CFTC Whistleblower Awarded $700,000, but Docked for Unreasonable Reporting Delay

On May 29, the U.S. Commodity Futures Trading Commission (CFTC) granted a $700,000 whistleblower award to an individual who voluntarily provided the agency with original information and assistance which led to a successful enforcement action. 

According to the CFTC, the whistleblower’s disclosure “prompted the CFTC to open the investigation and described the misconduct that ultimately appeared in the order.” The award order further notes that the whistleblower “provided all the assistance that Division staff requested” and that “Division staff were in contact with Claimant multiple times during the investigation underlying the Order, and they received additional information, including documents and emails, from Claimant through these communications.”

“Whistleblowers often provide the most valuable evidence about wrongdoing,” said Brian Young, director of the Division of Enforcement. “Today’s award recognizes the courage it takes to come forward to the CFTC, as well as the critical role whistleblowers play in the CFTC’s enforcement efforts.”

“We appreciate that the Commission granted this award to a whistleblower who provided key evidence and helped the CFTC interpret it,” said Cynthia Lie, acting director of the CFTC’s Whistleblower Office. “The Whistleblower Office is committed to rewarding whistleblowers for their significant contributions in identifying fraud, manipulation, and abuse in commodity markets.”

Through the CFTC Whistleblower Program, qualified whistleblowers are eligible to receive monetary awards of 10-30% of the funds recovered in the enforcement action aided by their disclosure. The Commission weighs a number of factors in determining the exact percentage to award a whistleblower.

In this case, the CFTC negatively factored in the whistleblower’s unreasonable delay in reporting the violations and their culpability in the underlying misconduct. The CFTC claims that the whistleblower participated personally in the misconduct but waited four years to file a tip with the CFTC. However, the CFTC notes that “the record contains no evidence to suggest that Claimant benefitted from the violations, is a recidivist, or interfered with the Commission’s investigation.”

Since it was established with the passage of the Dodd-Frank Act in 2010, the CFTC Whistleblower Program has become a crucial part of the CFTC’s enforcement efforts. According to the program’s latest annual report, 42% of all CFTC enforcement matters involve whistleblowers. Overall, the CFTC has awarded approximately $390 million to whistleblowers and those awards are associated with enforcement actions that have resulted in monetary sanctions totaling over $3.2 billion.