CFTC Whistleblower Program
The CFTC Whistleblower Reward Program provides whistleblowers with a strong monetary incentive, as well as anti-retaliation protections, for reporting wrongdoing to the CFTC. This includes violations or fraud in connection with:
Approximately 65% of whistleblower cases filed at the CFTC involved charges of commodities fraud, market manipulation schemes and spoofing. Whistleblower tips to CFTC have helped drive record-level enforcement activity.
Since 2014, the CFTC has issued more than $120 million in awards to whistleblowers. The largest CFTC whistleblower awards to date are $45 million, $30 million, and $10 million. Whistleblower disclosures have enabled the CFTC to recover nearly $1 billion.
Under the CFTC Whistleblower Reward Program, the CFTC will issue rewards to whistleblowers who provide original information that leads to CFTC enforcement actions with total civil penalties in excess of $1 million (see how the CFTC calculates monetary sanctions). A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.
Original information “leads to” a successful enforcement action if either:
- The original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or
- The conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.
In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.
Whistleblowers may still be eligible for a reward under the CFTC Whistleblower Reward Program even if they have already received a reward under the SEC Whistleblower Reward Program.
Anonymous Whistleblowing to the CFTC
If 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:
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).
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.