What potential whistleblowers need to know about reporting fraud or misconduct to the CFTC.
The Whistleblower Program of the Commodity Futures Trading Commission (CFTC) encourages those with knowledge of violations of U.S. Commodity Exchange Act (CEA) to share this information with the CFTC.
Under the CFTC Whistleblower Program, eligible whistleblowers are entitled to an award of between 10 percent and 30 percent of the monetary sanctions collected in actions brought by the government.
CFTC Whistleblower Program Topics Covered Here:
In July 2010, in response to the 2008 financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, known colloquially as “Dodd-Frank.” One of the most important components of this broad overhaul of the U.S. financial regulatory system was enactment of the CFTC Whistleblower Program.
To protect investors and the integrity of the commodity markets, the CFTC is charged with enforcing the Commodity Exchange Act (CEA). It has broad investigative powers and can bring civil enforcement actions seeking monetary penalties and other civil remedies through actions in federal court or administrative proceedings. A CFTC whistleblower may submit information about any possible violation of the CEA that has occurred, is ongoing, or is about to occur.
Whistleblowers must provide the CFTC with “original information,” meaning information that is not publicly available or information obtained as a result of the whistleblower’s independent analysis of public information if that independent analysis revealed information not previously known to the CFTC.
The CEA covers a wide range of actors and activities. Our collection of CFTC Enforcement Actions demonstrates the types of fraudulent activity that can give rise to a CFTC enforcement action and whistleblower claim.
Whistleblowers in the CFTC program submit their information directly to the CFTC using CFTC “tip, complaint, or referral,” or “TCR” forms and procedures; they do not file a complaint in federal court. Experienced whistleblower attorneys can help whistleblowers submit stronger claims, connecting the whistleblower’s evidence with the applicable law to spell out the nature of the wrong in a compelling way for the CFTC.
If a whistleblower is represented by counsel, the TCR form need not disclose the whistleblower’s identity. The whistleblower can proceed anonymously, to be contacted by the CFTC through the CFTC whistleblower’s attorney. However, the CFTC cautions that the whistleblower’s identity may become public when announcing settlements and making awards.
Unlike the FCA, the whistleblower does not have any right to participate as a party in any enforcement action brought by the CFTC against the defendant. If the CFTC chooses not to pursue an enforcement action, the CFTC Whistleblower Program does not provide a means for the whistleblower to independently pursue such an action.
If the information provided leads to a successful CFTC action resulting in an order of monetary sanctions exceeding $1 million, the whistleblower may then apply for a whistleblower reward.
Whistleblowers may receive awards of up to 30% of any government recovery based on the information provided.
In determining the award percentage, the CFTC considers factors such as the significance of the whistleblower’s information and the extent of the whistleblower’s assistance. If the whistleblower is awarded between 10 and 30% of the monetary recovery, the CFTC’s reward determination is not appealable.
If the CFTC denies the reward application, the whistleblower may file an appeal in a United States Court of Appeals.
This description of the elements and procedures of the CFTC Whistleblower Program is general in nature. The CFTC Whistleblower Program and the law surrounding it is complex. The whistleblower attorneys of Constantine Cannon understand the complicated, constantly changing landscape of state and federal whistleblower laws. If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please Contact us for a Confidential Consultation.