Securities Regulation Daily CFTC awards whistleblower $10M; largest award to date
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Monday, April 4, 2016

CFTC awards whistleblower $10M; largest award to date

By Lene Powell, J.D.

In its third whistleblower award since the program began, the CFTC issued an award of over $10 million to a whistleblower who provided key original information about Commodity Exchange Act (CEA) violations that led to a CFTC enforcement win. The award is much larger than the previous two awards, making it the biggest to date (CFTC Whistleblower Award Determination No. 16-WB-06, April 4, 2016).

To protect the whistleblower’s confidentiality, the CFTC did not identify the whistleblower or any individuals or entities involved in the violations. The CFTC also redacted the exact amount of the award and percentage of sanctions collected.

According to the order, the whistleblower did not participate in the violations. Further, the record did not indicate that the whistleblower participated in internal compliance or reporting systems.

Sizable award. The award amount is a major leap from the first two awards. In 2014, the CFTC issued its first whistleblower award of about $240,000 for “specific, timely and credible information that led to the Commission bringing important enforcement actions.” The CFTC issued a second award of about $290,000 in 2015.

“An award this size shows the importance that the Commission places on incentivizing future whistleblowers,” said Director of Enforcement Aitan Goelman in a release.

Echoing the hope that the sizable award will serve as a beacon, Christopher Ehrman, director of the CFTC’s Whistleblower Office, said, “The Whistleblower Program is working. My hope is that this multimillion dollar award will encourage others to come forward with information that will assist the Commission in protecting our markets.”

The CFTC will likely welcome any help in attracting whistleblowers. In the fall of 2015, the CFTC Office of the Inspector General reported that it had resumed a review looking at why the CFTC has issued relatively fewer awards than the SEC. The Inspector General will also recommend best practices.

Whistleblower program. The CFTC Whistleblower Program was created by the Dodd-Frank Act. The program pays monetary awards of between 10 and 30 percent of sanctions collected to eligible whistleblowers who voluntarily give the CFTC original information about violations of the CEA leading to a successful enforcement action that results in monetary sanctions of more than $1 million. Awards can also be given based on monetary sanctions collected by other government authorities, if the actions are related to a successful CFTC enforcement action and based on information provided by a CFTC whistleblower.

Awards are paid from the CFTC Customer Protection Fund, which is funded through monetary sanctions paid to the CFTC by violators of the CEA. The money does not come from harmed investors. Further information about the program is available at whistleblower.gov.

The proceeding is CFTC Whistleblower Award Determination No. 16-WB-06.

MainStory: TopStory CommodityFutures Derivatives DoddFrankAct Enforcement Swaps WhistleblowerNews

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