CFTC Awards $10 Million to Whistleblower
Author: Marta Moakley, XpertHR Legal Editor
May 5, 2016
The US Commodity Futures Trading Commission (CFTC) has announced an award of more than $10 million to a whistleblower. The award is the largest made by the agency to date.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) created the CFTC's whistleblower program, as well as that of the Securities and Exchange Commission (SEC). Under the program, a whistleblower may receive a percentage of the sanctions in a successful enforcement action, ranging from 10 to 30 percent of the recovery.
The CFTC enforces the Commodity Exchange Act (CEA), which regulates the trading of commodity futures. Under the CFTC's implementing regulations, the Whistleblower Award Determination Panel makes whistleblower award determinations on submitted applications. This is only the third petition that has been granted since the program's inception. Personally identifiable information has been redacted from the application in order to protect the whistleblower from retaliation.
The factors considered in making an award determination include:
- The significance of the information provided by the whistleblower to the success of the covered judicial, administrative or related action;
- The degree of assistance provided by the whistleblower in the covered action (e.g., cooperating with investigators and turning over relevant documents);
- The CFTC's interest in deterring violations of the CEA by making whistleblower awards;
- Whether the award otherwise enhances the CFTC's ability to enforce the CEA, protect customers and encourage the submission of high quality information from whistleblowers; and
- Potential adverse incentives from oversize awards (a factor that the SEC does not consider).
The CFTC also assesses the involvement of the whistleblower in the reported violation and whether he or she may be at fault. In addition, the timeliness of the report is taken into consideration - any unreasonable reporting delay may result in a denial of an award application.
Aitan Goelman, Director of the CFTC's Division of Enforcement, stated that an award this size "shows the importance that the Commission places on incentivizing future whistleblowers." Employers would be well-advised to focus on future whistleblowers, too, by ensuring that compliant policies regarding retaliation protections are properly implemented in the workplace. In addition, companies covered under Dodd-Frank should ensure that they have implemented internal compliance programs.