The Commodity Futures Trading Commission has awarded a whistleblower $2.5 million for assisting it in an investigation, but the award could have been larger if the report was made sooner, the CFTC said.
That was the broader message from the CFTC in paying the whistleblower. “Although this award was substantial, it was reduced because of an unreasonable delay in reporting the violations,” said James McDonald, director of the CFTC’s Division of Enforcement. “We hope this case illustrates the importance of reporting violations to the CFTC as soon as reasonably possible.”
Christopher Ehrman, director of the CFTC’s Whistleblower Office, added that it’s understandable that whistleblowers may have reasons to delay reporting suspected Commodity Exchange Act violations. “However, there is a point at which a delay becomes unreasonable,” he said.
“Timeliness is critical, because it plays a vital role in our assessment of whistleblower awards,” Ehrman added. “The facts in this case indicated that the whistleblower unreasonably delayed in reporting information, which resulted in a diminished award.”
The CFTC Whistleblower Program was created under Section 748 of the Dodd-Frank Act. The CFTC can pay awards not only on CFTC enforcement actions, but also on related actions brought by other federal regulators if certain conditions are met. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected in actions where the amount of sanctions ordered exceeds $1 million.
The Whistleblower Program also provides confidentiality protections for whistleblowers. Regardless of whether the CFTC grants an award, the CFTC will not disclose any information that could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances such as when disclosure is required in connection with a public proceeding, or when the director of the Division of Enforcement exercises authority to share important information with other regulators. Consistent with this confidentiality requirement, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information, or the exact dollar amount of the award granted.
In addition, the program affords protections against retaliation. Employers may not take any action to impede a would-be whistleblower from communicating directly with the Commission’s staff about possible violations of the Commodity Exchange Act. Employers are further prohibited from discharging, demoting, suspending, harassing, or in any way discriminating against someone for providing information to the Commission under the Whistleblower Program. An employee may bring a private right of action, and the CFTC may bring an enforcement action against an employer for any retaliatory acts.
Since issuing its first award in 2014, the CFTC has awarded over $90 million to whistleblowers. The CFTC actions associated with those awards have resulted in sanctions orders totaling more than $730 million.