On March 18, 2022, the Commodity Futures Trading Commission announced the award of approximately $10 million to a whistleblower for providing original information — i.e., information of which enforcement staff was previously unaware — about alleged noncompliance with the Commodity Exchange Act (“CEA”) that led to a successful enforcement action. According to the CFTC order, the whistleblower gave useful information which not only served as the foundation for staff opening an investigation into the alleged conduct, but the whistleblower also “provided good background …, interesting color, and … context” concerning the information which assisted staff in the early phases of the investigation. The information also enabled the CFTC staff to draft “the earliest round of subpoenas” in the investigation. In its order, the CFTC notes that the Claims Review Staff applied the factors set forth in CFTC Regulation 165.9, 17 CFR § 165.9, to determine the appropriate percentage of the total settlememt, while not following a set formula to weigh the positive and negative factors that may increase or decrease a whistleblower award.
One week earlier, on March 10, 2022, the CFTC announced awards totaling approximately $500,000, to two whistleblowers who separately provided substantial assistance to the CFTC, allowing it to expand the scope of an existing investigation. According to the CFTC order, the claimants were eligible for whistleblower awards because they voluntarily provided information that led to the successful enforcement action, including information with a “meaningful nexus to the Commission’s abiilty to successfully complete its investigation … and obtain a settlement.”
To-date, the CFTC has awarded approximately $330 million to whistleblowers who, since the program was established in 2014, have provided information leading to multiple successful enforcement actions and over $3 billion in monetary sanctions.
Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected as a result of a successful enforcement proceeding. These awards are paid from the CFTC Customer Protection Fund which is financed through monetary sanctions paid to the CFTC by violators of the CEA. In its press releases, the CFTC highlights that “no money is taken or withheld from injured customers to fund the program.”
CFTC press release | CFTC order (17 March 2022) | CFTC press release | CFTC order (10 March 2022)