an award claim anonymously. Rules 165.3(c), 165.4(b), 165.7(c)
Will the CFTC keep my identity confidential?
Whether or not you seek anonymity, the Commission is committed to protecting your identity. For example, the Commission will not disclose your identity in response to requests under the Freedom of Information Act. As a general rule, the Commission treats information learned during the course of an investigation including the identity of sources as non-public and confidential.
There are, however, limits on the Commission’s ability to shield your identity. For example, in an administrative or court proceeding, the Commission may be required to produce documents or other information which would reveal your identity. In addition, as part of the Commission’s ongoing investigatory responsibilities, the Commission may use the information you have provided during the course of an investigation. In appropriate circumstances, the Commission may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities. Rule 165.4