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Latest CFTC whistleblower award reflects assistance given to another federal regulator

Whistleblower awards by the Commodity Futures Trading Commission now total more than $88.5 million, with the news of a CFTC whistleblower award of $1.5 million this week.

The recent CFTC whistleblower award was particularly important for two reasons indicated by the CFTC in its announcement of the award:

  • The amount of the award was based on penalties collected by both the CFTC and another federal regulator as a result of the whistleblower’s information.
  • The CFTC had boosted the whistleblower’s reward because the whistleblower reported the wrongdoing to the employer first before going to the CFTC.

The CFTC can pay rewards to whistleblowers based on penalties collected by the CFTC and other regulators if the whistleblowers’ information contributed to those enforcement actions.

The CFTC rules for the whistleblower program also allow the commission to increase the size of awards when a whistleblower reports the wrongdoing internally first. Whistleblowers reporting misconduct to the CFTC are eligible to receive between 10 percent to 30 percent of the monetary sanctions collected based on their information.

“While there is no requirement that a whistleblower report internally before approaching the commission, today’s award demonstrates that the commission may pay enhanced awards to those that do – that is one of the positive factors set out in our rules for the commission to consider in making its award determination,” said Christopher Ehrman, director of the CFTC Whistleblower Office, in a press release.

However, CFTC whistleblowers should be aware that the Supreme Court ruled in a case last year that SEC whistleblowers who report internally first and are fired before they report to the SEC have no recourse under the anti-retaliation provisions of Dodd-Frank. The same could be true for CFTC whistleblowers. So those who are aware of wrongdoing by their employers should consult with an attorney before taking any action to be sure they are protected.

Dodd-Frank prohibits employers from retaliating against whistleblowers by firing, demoting, suspending, discriminating against or otherwise harassing employees who report misconduct. Whistleblowers who have been retaliated against are empowered to sue for reinstatement, doubled back pay (with interest) and legal fees.

The law also promises whistleblowers anonymity if they file their compliance through an attorney. The CFTC will not disclose a whistleblower’s identifying information except to other governmental or regulatory agencies when additional proceedings call for it.

The CFTC whistleblower program was set up in 2011, but it did not issue its first reward until 2014. The CFTC issued five awards last year, including several large whistleblower awards that set records. The regulator announced a $45 million award in August, which was split between three whistleblowers, and a $30 million award in July.

The large awards demonstrated “the game-changing nature of the whistleblower program,” Ehrman said at the time. Because of those awards, he added, “whistleblowers are increasingly providing high-quality information about violations.”

Learn more about the CFTC’s whistleblower program and the protections it affords whistleblowers in our overview.If you are aware of commodities and futures fraud and would like to discuss your options with our whistleblower attorneys, please contact us for a free, confidential consultation.

 

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