Washington DC Law Firm Representing Commodity Fraud Whistleblowers
In July 2010, the Dodd-Frank Wall Street Reform and Protection Act (Dodd-Frank) created the CFTC Whistleblower Reward Program. It provides whistleblowers with a strong monetary incentive, as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:
- Commodity futures;
- Commodity options;
- Swap trading markets; and
Common market manipulation schemes include:
- pump-and-dumps; and
- spoofing, and manipulating the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX) benchmark swap rates, LIBOR, Euribor, and other foreign interest rate benchmarks.
CFTC and Commodity Fraud Whistleblower Rewards and Bounties
Under the program, the CFTC will issue rewards to whistleblowers who provide original information that leads to CFTC enforcement actions or “related actions” with total civil penalties in excess of $1 million. A whistleblower may receive a reward of between 10-30 percent of the total sanctions imposed. In April 2016, a whistleblower received a reward of more than $10 million for providing the CFTC with key original information that led to a successful enforcement action.
Original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.
In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcements interests at stake.
Whistleblowers are still eligible for a reward under the CFTC Whistleblower Reward Program even if they have already received a reward under the SEC Whistleblower Reward Program.
Anonymous Whistleblowing to the CFTC
If represented by counsel, a whistleblower may submit a tip anonymously to the CFTC. In certain circumstances, a whistleblower may remain anonymous, even to the CFTC, until a reward is issued. However, even at the time of a reward, a whistleblower’s identity is not made available to the public.
According to a recent report of the CFTC Whistleblower Office, the Office takes steps to protect whistleblower confidentiality. In particular, during FY 2017, the Office considered 267 requests to produce documents from the investigation and litigation files of the Enforcement Division and found 16 requests to implicate whistleblower-identifying information. The Office worked with the Enforcement Division to remove whistleblower-identifying information or otherwise take steps to preserve whistleblower confidentiality.
Protections Against Whistleblower Retaliation
Whistleblowers are also afforded substantial protection against retaliation. Specifically, an employer may not “discharge, demote, suspend, threaten, harass, directly or indirectly, or in any manner discriminates against, a whistleblower” for legally reporting wrongdoing. In the event that an employer retaliates against a whistleblower, the law provides for substantial relief. This may include reinstatement, back pay, and compensation for related expenses such as litigation costs and reasonable attorneys’ fees.
A whistleblower is entitled to this protection even if they do not receive a reward. The anti-retaliation provision applies to any whistleblower who possesses “a reasonable belief that the information the whistleblower is providing relates to a possible violation of the Commodity Exchange Act (CEA), or the rules or regulations thereunder, that has occurred, is ongoing, or is about to occur.” Furthermore, the rights and remedies provided for in the anti-retaliation provision may not be waived by any agreement, policy, form, or condition of employment, including by a predispute arbitration agreement.
The CFTC can take enforcement action against an employer that “retaliates against a whistleblower by discharge, demotion, suspension, direct or indirect threats or harassment, or any other manner of discrimination” because the whistleblower provided “information to the Commission after reporting the information through internal whistleblower, legal or compliance procedures.” 17 C.F.R. 165.20(b).
CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements
The rules implementing the CFTC whistleblower program prohibit employers from taking steps to impede whistleblowers from communicating with the CFTC staff. In particular, 17 C.F.R. § 165.19(b) provides:
No person may take any action to impede an individual from communicating directly with the Commission’s staff about a possible violation of the Commodity Exchange Act, including by enforcing, or threatening to enforce, a confidentiality agreement or predispute arbitration agreement with respect to such communications.
This prohibition is critical to the success of any whistleblower program because companies often use overly broad confidentiality agreements to silence and punish whistleblowers.
Experienced CFTC Whistleblower Bounty Lawyers
The whistleblower lawyers at Zuckerman Law have substantial experience representing corporate whistleblowers in whistleblower protection and whistleblower rewards cases, including matters concerning market manipulation in the oil industry. Our team of attorneys includes a licensed Certified Public Accountant and Certified Fraud Examiner whose experience working at a large audit firm enhances the firm’s to investigate complex fraud schemes and prepare effective submissions to the CFTC. For a free, confidential consultation, click here or call us at 202-262-8959.