CFTC Whistleblower Program
The Whistleblower Program of the Commodity Futures Trading Commission 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.
History of the CFTC Whistleblower Program
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.
Elements of a Claim under the CFTC Whistleblower Program
To protect investors and the integrity of the commodity markets, the CFTC is charged with enforcing the 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 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 SEC 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. Read here for examples of the types of fraudulent activity that can give rise to a CFTC enforcement action.
The CFTC Whistleblower Program Process
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 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 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’s may then apply for a whistleblower reward.
The 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.
Key Features of the CFTC Whistleblower Program
- Whistleblowers may receive an award even if their information relates to an existing CFTC investigation, if they provide additional information that significantly contributes to the CFTC’s success in the existing investigation.
- The whistleblower must voluntarily provide the information about the securities law violation. Information provided to the CFTC after receiving a request for that information from the CFTC or other government agency may not be found to have been voluntarily provided.
- Whistleblowers do not have to be “insiders.” They may receive awards based on their independent knowledge or independent evaluation of publicly-available information.
- Whistleblowers do not have to be U.S. citizens or residents. Further, the illegal conduct doesn’t have to have taken place in the United States, as long as it affects the U.S. market.
- Employee-whistleblowers may generally proceed directly to the CFTC Whistleblower Program, and do not need to first report their information through internal compliance procedures.
- Individuals with legal compliance, audit, supervisory, or governance responsibilities are not eligible for awards under the CFTC Whistleblower Program. However, in limited circumstances where substantial injury is likely, and where internal reporting has failed, such an individual may be able to proceed as a CFTC whistleblower.
- Whistleblowers are generally entitled to protection from retaliation by their employers based on their reporting of securities violations.
- There is no requirement that any government entity be financially harmed by the complained-of conduct.
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.