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AM I ELIGIBLE FOR A WHISTLEBLOWER REWARD UNDER THE CFTC WHISTLEBLOWER PROGRAM?

May 24, 2022

In the last fiscal year alone, the U.S. Commodity Futures Trading Commission (CFTC) issued approximately $123 million in whistleblower awards. This figure does not include a whooping $200 million award the agency issued on October 21, 2021—which is the largest-known single whistleblower award under the programs established by the Dodd-Frank Act.

To be eligible for an award under the Program, whistleblowers must voluntarily provide the CFTC with original information, via Form TCR (Tip, Complaint, or Referral), about violations of the Commodity Exchange Act (CEA) that have occurred, are ongoing, or are about to occur. Original information may be derived from a whistleblower’s independent knowledge (facts not available in public sources) or independent analysis (evaluation of information, while available in public sources, that reveals information that is not generally known).

Certain information may be excluded from the definition of “original information.” This may include information 1) subject to the attorney-client privilege; 2) learned because a whistleblower held certain titles at a company, such as officer or director; or 3) learned from another person or through the entity’s internal reporting systems. There are, however, exceptions to these exclusions.

If the information submitted is deemed “original information,” or is subject to an exception from an applicable exclusion, the whistleblower will be eligible for an award where the CFTC recovers more than $1 million as a result of that information. A whistleblower may be awarded anywhere between 10 and 30 percent of the amount of money the agency collects.

The CFTC will evaluate specific factors in determining the amount to be awarded to a whistleblower in a particular case. Negative factors that may reduce the award include a reporting delay, culpability, or interference with a company’s internal compliance processes or reporting program. Positive factors that may lead to a higher award percentage include the significance of the information provided by the whistleblower; the level of assistance provided by the whistleblower to the CFTC; the agency’s interest in deterring the type of violations reported by the whistleblower; and whether the whistleblower engaged internal compliance systems prior to or at the same time as reporting the misconduct to the CFTC.

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WHAT IS THE CFTC WHISTLEBLOWER PROGRAM?

Whistleblowers submitting tips to the CFTC are often employees or ex-employees of the target defendant. But other individuals who could potentially have information serving as the basis for a submission on Form TCR include competitors of the target; non-profits; financial analysts; patients; fraud victims; data analytics professionals; or industry experts. While the CFTC requires whistleblowers to be individuals (not entities), it does not require them to be company insiders.

If you are considering reporting information to the CFTC, please fill out our online form or contact us by phone at (267) 551-5240 or via e-mail at zarbitman@feldmanshepherd.com for a free, confidential consultation.

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