On May 6, 2019, the Commodity Futures Trading Commission (“CFTC”) announced a whistleblower award of approximately $1.5 million to be paid to an individual whistleblower. The CFTC announced that it granted the whistleblower’s award application for both a CFTC action and a related action brought by another federal regulator. In ordering the award, the CFTC recognized the contribution of a whistleblower who sought to report his or her concerns internally prior to reporting to the CFTC.
“While there is no requirement that a whistleblower report internally before approaching the Commission, today’s award demonstrates that the Commission may pay enhanced awards to those that do – that is one of the positive factors set out in our rules for the Commission to consider in making its award determination,” said Christopher Ehrman, Director of CFTC’s Whistleblower Office. “To be clear, the Commission’s rules do not require a whistleblower to undertake internal reporting efforts in order to be eligible for the benefits and protections of our program. Instead, a whistleblower can contact us directly whenever he or she wishes – and may do so anonymously.”
CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFTC can pay awards not only on CFTC enforcement actions, but also on related actions brought by other federal regulators if certain conditions are met. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected.
In addition, the program affords protections against retaliation. Employers may not take any action to impede a would-be whistleblower from communicating directly with the CFTC’s staff about possible violations of the Commodity Exchange Act (“CEA”); nor may employers discharge, demote, suspend, harass, or in any way discriminate against someone for providing information to the CFTC under the Whistleblower Program. An employee may have a private right of action, and the CFTC may bring an enforcement action against an employer for any retaliatory acts.
The CEA also provides confidentiality protections for whistleblowers. Regardless of whether the CFTC grants an award, the CFTC will not disclose any information which could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances such as when disclosure is required in connection with a public proceeding, or when the Director of the Division of Enforcement (“DOE”) exercises his/her authority to share important information with other regulators. Consistent with this confidentiality requirement, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information or the exact dollar amount of the award granted.
All whistleblower awards are paid from the CFTC Customer Protection Fund established by Congress and financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from harmed investors to fund the program.
Since issuing its first award in 2014, through 2018, the CFTC has awarded more than $85 million to whistleblowers. DOE actions associated with those awards have resulted in sanctions orders totaling more than $675 million.