Compliance Official Receives $1.25 Million CFTC Whistleblower Award

SEC Award

On March 14, the U.S. Commodities Future Trading Commission (CFTC) announced a $1.25 million whistleblower award. The whistleblower’s information “was quite significant because it, and it alone, caused the Division of Enforcement (Division) to open the investigation underlying the Covered Action,” according to the award order.

Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected in the action.

In this case, the whistleblower learned of the misconduct in their role where their principal duties involved compliance and/or audit responsibilities. Whistleblowers who learn of misconduct in such roles are not immediately eligible for an award but the whistleblower qualified because they first reported the contact internally and then waited 120 days to contact the CFTC.

“Insiders have some of the most valuable evidence about illegal activity in our markets,” said Ian McGinley, Director of the Division of Enforcement. “Today’s award recognizes the risks they take in coming forward to the CFTC, as well as the role of their information in amplifying the CFTC’s enforcement efforts.”

“The whistleblower first reported internally, fulfilling job duties and putting the entity on notice of its wrongdoing,” said Director of the Whistleblower Office Brian Young. “The CFTC’s Whistleblower Program rewards employees with compliance and audit responsibilities who first raise violations internally and then contact the CFTC if the employer sits on its hands.”

Young was named as the Director in February. “Leads generated from insiders are critically important to any financial enforcement program,” he said at the time. “The tremendous accomplishments of the CFTC’s Whistleblower Program confirm this view. I look forward to working with and learning from the talented CFTC staff to combat wrongdoing.”

Since it was established in 2010, the CFTC Whistleblower Program has awarded $365 million to whistleblowers. Whistleblower disclosures have allowed the agency to recover over $3.2 billion from fraudsters.

A major issue, however, is that the CFTC Whistleblower Program is facing a financial crisis: the fund used to pay awards and finance the program is facing depletion. “The issue stems from a congressionally set cap on the program’s Consumer Protection Fund,” leading whistleblower attorney Stephen M. Kohn recently wrote. “The amount of money that can be placed in the fund, which is entirely financed by sanctions collected thanks to whistleblowers — not by taxpayers — is capped at $100 million.”

Introduced in July by a bipartisan group of senators, the CFTC Whistleblower Fund Improvement Act of 2023 addresses the funding crisis undermining the CFTC Whistleblower Program. “The bipartisan Whistleblower Fund Improvement Act will ensure that the CFTC whistleblower program will not be a victim of its own success and can continue to help root out fraud in the U.S. derivatives markets,” wrote Kohn in a previous article calling for the passage of the bill.

Kohn sees the passage of the CFTC Whistleblower Fund Improvement Act as one of the seven most urgently needed whistleblower reformsNational Whistleblower Center (NWC), where Kohn serves as Chairman of the Board, has issued an Action Alert calling on Congress to pass the bill.

Join NWC in Taking Action:

Save the CFTC Whistleblower Program

Further Reading:

CFTC Awards Insider Whistleblower Approximately $1.25 Million

Leading Whistleblower Attorney: Congress Must Pass CFTC Whistleblower Funding Law

More CFTC Whistleblower News

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