Trafigura Whistleblower Disclosure Leads to $55 Million Enforcement Action by CFTC

CFTC Whistleblower Program

On June 17, the U.S. Commodity Futures Trading Commission (CFTC) announced that Trafigura Holding LLC agreed to pay $55 million to settle allegations of fraud, market manipulation, and impeding the ability of employees to blow the whistle.

Whistleblower law firm Kohn, Kohn & Colapinto announced that a whistleblower made a disclosure in the case. Through the CFTC Whistleblower Program, whistleblowers may blow the whistle anonymously to the CFTC and may be eligible for monetary awards.

According to the CFTC, Trafigura, a global commodities merchant, “traded gasoline while in knowing possession of material nonpublic information it knew or should have known had been misappropriated from a Mexican trading entity (MTE)” and “Trafigura manipulated a fuel oil benchmark to benefit its futures and swaps positions, including derivatives traded on United States registered entities.”

“As reflected in today’s Order, Trafigura misappropriated material non-public information and engaged in manipulative conduct that affected published benchmark rates,” said Director of Enforcement Ian McGinley. “This enforcement action is yet another example of the CFTC’s commitment to ensuring the derivatives markets remain free from trading abuses that undermine their integrity.”

“This is a great day for accountability and for fighting transnational corruption,” said Kohn, Kohn & Colapinto founding partner Stephen M. Kohn, who represented the whistleblower during the CFTC’s confidential investigation. “Whistleblowers demonstrate immense bravery in coming forward. During the course of the entire lengthy investigation the CFTC’s staff demonstrated professionalism and a deep respect for the stress and hardship whistleblowers face,” Kohn added.

“Holding a multinational company headquartered in Singapore accountable for misconduct which occurred in Mexico further demonstrates the transnational scope and impact of U.S. laws and whistleblower programs,” Kohn said. “The CFTC Whistleblower Program is proving to be a critical tool in efforts to combat corruption globally,” he added.

CFTC further alleges that Trafigura “required current employees and former employees to sign employment and/or separation agreements containing non-disclosure provisions prohibiting them from disclosing company information, with no exception for law enforcement agencies or regulators, which illegally impeded individuals from voluntarily communicating with Division of Enforcement (DOE) staff during the investigation.”

Director of the Whistleblower Office Brian Young commented, “This is the first CFTC action charging a company for interfering with whistleblower communications. This groundbreaking action demonstrates the CFTC’s commitment to protecting potential whistleblowers and puts the market on notice that the CFTC will not tolerate attempts to silence potential witnesses.” 

“This is a giant breakthrough in the international commodities market,” said Kohn. “This enforcement action sends a message that the CFTC is joining with other agencies in cracking down on the use of illegal NDAs which restrict whistleblowing. The CFTC knows that whistleblowers are critical to its enforcement efforts and is clearly committed to ensuring that companies, including privately held ones such as Trafigura, are not able to silence whistleblowers through NDAs.”

Kohn, Kohn & Colapinto also represented a whistleblower in the first Securities and Exchange Commission (SEC) enforcement action sanctioning a company for impeding whistleblowing. In recent months, the SEC has increased enforcement matters around the issue.

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