CFTC Issues Annual Whistleblower Report Highlighting Continued Success of CFTC Whistleblower Program

As it is required to do every year, the Commodity Futures Trading Commission (CFTC) just released its Annual Report on the CFTC Whistleblower Program, which provides rewards and protections to whistleblowers providing the agency with information on Commodities Exchange Act violations.  The 2024 Report covers the period from October 1, 2023 through September 30, 2024 and as with its previous annual reports, details the continued growth and success of the CFTC Program.  It also evidences the CFTC’s continued recognition of the critical role whistleblowers play in the CFTC enforcement regime.

There were no blockbuster whistleblower awards this year even close to the record $200 million award the CFTC made in October 2021 to the LIBOR benchmark manipulation whistleblower.  But it was a very active year for the whistleblower program nonetheless, with the CFTC hitting several notable milestones.  Three in particular were highlighted by the CFTC in its report.

First, the agency issued 12 whistleblower award orders this year, the most since the agency issued its first award in 2014.  These awards totaled roughly $42 million and were associated with enforcement actions resulting in roughly $162 million in monetary sanctions.  Second, the CFTC received 1,744 whistleblower submissions, again the most in any year since the program’s inception.  Third, on September 23 the CFTC issued four orders granting awards to 7 whistleblowers, the most awards the agency issued in a single day.

In addition, the CFTC underscored several notable features of some of this year’s awards:

• • Public Information. The CFTC’s largest award this year ($18 million) went to a whistleblower who provided information based on the whistleblower’s independent analysis of publicly available information.  The CFTC used the award to stress that whistleblowers need not be company insiders.  Anyone in any position who provides helpful information to the agency can qualify.

• • Culpable Insider. The CFTC made an $8 million award to a company insider who was directly involved in the misconduct the whistleblower reported, providing direct evidence of the whistleblower’s own intent along with information about the others involved both inside and outside the company.  While the whistleblower’s involvement reduced the award amount, the CFTC made clear that absent of a criminal conviction, culpability alone does not disqualify a whistleblower from receiving an award.

• • Compliance Officer. The CFTC made its first award to a company insider serving in the compliance department.  Compliance officers do not generally qualify for awards because ferreting out fraud is part of their regular responsibilities.  However, the CFTC whistleblower rules provide an exception for compliance professionals who report to the CFTC after at least 120 days have passed since they reported the misconduct internally and the company failed to take action.  That was how this whistleblower qualified.

• • Digital Markets. The CFTC made an award to a whistleblower reporting on improper trading in the digital asset markets with the agency noting that identifying unlawful conduct in these markets is a top priority and that fraud in this area accounted for nearly half the CFTC’s enforcement docket and the majority of whistleblower tips the CFTC received.

• • Delay. The CFTC made an award to a whistleblower even though the agency found the whistleblower unreasonably delayed in reporting the misconduct.  The CFTC reduced the award because of the delay but at the same time recognized the difficult path whistleblowers often face, and that there may be legitimate reasons for delay.

• • Market Participant. The CFTC made an award to a market participant who was not a company insider, again stressing that anyone with valuable information of securities fraud can qualify for a whistleblower award.

In all this, the CFTC has once again made it clear how highly it values its whistleblower program, with whistleblowers now involved in more than 40% of CFTC enforcement matters, and with total awards under the program amounting to roughly $390 million, leading to enforcement actions securing more than $3.2 billion in monetary sanctions.  By any measure, the CFTC Whistleblower Program is alive and well with the agency putting out the call for more whistleblowers to come forward.

So if you have information on potential commodities violations and would like to learn more about the CFTC program or what it means to be a whistleblower more broadly, please don’t hesitate to contact us.  We will connect you with a member of our whistleblower team for a free and confidential consult.

Tagged in: Fraud in CFTC-Regulated Markets, Whistleblower Eligibility, Whistleblower Rewards,