Image of CFTC Announces Second Whistleblower Award in 2016 as the Agency’s Whistleblower Reward Program Picks Up Steam

CFTC Announces Second Whistleblower Award in 2016 as the Agency’s Whistleblower Reward Program Picks Up Steam

 

By Dallas Hammer

Today the CFTC announced it has awarded a whistleblower $50,000 for information provided through its whistleblower award program.  In 2010, the Dodd-Frank Act created whistleblower award programs at the SEC and CFTC to provide rewards for whistleblowers who report violations of the securities and commodities laws.  This is the fourth award the CFTC has made under its program.  Though the CFTC’s program has made fewer awards than its counterpart whistleblower reward program at the SEC, the agency has recently made a concerted effort to make its program a success.

Because award determinations do not identify the whistleblower or the enforcement action they are based on, details about the award are scarce.   Generally, the CFTC awards eligible whistleblowers who voluntarily provide the agency with original information about violations of the Commodity Exchange Act  (“CEA”) that leads to an enforcement action through which the CFTC obtains monetary sanctions exceeding $1 million.

An eligible whistleblower can also obtain an award if a different federal agency uses the original information reported to the CFTC as the basis for a related enforcement action.  However for an award to result from a related action, the CFTC must also bring an action based on that same information.

In addition to whistleblower awards, the Dodd-Frank Act prohibits employers from retaliating against whistleblowers who report violations of the CEA to the CFTC. In general, employers may not discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against a whistleblower because of any lawful act done by the whistleblower.

Eligible whistleblowers receive between 10 percent and 30 percent of the monetary sanctions collected.  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.

Accordingly, the award of $50,000 announced today represents 10 percent to 30 percent of the amount the CFTC has collected to date.  The CFTC will pay out additional amounts to the CFTC as additional monetary sanctions are collected.

To date, the CFTC has made four whistleblower awards totaling about $10.6 million.  The largest award was $10 million.

In comparison, the SEC has made awards to 32 whistleblowers for a total of more than $85 million during the same time period.  The largest award under the SEC’s whistleblower reward program was $30 million.

The relative inactivity under the CFTC’s whistleblower reward program can in part be explained by the agency’s narrower enforcement focus.  The CFTC’s jurisdiction is limited to the CEA, which is much narrower in scope both in its design and application than the laws enforced by the SEC.  Still the CFTC got off to a slow start.  It did not make any award under its program until 2014, and a second award did not come until the following year.

However, there are signs that the CFTC is committed to its whistleblower rewards program and wants it to be a success.  In 2016, the CFTC has already made two whistleblower awards, including the $10 million award that constitutes the vast lion’s share of the agency’s awards to date.  Further, the CFTC has redesigned its whistleblower awards Web site to make it more accessible to potential whistleblowers.  It even scooped up the easily recognizable domain whistleblower.gov.

If you believe you have information regarding commodities fraud, you should speak with an experienced whistleblower attorney to determine whether you are eligible for a reward under the CTFC or SEC whistleblower rewards programs.

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.