On April 4, 2016, the U.S. Commodity Futures Trading Commission (CFTC) announced that it had issued a whistleblower award of over $10 million for information that led to a major CFTC enforcement action. This is the largest award ever made by the CFTC’s Whistleblower Program.
The CFTC Whistleblower Program
The CFTC’s Whistleblower Program, created by the Dodd-Frank Act of 2010, rewards whistleblowers who voluntarily provide the CFTC with original information about violations of the Commodity Exchange Act (CEA) that leads to a successful enforcement action. The CFTC also rewards whistleblowers when the information leads to the successful enforcement of a related action brought by another governmental entity, provided that the CFTC also brings an action based on that same information. Whistleblowers can be awarded anywhere from 10 percent to 30 percent of the amount collected when the enforcement action results in monetary sanctions exceeding $1 million.
The CFTC program has made only two other awards to whistleblowers since it began accepting tips in September 2012. The first award of $240,000 was announced in May 2014, and a second award of $290,000 was announced in September 2015. The corresponding SEC Whistleblower Program, in contrast, has already paid more than $57 million to 26 whistleblowers since its creation.
The Award and its Implications
This record eight-figure award may provide an incentive for more whistleblowers to come forward. By law, the CFTC protects the confidentiality of whistleblowers and does not disclose information that may directly or indirectly reveal a whistleblower’s identity. However, the order granting the award did mention the timeliness, credibility, and specificity of the information given by the whistleblower, as well as the whistleblower’s cooperation throughout the investigation and the person’s lack of involvement in the violations. “An award this size shows the importance that the Commission places on incentivizing future whistleblowers,” said Alan Goelman, director of the CFTC’s enforcement division.
This large award could generate more interest in the CFTC program and spur more whistleblowers to provide information to the CFTC about CEA violations. If whistleblower tips do increase, then the CFTC may be able to pursue more enforcement actions involving manipulation, where the intent behind the violation can be difficult to detect.