CFTC Issues $10 Million Whistleblower Award
On March 18, the U.S. Commodity Futures Trading Commission (CFTC) issued a whistleblower award of approximately $10 million to an individual whose disclosure led the agency to open an investigation. The whistleblower’s information was utilized at the earliest stages of the investigation and the whistleblower later provided supplemental information.
Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to an award of 10-30% of the funds collected by the government.
“This award demonstrates the continued success of the CFTC’s Whistleblower Program,” said Acting Director of Enforcement Vincent McGonagle. “The CFTC is committed to rewarding whistleblowers who identify misconduct in our markets.”
“The CFTC has granted a number of multimillion-dollar whistleblower awards to date,” added Whistleblower Office Director Christopher Ehrman. “These large awards are putting market participants on notice that whistleblowers continue to provide significant information to the Commission.”
The CFTC has awarded approximately $330 million since issuing its first award in 2014. In October 2021, the agency issued a record $200 million award.
“The CFTC whistleblower program continues to be a tremendous success,” stated whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto. “Congress needs to fully fund this critical anti-corruption program that brings in billions of dollars in sanctions.”
As Kohn references, funding has proven to be an issue for the CFTC Whistleblower Program. The funding issue was outlined by Senator Charles Grassley (R-IA) in letters to CFTC nominees. “Because of its great success,” he wrote, “the whistleblower fund is at risk of being depleted.” Grassley further explained that ‘the increasing size and quantity of fines arising from successful whistleblower disclosures have led to larger reward disbursements. Current law requires that the whistleblower fund be capped at $100 million, and any fines collected past the cap are remitted to the Treasury’s general fund. The disbursement of larger rewards from a capped fund poses an impending threat to the CFTC whistleblower program’s ability to fuction.”
After months of lobbying by whistleblower advocates, President Biden signed an amended version of the bipartisan CFTC Fund Management Act into law on July 6, 2021. The law saved the CFTC Whistleblower Program from financial collapse by temporarily establishing a separate fund to finance the operations of the program. According to whistleblower advocates, however, further longer-term reforms are needed to ensure the long-term success of the program.
