Whistleblowers are increasingly becoming a key part of the Commodity Futures Trading Commission’s enforcement efforts, as the agency continues to expand its whistleblower program.
In one recent case, the CFTC on Sept. 27 announced it awarded $7 million to a whistleblower who provided the agency with information about misconduct that prompted an investigation and ultimately led to an enforcement action concerning a violation of the Commodity Exchange Act. In a statement, CFTC Director of Enforcement James McDonald said the award demonstrated “how integral whistleblowers have become to our enforcement efforts.”
Forty percent of CFTC investigations now involve whistleblowers. “We expect that number to increase as the CFTC continues to expand its whistleblower program,” McDonald said.
Especially notable about this case is that the whistleblower who received the award “did not provide particularly significant information to the Commission,” and the charges the Commission brought were “ultimately different” from the whistleblower’s allegations, according to the CFTC’s order. Moreover, the whistleblower provided “limited assistance” and “could not provide specifics to CFTC staff investigating the matter and did not understand how the violations under investigation worked,” the CFTC order stated.
CFTC Whistleblower Office Director Christopher Ehrman said, “This award shows that, in some cases, whistleblowers may provide information about wrongdoing that is not completely accurate, but if any information they provide leads us to open an investigation resulting in a successful enforcement action, we will reward them accordingly.”
Specific details about the investigation were redacted, as was the whistleblower’s identity. This is because the CFTC’s Whistleblower Program provides all whistleblowers with confidentiality protections regardless of whether the CFTC ultimately issues awards or proceeds with a case, and 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,” according to the CFTC.
Since establishing the Whistleblower Program in 2010 under the Dodd-Frank Act, the CFTC has paid out more than $90 million in awards. CFTC enforcement actions associated with whistleblower awards have resulted in more than $730 million in sanctions to date.
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