The Commodity Futures Trading Commission (CFTC) has made an award of approximately USD2.5 million to an individual whistleblower.
In ordering the award, the CFTC took into account the significance of early reporting of misconduct, however, the award was reduced because of the whistleblower’s delay in reporting to the CFTC.
“Today’s award goes to a whistleblower who assisted the CFTC at every step of the investigation,” says James McDonald, Director of the CFTC’s Division of Enforcement. “Although this award was substantial, it was reduced because of an unreasonable delay in reporting the violations. We hope this case illustrates the importance of reporting violations to the CFTC as soon as reasonably possible. Reporting early lessens the harm violators can inflict on the public and hastens our investigations to bring the culprits to justice.”
Christopher Ehrman, Director of CFTC’s Whistleblower Office, says: “We understand that whistleblowers may have reasons to delay reporting suspected Commodity Exchange Act violations, however, there is a point at which a delay becomes unreasonable. Timeliness is critical because it plays a vital role in our assessment of whistleblower awards. The facts in this case indicated that the whistleblower unreasonably delayed in reporting information, which resulted in a diminished award.”
CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. 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 per cent of the monetary sanctions collected in actions where the amount of sanctions ordered exceeds USD1 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 which 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 his 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 (CEA); nor may employers discharge, demote, suspend, harass, or in any way discriminate against someone for providing information to the Commission under the Whistleblower Program. An employee may have a private right of action, and the CFTC may bring an enforcement action against an employer for any retaliatory acts.
All whistleblower awards are paid from the CFTC Customer Protection Fund established by Congress and financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from harmed investors to fund the program.
Since issuing its first award in 2014, the CFTC has awarded over USD90 million to whistleblowers. The Commission actions associated with those awards have resulted in sanctions orders totalling more than USD730 million.
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