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Difference between revisions of "CFTC Whistleblower Program"
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The FY20 reports of the [https://web.archive.org/web/20220705214813/https://www.whistleblower.gov/sites/whistleblower/files/2020-11/FY20%20Report%20to%20Congress.pdf CFTC Whistleblower Program] and [https://www.cftc.gov/PressRoom/PressReleases/8323-20 CFTC Division of Enforcement] reveal that the CFTC Whistleblower Program continues to grow and is helping to drive record-level enforcement activity. The Division of Enforcement reported a total of $1,327,869,760 in monetary relief ordered—the fourth-highest total in CFTC history, the third straight year-over-year increase, and the second straight year in excess of $1 billion. Approximately 30 to 40% of the CFTC’s ongoing investigations now involve some whistleblower component. Since the inception of the [https://www.zuckermanlaw.com/cftc-whistleblower-reward-lawyers/ CFTC Whistleblower Program], CFTC enforcement actions associated with whistleblower awards have resulted in sanctions orders totaling more than $3 billion. In light of the CFTC’s recent whistleblower award of [https://www.zuckermanlaw.com/cftc-shows-whistleblowers-the-money-implications-of-record-200-million-award/ $200 million], whistleblowers will continue to play a pivotal role in enabling the CFTC to carry out its vital enforcement mission. | The FY20 reports of the [https://web.archive.org/web/20220705214813/https://www.whistleblower.gov/sites/whistleblower/files/2020-11/FY20%20Report%20to%20Congress.pdf CFTC Whistleblower Program] and [https://www.cftc.gov/PressRoom/PressReleases/8323-20 CFTC Division of Enforcement] reveal that the CFTC Whistleblower Program continues to grow and is helping to drive record-level enforcement activity. The Division of Enforcement reported a total of $1,327,869,760 in monetary relief ordered—the fourth-highest total in CFTC history, the third straight year-over-year increase, and the second straight year in excess of $1 billion. Approximately 30 to 40% of the CFTC’s ongoing investigations now involve some whistleblower component. Since the inception of the [https://www.zuckermanlaw.com/cftc-whistleblower-reward-lawyers/ CFTC Whistleblower Program], CFTC enforcement actions associated with whistleblower awards have resulted in sanctions orders totaling more than $3 billion. In light of the CFTC’s recent whistleblower award of [https://www.zuckermanlaw.com/cftc-shows-whistleblowers-the-money-implications-of-record-200-million-award/ $200 million], whistleblowers will continue to play a pivotal role in enabling the CFTC to carry out its vital enforcement mission. | ||
=='''Anonymous Whistleblowing to the CFTC'''== | |||
If [https://www.zuckermanlaw.com/how-best-sec-whistleblower-law-firms-advocate-sec-whistleblowers/ represented by counsel], a whistleblower may submit a tip anonymously to the CFTC. In certain circumstances, a whistleblower may remain anonymous, even to the CFTC, until an award determination. However, even at the time of a reward, a whistleblower’s identity is not made available to the public. | |||
According to a recent report of the CFTC Whistleblower Office, the Office takes steps to protect whistleblower confidentiality. For example, in 2017 the Office considered 267 requests to produce documents from the investigation and litigation files of the Enforcement Division and found 16 requests to implicate whistleblower-identifying information. The Office worked with the Enforcement Division to remove whistleblower-identifying information or otherwise take steps to preserve whistleblower confidentiality. | |||
== '''CFTC Whistleblower Awards''' == | |||
The table below identifies some of the largest CFTC whistleblowers awards: | |||
{| class="wikitable" | |||
! Whistleblower Award !! Date !! Basis for Whistleblower Award | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7767-18 $45 million] || August 2, 2018 || On August 2, 2018, the CFTC announced a $45 million award to multiple whistleblowers. [https://markets.businessinsider.com/news/stocks/whistleblower-gets-largest-ever-cftc-award-for-exposing-the-isdafix-scandal-garson-segal-steinmetz-fladgate-llp-1027435727 Reports] indicate the award was related to ISDAFIX manipulation enforcement actions. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7753-18 $30 million] || July 12, 2018 || On July 12, 2018, the CFTC announced its largest-ever whistleblower award given to an individual. The whistleblower exposed that [https://www.sec.gov/news/pressrelease/2015-283.html JP Morgan] did not properly disclose conflicts of interests to clients. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-08.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7351-16 $10 million] || March 28, 2016 || On April 4, 2016, the CFTC announced a $10 million award given to an individual. The whistleblower provided “valuable information” regarding violations of the Commodity Exchange Act. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/Final%20Orders/16-WB-06.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/8022-19 $7 million] || September 27, 2019 || On September 27, 2019, the CFTC issued a $7 million award to a whistleblower. CFTC Director of Enforcement James McDonald stated in the Press Release: “Forty percent of our investigations now involve whistleblowers. We expect that number to increase as the CFTC continues to expand its whistleblower program.” Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-09/19-WB-05.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/8175-20 $6 million] || June 9, 2020 || On June 9, 2020, the CFTC issued a $6 million award to a whistleblower who voluntarily provided original information that led the CFTC to bring a successful enforcement action. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7943-19 $2.5 million] || June 24, 2019 || On July 24, 2019, the CFTC issued a $2.5 million whistleblower award to an individual. The award was reduced due to the whistleblower’s delay in reporting. Director McDonald stated the delay was “unreasonable.” Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-06/19-WB-03.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7953-19 $2 million] || July 1, 2019 || On July 1, 2019, the CFTC issued a $2 million whistleblower award to two whistleblowers who provided multiple interviews and documents. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-07/19-WB-04.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7882-19 $2 million] || March 4, 2019 || On March 4, 2019, the CFTC announced an award of over $2 million to a whistleblower who conducted an "independent analysis" of market data, greatly aiding the investigation. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-03/19-WB-01%20-%20Public%20Version.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7924-19 $1.5 million] || May 6, 2019 || On May 6, 2019, the CFTC announced a $1.5 million award to a whistleblower who first attempted internal reporting. The award was granted for both a CFTC action and a related action by another federal regulator. Find the order [https://www.whistleblower.gov/sites/whistleblower/files/2019-05/19-WB-02%20-%20Public%20Version.pdf here]. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7882-19 $290,000] || September 29, 2015 || On September 29, 2015, the CFTC announced an award of $290,000 to a whistleblower. Two applicants applied, but only one received the award. | |||
|- | |||
| [https://www.cftc.gov/PressRoom/PressReleases/7767-18 $240,000] || May 20, 2014 || On May 20, 2014, the CFTC announced its first-ever whistleblower award of $240,000 for providing “specific, timely and credible information.” | |||
|} | |||
== '''Protections Against Whistleblower Retaliation'''== | |||
Whistleblowers are also afforded substantial protection against retaliation. Specifically, '''an employer may not “discharge, demote, suspend, threaten, harass, directly or indirectly, or in any manner discriminates against, a whistleblower” for legally reporting wrongdoing.''' In the event that an employer retaliates against a whistleblower, the law provides for substantial relief. This may include reinstatement, back pay, and compensation for related expenses such as litigation costs and reasonable attorneys’ fees. | |||
A whistleblower is entitled to this protection even if they do not receive a reward. The anti-retaliation provision applies to any whistleblower who possesses “a reasonable belief that the information the whistleblower is providing relates to a possible violation of the Commodity Exchange Act (CEA), or the rules or regulations thereunder, that has occurred, is ongoing, or is about to occur.” | |||
The CFTC can take enforcement action against an employer that “retaliates against a whistleblower by discharge, demotion, suspension, direct or indirect threats or harassment, or any other manner of discrimination” because the whistleblower provided “information to the Commission after reporting the information through internal whistleblower, legal or compliance procedures.” 17 C.F.R. 165.20(b). | |||
==='''Acts of Retaliation are Prohibited by the CFTC Whistleblower Protection Law'''=== | |||
The CEA prohibits an employer from discharging, demoting, suspending, threatening or harassing, or in any other manner discriminating against, a whistleblower in the terms and conditions of employment because of any protected whistleblowing. | |||
==='''The Burden to Prevail in a CFTC Whistleblower Retaliation Claim'''=== | |||
To prevail, a whistleblower must prove “but-for” causation, which is not tantamount to “sole factor” causation. In Bostock v. Clayton Cty., the Supreme Court clarified the burden of proving “but for” causation: | |||
Title VII’s ‘because of’ test incorporates the "simple" and "traditional" standard of but-for causation. Nassar, 570 U. S., at 346, 360, 133 S. Ct. 2517. That form of causation is established whenever a particular outcome would not have happened ‘but for’ the purported cause. See Gross, 557 U. S. at 176, 129 S. Ct. 2343. In other words, a but-for test directs us to change one thing at a time and see if the outcome changes. If it does, we have found a but-for cause. | |||
==='''Private Right of Action under Section 23(h)(1)(A) of the Commodity Exchange Act'''=== | |||
The CEA authorizes a whistleblower to bring a CFTC whistleblower retaliation claim in federal court. | |||
==='''Statute of Limitations for a CFTC Whistleblower Retaliation Claim'''=== | |||
The statue of limitations for a CFTC whistleblower retaliation claim is two years after the date on which the act of retaliation is committed. | |||
==='''Arbitration of a CFTC Whistleblower Retaliation'''=== | |||
An employer can not require arbitration of a CFTC whistleblower retaliation claim. The Dodd-Frank Act expressly provides that CFTC whistleblower retaliation claims are not subject to pre-dispute arbitration agreements. See 7 U.S.C. § 26(n). | |||
==='''Other Whistleblower Protection Laws May Provide a Remedy for Retaliation for Corporate Whistleblowers'''=== | |||
Other federal and state whistleblower protection laws may provide an additional remedy, including New York’s recently amended whistleblower protection law. | |||
=='''CFTC Prohibits “Gag Clauses” in Confidentiality and Employment Agreements'''== | |||
The rules implementing the CFTC whistleblower program '''prohibit employers from taking steps to impede whistleblowers from communicating with the CFTC staff.''' In particular, 17 C.F.R. § 165.19(b) provides: | |||
No person may take any action to impede an individual from communicating directly with the Commission’s staff about a possible violation of the Commodity Exchange Act, including by enforcing, or threatening to enforce, a confidentiality agreement or predispute arbitration agreement with respect to such communications. | |||
This prohibition is critical to the success of any whistleblower program because '''companies often use overly broad confidentiality agreements to silence and punish whistleblowers.''' | |||