In 2021, the Commodity Futures Trading Commission (CFTC) Whistleblower Program received widespread attention for issuing a record-setting $200 million whistleblower award. That record award was not the only whistleblower award issued by the CFTC in 2021, however. Over the course of the year, the CFTC issued a number of awards, demonstrating the agency’s commitment to rewarding whistleblowers who provide high-quality original information.
Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government.
The record $200 million award was issued on October 21, 2021. According to the CFTC, the awarded whistleblower offered “specific, credible, and timely original information” that “significantly contributed to an already open investigation and led to a successful enforcement action.” The whistleblower’s contributions also led to the “success of two related actions, by a U.S. federal regulator and a foreign regulator.”
On April 23, 2021, the CFTC issued a $3 million whistleblower award to an individual who, according to the CFTC, provided a “specific, credible, and timely tip” which “led the CFTC to open an investigation and ultimately bring a successful enforcement action.” This award was notable because with the award, the CFTC had recovered over $1 billion in cases for which they issued a whistleblower award.
“This milestone illustrates that the CFTC’s Whistleblower Program has had a tremendous impact on increasing our enforcement efforts in its short history,” said CFTC Acting Director of Enforcement Vincent McGonagle. “In many of our actions, whistleblowers’ assistance has been critical in revealing wrongdoing, and their tips ultimately conserve the CFTC’s time and resources.”
On November 22, 2021, the CFTC awarded approximately $1 million to two whistleblowers for the “significant information and substantial assistance” they provided to the agency. One of the two whistleblowers received a larger award because their information was deemed more significant as it led to the opening of the investigation.
“It is not always the case that the first tipster gets a higher award, but in this case, where both claimants significantly contributed to the action, it was the first claimant’s information that played a key role in leading the CFTC to open an investigation,” said Whistleblower Office Director Christopher Ehrman. “This matter demonstrates that whistleblowers can receive an award for their role in causing the CFTC to open an investigation or for significantly contributing to an already open investigation, or both.”
On April 16, 2021 the CFTC issued a whistleblower award for an undisclosed amount to an individual whose contributions to the case were “substantial.” The CFTC reports that the whistleblower voluntarily provided a detailed disclosure which was “specific, credible, and timely” and contained information “previously unknown to the Commission and derived from [the whistleblower’s] personal experience and observations.” The CFTC opened an investigation into the misconduct exposed by the whistleblower’s disclosure.
On May 27, 2021 the CFTC announced four separate whistleblower awards for undisclosed amounts. One of the awarded whistleblowers made a disclosure directly to the CFTC. The whistleblower’s information led the CFTC to then open an investigation into the alleged misconduct. The whistleblower also provided further assistance to the CFTC in the course of the investigation; this included providing further documentation and offering explanations of their contents to CFTC staff.
The other awarded whistleblowers all originally made their disclosures to entities other than the CFTC. In one case, the whistleblower filed an official whistleblower disclosure through the U.S. Securities and Exchange Commission (SEC) Whistleblower Program. The SEC shortly thereafter referred the disclosure to the CFTC, which subsequently opened an investigation. This whistleblower also provided the CFTC with ongoing assistance during the investigation.
According to the award order, the third whistleblower likewise originally made their disclosure to “another regulator” which “forwarded to the [CFTC] [the whistleblower’s] information and documents.” Similarly, the fourth whistleblower “voluntarily provided original information to a self-regulatory organization, which later provided the [CFTC] with the same information in a written referral.”
While each of these awarded whistleblowers originally made their disclosure through a different channel, it is important to note that all of them eventually filed Form TCR disclosures with the CFTC. Filing a Form TCR is an essential element in ensuring full award eligibility.
The whistleblower awards issued in 2021 demonstrate the CFTC Whistleblower Program’s success. This success, however, threatened to undermine the program in 2021. As a result of the recent growth of the program, the program began to face a financial crisis in 2021. The fund used to finance whistleblower awards and pay for the program’s operating expenses was nearly depleted which delayed the issuance of awards and threatened to force the program to furlough staff.
After months of lobbying by whistleblower advocates, President Biden signed an amended version of the bipartisan CFTC Fund Management Act into law on July 6, 2021. The law saved the CFTC Whistleblower Program from financial collapse by temporarily establishing a separate fund to finance the operations of the program. Further longer-term reforms are needed, however, to ensure the long-term success of the program.