The U.S. Commodity Futures Trading Commission (CFTC) yesterday announced an award of more than $2 million to an individual whistleblower, which is the highest such award. The award was based on the actions taken by the CFTC and another federal authority based on information provided by the whistleblower. The award is in recognition of the whistleblower’s role in providing crucial information based on their independent analysis of financial markets data.
James McDonald, the CFTC Directory of Enforcement
The Director of CFTC’s Enforcement Division, James McDonald, commented:
The Commission is dedicated to working cooperatively with other federal regulators, and this case highlights how successful we can be when we appropriately share high-quality whistleblower information and analysis with our law enforcement partners. I look forward to seeing continued growth in our Whistleblower Program, both in terms of tips received and awards ordered.
The Director of CFTC’s Whistleblower Office, Christopher Ehrman, added:
Today’s award illustrates two key aspects of our Whistleblower Program – that an individual doesn’t have to be an insider to receive a whistleblower award and the Commission can pay awards based on related actions brought by other regulators. I expect more awards to be issued to whistleblowers who provide our Enforcement Division with information based on their expert analysis of market data and to whistleblowers based on related actions.
CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program allows the CFTC to pay rewards on its enforcement actions, but also on actions taken by other federal authorities under certain conditions. Whistleblowers are entitled to receive from 10-30% of the monies collected by the authorities as a result of their actions.
Whistleblowers’ confidentiality protections are set out in the Commodity Exchange Act (CEA), which obligates the CFTC not to disclose any details that could lead to the discovery of the whistleblower’s identity. However, some limited circumstances involving public proceedings may require the Enforcement Division to reveal some details of the whistleblower to the relevant authorities. This is the reason why the CFTC did not disclose the details of the enforcement action, the name of whistleblower, or the exact amount awarded.
Whistleblower rewards are taken from the monetary sanctions collected by the CFTC from parties who violate the CEA. The monies are part of the CFTC Customer Protection Fund created by Congress and fully funded by the monetary sanctions.
The CFTC has awarded over $85 million to whistleblowers since the program’s inception in 2014 up to 2018. The Enforcement Division has collected over $675 million from monetary sanction over the same duration.