CFTC Whistleblower Program
The Commodity Futures Trading Commission (CFTC) Whistleblower Program covers reports of alleged violations of the Commodity Exchange Act (CEA) and CFTC regulations related to futures, options, and swaps and commodities in interstate commerce. The Program includes anti-retaliation protections and significant rewards for tips that lead to successful enforcement actions.
History of the Program
Like the SEC Whistleblower Program, the CFTC Whistleblower Reward Program was established as part of sweeping financial reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Since its inception, the agency’s Whistleblower Office has issued over 40 orders awarding whistleblowers nearly $350 million. Participation in the Program saw a drastic increase after an award of $200 million to a single whistleblower in 2021, which set the record at the time for the highest award under both the SEC and CFTC Programs. In 2023 alone, the Office processed over 1,500 tips, and distributed awards totaling nearly $16 million.
Elements of a CFTC Whistleblower Claim
The CFTC Whistleblower Program covers reports of violations of the CEA, including market manipulation, insider trading, corruption, recordkeeping or registration violations, and fraud or manipulation related to digital/crypto assets, precious metals, and forex trading.
For the purposes of the Program, a whistleblower is someone who voluntarily provides the agency with original information in writing about a violation of federal securities law that has happened, is ongoing, or is about to occur. Whistleblowers have original information when their tip is based on independent knowledge or analysis that comes from sources that are not publicly available (like news media or public disclosures). The agency considers information voluntary when the whistleblower has made the report on their own, before any inquiry or investigation has requested it.
Whistleblowers who submit information that leads to an enforcement action that results in sanctions of over $1 million can be eligible for an award of 10-30% of the penalties.
CFTC Whistleblower Process
To be eligible for an award under the Whistleblower Program, individuals must submit their report through the agency’s Tips, Complaints and Referrals (TCR) process. A whistleblower can be anyone with original information, such as an employee, trader, or fraud victim, and can remain anonymous through the reporting process. While tips cannot be made by a company or organization, they can be submitted by more than one person. The Program is open to non-U.S. citizens, and reports can relate to conduct outside the U.S., if the violations impact the American commodities market.
While many whistleblowers report internally to their employer first, whether an internal report was made generally has no impact on a whistleblower’s eligibility for the Reward Program. There are some specific rules related to reporting for compliance personnel, and if you have any questions, it’s important to make sure you talk to an attorney to ensure you’re preserving your rights.
Once a tip is submitted, the CFTC makes an assessment and determines whether to open a new investigation or use the information in any ongoing investigations. Even where an investigation is already underway, a whistleblower tip may still be eligible for an award if it was provided outside of any inquiry or request, qualifies as original information, and substantially contributes to the inquiry.
Throughout the reporting and enforcement process, important anti-retaliation protections apply under the CEA and other statutes, to ensure that whistleblowers are not punished for coming forward. Companies cannot demote, discharge, suspend, harass, or discriminate in any way against an employee who has reported conduct to the CFTC that they reasonably believe is a violation of federal commodities law. It is also illegal for any person to interfere with someone making a direct report of alleged wrongdoing to the agency.
Unlawful retaliation is subject to separate legal claims and damage awards, independent of any violations of commodities law.
CFTC Whistleblower Rewards
If a qualifying tip leads to an enforcement action and over $1 million in sanctions against a company, a whistleblower is eligible to claim an award of 10-30% of the sanction amount. The CFTC uses a number of factors to determine the award share, including the significance of the information provided, assistance provided for the enforcement action, timing of reported violations, and culpability. In addition to CFTC actions, awards may be issued for related actions brought by other governmental entities, such as the Department of Justice, federal or state enforcement bodies, and foreign futures authorities.
Whistleblowers are not notified directly of their eligibility for an award, or automatically issued the funds. The CFTC instead posts notice of enforcement actions over $1 million, and whistleblowers must apply for an award within 90 calendar days.
Contact a Whistleblower Attorney
These descriptions of the CFTC Whistleblower Program are general in nature and do not constitute legal advice. Financial regulation of publicly traded companies is complex and ever-evolving. The attorneys at Whistleblower Partners understand the complicated, constantly changing legal landscape and are happy to discuss any potential matter further.
If you would like more information or would like to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.