CFTC Announces First Award to a Foreign Whistleblower
Earlier this week, the Commodity Futures Trading Commission (CFTC) announced an award of more than $70,000 to a whistleblower “who significantly contributed to an ongoing CFTC investigation and led the CFTC to a successful settlement.” It is the first award under the CFTC’s Whistleblower Program to a foreign whistleblower and follows on the heels of last week’s record-breaking $30 million award, by far the largest to date under the CFTC program. Yet, it still represents only the sixth whistleblower award under the CFTC program since its inception in 2010. See CFTC Press Release.
In announcing the award, the CFTC highlighted “the international reach of the Whistleblower Program, underscoring that any person worldwide who has information about potential violations of the CEA [Commodity Exchange Act] can become a whistleblower by simply submitting a tip online.” CFTC Enforcement Chief James McDonald further doubled-down on the agency’s efforts to attract foreign whistleblowers by stressing the significance of the award “because it signals to whistleblowers around the world that anyone with information about potential violations of the Commodity Exchange Act can participate in the CFTC’s Whistleblower Program.” He also put out a general call for more whistleblower to come forward by recognizing “the increasing significance of whistleblowers in our enforcement program, a trend I expect to continue going forward.”
The CFTC Whistleblower Program was created under the authority of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program is designed to encourage individuals to submit information regarding commodities laws violations to the CFTC. Under the Commodity Exchange Act, the CFTC regulates the trading of futures, options, and swaps on “commodities,” which are traditionally thought of as tangible goods such as precious metals, wheat or oil. The CFTC also has asserted authority over various financial instruments and benchmarks, including virtual currency, London Interbank Offered Rates (LIBOR), and foreign exchange (forex) benchmarks.
If the whistleblower’s information leads to a CFTC enforcement action resulting in over $1 million in monetary sanctions, the whistleblower can receive an award of between 10 and 30 percent of the money collected. Whistleblowers may also be entitled to awards based on monetary sanctions collected by other agencies in actions related to a CFTC enforcement action.
The CFTC has been criticized for the dearth of awards it has doled out under its whistleblower program, particularly in comparison to the dozens of awards the SEC has made under its Dodd-Frank whistleblower program (55 whistleblowers and counting). But not only is this week’s award the second in two weeks, it also is the second award under the CFTC’s self-described newly enhanced rules intended to bolster anti-retaliation protections for whistleblowers and improve the process for claims review. This is a point the CFTC emphasized in its award announcement this week.
Perhaps this all indicates a warmer CFTC embrace of whistleblowers going forward. At the very least, it should provide some added incentives to those who have information to report on any fraud or misconduct in the commodities arena. The CFTC has made it clear it wants to hear from you.
To find out more about whether you should submit information through CFTC Whistleblower Program, please contact us today.