Becoming Eligible for an Award Under the CFTC Whistleblower Award Program

• Through the Commodity Futures Trading Commission (CFTC) Whistleblower Program qualified whistleblowers are eligible to monetary awards of 10-30% of the funds collected by the government in the enforcement action connected to their disclosure.
• To be eligible for a CFTC whistleblower award, an individual must “voluntarily” provide “original information” about violations of the Commodity Exchange Act (CEA) that leads to a successful CFTC enforcement action where the agency collects at least $1 million.
• A wide-range of individuals may qualify for whistleblower awards under the CFTC Whistleblower Program including company executives and insiders, market observers, and fraud victims. An individual does not need to be an employee of the company they are blowing the whistle on in order to be eligible for a CFTC whistleblower award. Furthermore, whistleblowers do not need to be U.S. citizens nor located in the U.S. to qualify.
• CFTC whistleblowers must make their disclosures using a Form TCR in order to qualify for a CFTC whistleblower award. To claim an award, an individual must file a Form WB-APP within 90 days of the CFTC posting a Notice of Covered Action (NCA) for the relevant enforcement action.

Established with the passage of the Dodd-Frank Act in 2010, the CFTC Whistleblower Program provides monetary awards and anti-retaliation protections to commodities whistleblowers. The CFTC Whistleblower Program seeks information about violations of the Commodity Exchange Act (CEA) and CFTC regulations.

The CFTC oversees the U.S. derivatives markets, including futures, options, and swaps. Types of frauds which the CFTC seeks information on include fraud, false reporting, disruptive trading practices, misappropriation, price manipulation, accounting violations, registration violations, failure to maintain or produce required records, and many others.

For more information on the CFTC Whistleblower Program: CFTC Whistleblower Award Program Overview

In order to be eligible for a CFTC whistleblower award, an individual must first submit a Form TCR (Tip, Complaint, or Referral) either electronically via the website, or by fax or mail. If an individual does not file a Form TCR they may be disqualified from receiving an award they would otherwise be eligible for.

The Form TCR is how an individual blows the whistle on commodities law violations to the CFTC. A whistleblower should ensure that the information provided in a Form TCR is specific, credible, and timely.

A whistleblower may file a Form TCR anonymously if they are represented by a whistleblower attorney. An experienced whistleblower attorney can also ensure that the Form TCR clearly communicates the alleged violations.

In order to be eligible for a CFTC whistleblower award, an individual must voluntarily blow the whistle to the CFTC. This means that an individual must make their disclosure to the CFTC before the agency, Congress, or another regulatory or enforcement agency or a self-regulatory organization contacts the individual (or their employer or attorney) with a request, inquiry or demand for the information.

The CFTC’s rules further clarify that a disclosure “will not be considered voluntary if the whistleblower is under a pre-existing legal or contractual duty to report the violations that are the subject of the whistleblower’s original information to the Commission, Congress, any other federal or state authority, the Department of Justice, a registered entity, a registered futures association, or a self-regulatory organization.”

A whistleblower’s disclosure must include “original information” in order for it to qualify for a whistleblower award. The CFTC defines “original information” as information “not already known to the Commission from any other source, unless the whistleblower is the original source of the information” and “derived from the independent knowledge or independent analysis of a whistleblower.”

Thus, if an earlier whistleblower has already provided the CFTC with the same information, the later whistleblower will not be eligible for an award. Furthermore, information that is available to the public is not considered “original information” unless the whistleblower uses their expertise or knowledge to conduct independent analysis of public information to reveal information that is not generally known or available to the public.

Original information may be gained from an individual’s experiences, communications, and observations in both business and social interactions.

In order to qualify for a CFTC whistleblower award, a whistleblower’s information must lead to a successful enforcement where the CFTC collects at least $1 million. Information may “lead” to a successful enforcement action in a number of ways.

According to CFTC rules, information is considered to have led to a successful enforcement action if it causes the CFTC to “commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation” and the agency subsequently brings “a successful judicial or administrative action based in whole or in part on conduct that was the subject of the whistleblower’s original information.”

Even if a whistleblower makes a disclosure relating to an ongoing investigation, they may be eligible for an award if “significantly contributed to the success of the action.”

Under the CFTC Whistleblower Program, a whistleblower does not need to make their disclosure internally before contacting the CFTC in order to be eligible for an award.

If a whistleblower does report internally they should file a Form TCR with the CFTC reporting the same information within 180 days. In this situation, the CFTC will consider the date the whistleblower reported internally as the date of their whistleblowing. This will factor into whether the whistleblower is considered the “original” source of the information.

If an internal whistleblower’s disclosure leads to the company self-reporting violations to the CTFC and this in turn leads to a successful enforcement action, the whistleblower will be eligible for an award if they also provided the information directly to the CFTC via a Form TCR within 180 days of reporting internally.

A whistleblower is normally not eligible for a CFTC whistleblower award if they blow the whistle on a company where they served as an employee with principal job duties of compliance or internal audit responsibilities.

However, under CFTC rules, compliance professionals are eligible for whistleblower awards if they have “a reasonable basis to believe that disclosure of the information to the Commission is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors” or if “at least 120 days have elapsed since the whistleblower provided the information to the relevant entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or the whistleblower’s supervisor.”

In order to receive a CFTC whistleblower award, an eligible whistleblower must file a Form WB-APP within 90 days of the CFTC posting a Notice of Covered Action (NCA). The CFTC posts a NCA for every enforcement action where the agency collected at least $1 million.

The CFTC will not notify whistleblowers when NCAs are posted. An experienced whistleblower attorney can help track NCAs and help a whistleblower submit a timely and complete WB-APP.