CFTC Awards $15 Million to Two Whistleblowers
Yesterday (September 19), the Commodity Futures Trading Commission (CFTC) announced its award of $15 million to two whistleblowers. Keeping to its commitment of protecting the identity of its whistleblowers, we do not know who the whistleblowers are or the enforcement actions to which the rewards relate. All we know is the whistleblowers “provided significant information and assistance that led the CFTC to bring separate successful enforcement actions.”
The associated Whistleblower Determination Orders provide a bit more detail on the basis for the awards. The heavily-redacted Order for the first whistleblower details that they provided the initial information that led to the opening of the investigation and “a very high degree of additional, ongoing support” including: (i) further explaining the problematic violations and providing evidence that the conduct was ongoing; (ii) interpreting key evidence; (iii) facilitating the appearance of a corroborating witness; and (iv) providing additional analysis supporting the investigation and quantifying the harm. The Order also noted the whistleblower’s explanation of the misconduct directly contradicted the target company’s explanation.
The Order for the second whistleblower was even more sparse on specifics, basically noting only that the whistleblower was helpful in interpreting key evidence and identifying new and productive lines of inquiry. Neither Order provided any hint into the nature of the misconduct, how the whistleblowers learned of it, and what steps, if any, they took to report it internally to the companies before reporting it to the CFTC. Nor did the Orders disclose the industries in which the companies are involved or any other clues that would shed light into the substance of the specific enforcement actions.
Nevertheless, in announcing the awards, the CFTC stressed the critical role these two whistleblowers played — and the importance of whistleblowers more broadly — in assisting the CFTC’s enforcement efforts. CFTC Director of Enforcement Ian McGinley trumpeted the awards as an illustration of the “success of our whistleblower program,” which he described as “incentiviz[ing] whistleblowers like these two to come forward with accurate information, including evidence of ongoing misconduct, to help protect market participants and hold wrongdoers accountable.”
Acting Whistleblower Chief Christina McGlosson echoed this sentiment noting “[t]hese whistleblowers provided sustained cooperation and support, which helped catch more misconduct and conserve CFTC resources,” and that the awards “show how whistleblowers can act as force multipliers for the CFTC’s enforcement efforts.”
Both awards were made under the CFTC Whistleblower Program, created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which provides whistleblowers with up to 30% of any government recovery resulting from information they voluntarily provide. Since its first award in 2014, the CFTC has made roughly $350 million in whistleblower awards associated with enforcement actions bringing in more than $3 billion in government recoveries. This includes the agency’s $200 million blockbuster award in October 2021, which by all accounts was likely related to the CFTC’s action against Deutsche Bank for manipulating the LIBOR global financial benchmark.
This is the first whistleblower award the CFTC has made since its long-standing Whistleblower Chief Chris Ehrman stepped down in July. Generally speaking, the CFTC has been significantly less prolific with its whistleblower payouts compared to the better-resourced SEC, which has made more than $400 million in whistleblower awards over this past summer alone. This includes an $18 million award on August 25, $104 million in awards on August 4, and a $279 million award on May 5, the largest under any whistleblower program ever.
So if you have information relating to potential commodities fraud or securities fraud, the CFTC and SEC have made it very clear that they want to hear from you. If you think you might have such information and want to speak to a member of the Constantine Cannon whistleblower team to learn what it means to be a whistleblower, please do not hesitate to contact us for a free and confidential consultation.