On November 22, the U.S. Commodity Futures Trading Commission (CFTC) announced that two whistleblowers received approximately $1 million for the “significant information and substantial assistance” they provided to the agency “during the underlying investigation.” The whistleblowers’ help “led the CFTC to bring a successful enforcement action.”
The award determination document shows that four whistleblowers filed award claims, but only two whistleblowers’ claims were accepted by the Claims Review Staff (CRS). The CRS recommended the denial of the two whistleblowers’ claims because “they failed to meet the requirements of Section 23 of the [Commodity Exchange Act] and the Rules.”
Both whistleblowers who received awards “voluntarily provided the Commission with original information that led to the successful enforcement of a covered action.” The first whistleblower, Claimant 1, “provided unique [redacted] information that was previously unknown to the Commission.” The information Claimant 1 provided was also “sufficiently specific, credible and timely that it, along with other documents and information, caused staff of the Commission’s Division of Enforcement…to open the investigation that led to the Covered Action.” Additionally, Claimant 1 “voluntarily provided information to another regulatory authority.”
Claimant 2 also “provided unique [redacted] information, much of which was previously unknown to the Commission.” Both whistleblowers provided information “that significantly contributed to the success of the Covered Action.” However, the CRS decided that Claimant 1 will receive a higher percentage of the award “because of the key role that Claimant 1’s information played in causing the Division to open the investigation that led to the Covered Action and focusing the Division’s efforts during the investigation’s earliest stages.” As such, “Claimant 2 will receive a smaller share of the award because they “reported to the Commission while the investigation was ongoing.”
“The CFTC’s Whistleblower Program already made history with the announcement of the largest-ever Dodd-Frank Act whistleblower award last month,” said CFTC Acting Director of Enforcement Vincent McGonagle in the press release. “The CFTC will continue to reward deserving whistleblowers who help the CFTC root out misconduct.”
The award McGonagle mentions was doled out to a CFTC whistleblower to the tune of almost $200 million in mid-October, the largest CFTC whistleblower award to date.
“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,” added 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.”
Since issuing its first award in 2014, the CFTC has given awards to whistleblowers totaling approximately $300 million. “Those awards are associated with enforcement actions that have resulted in monetary sanctions totaling more than $3 billion,” the press release states. “The CFTC issues awards related not only to the agency’s enforcement actions, but also in connection with actions brought by other domestic or foreign regulators if certain conditions are met.”
All whistleblower awards are paid out of the CFTC Customer Protection Fund, which is “financed entirely through monetary sanctions paid to the CFTC by violators” of the Commodity Exchange Act. Earlier in the year, President Biden signed into law emergency legislation to save the Fund from financial collapse; it had become endangered due to its own success and depleted from the number of awards issued.