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CFTC Announces Largest Ever Whistleblower Award
Practical Law Legal Update w-001-8901 (Approx. 3 pages)
CFTC Announces Largest Ever Whistleblower Award
by Practical Law Finance
| Published on 15 Apr 2016 • USA (National/Federal) |
The CFTC announced its largest ever whistleblower award in exchange for key original information that led to a successful CFTC enforcement action for violations of the Commodity Exchange Act (CEA).
On April 4, 2016, the CFTC announced its largest ever whistleblower award in exchange for key original information that led to a successful CFTC enforcement action for violations of the Commodity Exchange Act (CEA). This is the third whistleblower award under the CFTC’s whistleblower program and dwarfs previous awards, which were roughly $240,000 and $290,000 (see Legal Updates, CFTC Announces Second Whistleblower Award Under Dodd-Frank and CFTC Approves Final Rules on Whistleblower Incentives and Protection).
The CFTC's whistleblower program, introduced under Section 748 of the Dodd-Frank Act, grants monetary awards to individuals for reporting CEA violations if that information leads to more than $1 million in monetary sanctions (7 U.S.C. § 26). Whistleblower awards are anonymous and the amount awarded ranges from between 10% and 30% of the total amount collected as a result of the information.
The CFTC whistleblower program is much less publicized than the analogous program sponsored by the SEC. However, the CFTC hopes that, with the publicity garnered by such a large reward, additional whistleblowers will be encouraged to come forward with information.
To qualify for the program, a whistleblower must, among other things:
- Provide key original information, which cannot be sourced from either public filings or confidential sources, such as conversations protected by attorney-client privilege.
- Provide information that leads to an award of over $1 million.
- Provide information voluntarily, meaning that it must be provided prior to any governmental or self-regulatory organization request, including by the CFTC, congress or other agencies.
- Not be a member of an excluded class, such as individuals with legal compliance, audit, supervisory or governance responsibilities.
Additionally the CFTC, whistleblower program:
- Does not require any internal reporting prior to conveying information that leads to a reward.
- Provides monetary awards even if the information leads to enforcement by other governmental entities, and does not prohibit awards to those that have received prior SEC whistleblower awards.
- Provides retaliatory protection for whistleblowers, including reinstatement from termination, back pay, and compensation for expenses related to the whistleblower action.
For more information on the CFTC's whistleblower program, see Practice Note, Whistleblower Protections Under Sarbanes-Oxley and the Dodd-Frank Act.