CFTC Announces Two Significant Whistleblower Awards Under Revamped Program

$30 Million Award Is Largest Ever; and Award to an Overseas Whistleblower Is the First of Its Kind July 17, 2018
The CFTC, under its revamped whistleblower program, announced this month its largest award to date and its first award to a foreign resident.  Both whistleblowers were insiders of the penalized entity.

On July 12, the CFTC announced an approximately $30 million award to an “insider” who voluntarily provided “key information that led to a successful enforcement action.”  The award is the largest whistleblower award ever made by the CFTC.  CFTC Chairman J. Christopher Giancarlo stated in a press release:  “We hope that an award of this magnitude will incentivize whistleblowers to come forward with valuable information and provide notice to market participants that individuals are reporting quality information about violations of the Commodity Exchange Act [CEA].”

On July 16, the CFTC announced its first award to a foreign resident, who received more than $70,000.  The associated order stated that this awardee “was involved in the CEA violations at issue” but “it was unlikely that he/she acted with scienter, as he/she was a junior-level employee in a foreign nation given instruction by his/her employer.”  James McDonald, Director of the CFTC’s Division of Enforcement stated:  “This award is significant because it signals to whistleblowers around the world that anyone with information about potential violations of the Commodity Exchange Act can participate in the CFTC’s Whistleblower Program.”

The Dodd-Frank Act of 2010 empowered both the CFTC and SEC to grant to eligible whistleblowers awards in amounts between 10 and 30 percent of the ultimate monetary sanctions imposed on a regulated entity, provided that the whistleblower’s information led to a successful enforcement action that resulted in a sanction of at least $1 million.  The CFTC program historically has been significantly less prolific than the one administered by the SEC.  In May 2017, however, the CFTC implemented significant changes to “strengthen and enhance” its whistleblower program.  According to a recent statement by Chairman Giancarlo, the whistleblower program has now “become an integral component in the agency’s enforcement arsenal.”  Similarly, Enforcement Director McDonald stated:  “Whistleblower submissions have become a significant part of our enforcement program, allowing us to pursue violations we might otherwise have been unable to detect.  That’s one reason why we’ve worked hard to expand our Whistleblower Program, including by increasing the protections afforded to whistleblowers that come forward.  I expect the Whistleblower Program to contribute even more substantially to our enforcement efforts going forward.”