CFTC Whistleblower Program: What Are the Largest CFTC Whistleblower Awards?
Largest CFTC Whistleblower Awards
Since 2012, the CFTC has issued more than $100 million in CFTC whistleblower awards. The top 5 largest CFTC awards to date are:
$45 million CFTC whistleblower award (August 2, 2018);
$30 million CFTC whistleblower award (July 12, 2018);
$10 million CFTC whistleblower award (March 28, 2016);
$7 million CFTC whistleblower award (September 27, 2019);
$2.5 million CFTC whistleblower award (June 24, 2019).
Under the CFTC Whistleblower-Reward Program, the CFTC is required to issue awards to eligible whistleblowers whose information leads to successful CFTC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected. To date, more than $800 million in monetary sanctions have been ordered against wrongdoers based on actionable information provided by whistleblowers.
The CFTC Whistleblower-Reward Program also offers robust whistleblower confidentiality protections and permits whistleblowers to submit anonymous tips if represented by counsel. See §165.4 Confidentiality.
Violations That May Lead to CFTC Whistleblower Awards
A whistleblower may be eligible for a CFTC whistleblower award if their tip concerns any material violation of the Commodity Exchange Act or CFTC regulations. As part of the CFTC Whistleblower-Reward Program, the CFTC issues “Whistleblower Alerts” to help potential whistleblowers identify red flags for certain violations that may lead to successful CFTC enforcement actions. During FY 2019, the CFTC issued four alerts detailing types of misconduct that whistleblowers should be on the lookout for:
For more information about CFTC enforcement, please click here.
Foreign Corrupt Practices
Generally, “foreign corrupt practices” are actions that “seek to improperly influence foreign officials” with personal payments or rewards. Fraudulent conduct relating to such practices could include practices that alter the prices in commodity markets or manipulate benchmarks, bribes employed to secure business in connection with regulated activities like trading or advising, and paid out of funds investors believed were being used to invest.
Virtual Currency Fraud
Virtual currency is a digital representation of value that functions as a medium of exchange or a store of value. The CFTC advises potential whistleblowers to be on the lookout for practices such as “pump-and-dump” schemes, pre-arranged trading of virtual currencies, and trading of currencies by unregistered persons or on unregistered platforms. Failure to properly register or abide by CFTC regulations regarding virtual currency is also a fraudulent practice that a potential whistleblower should also bring to the attention of the CFTC, as it could lead to the discovery of a larger scheme.
The CFTC defines insider trading as trading on the basis of material nonpublic information (MNPI) in breach of a pre-existing duty or that was obtained by fraud or deception. The CFTC’s alert on insider trading encourages reporting of trading on market moving information that the source had a duty to protect, brokers front running customer orders without consent or improperly disclosing customer orders, and swap dealers or major swap participants improperly disclosing MNPI without the counterparty’s consent.
Violations of the Bank Secrecy Act
The Bank Secrecy Act (BSA) requires U.S. financial institutions to collaborate with the government in cases of suspected money laundering and fraud. Under the Financial Crimes Enforcement Network (FinCEN) regulations, Futures Commission Merchants (FCM) and Introducing Brokers (IB) must comply with various BSA requirements. The CFTC has brought charges under Title 17 of the Code of Federal Regulations against IBs and FCMs for, among other things, improper supervision and records violations, failure to diligently supervise the handling of accounts, failure to file suspicious activity reports, and improper enforcement of training limits assigned by regulators. While these areas of misconduct are traditionally occupied by FinCEN, the CFTC is dedicated to pursuing these types of misconduct, as they can also constitute Commodity Exchange Act violations.
Tracking CFTC Whistleblower Awards
The table below identifies some of the largest awards that the CFTC has provided to whistleblowers:
|$45 million||August 2, 2018||On August 2, 2018, the CFTC announced a $45 million award to multiple whistleblowers. Reports indicate the award was related to ISDAFIX manipulation enforcement actions.|
|$30 million||July 12, 2018||On July 12, 2018, the CFTC announced its largest-ever whistleblower award given to an individual. The whistleblower exposed that JP Morgan did not properly disclose conflicts of interests to clients. Find the order here.|
|$10 million||March 28, 2016||On April 4, 2016, the CFTC announced a $10 million award given to an individual. The whistleblower provided “valuable information” regarding violations of the Commodity Exchange Act. Find the order here.|
|$7 million||September 27, 2019||On September 27, 2019, the CFTC issued a $7 million award to a whistleblower. CFTC Director of Enforcement James McDonald stated in the Press Release: “Forty percent of our investigations now involve whistleblowers. We expect that number to increase as the CFTC continues to expand its whistleblower program.” Find the order here.|
|$2.5 million||June 24, 2019||On July 24, 2019, the CFTC issued a $2.5 million CFTC whistleblower award to an individual. The award was reduced because of the whistleblower’s delay in reporting. Director McDonald said the delay was “unreasonable” and the whistleblower could have received a larger award had this person not waited. Find the order here.|
|$2 million||July 1, 2019||On July 1, 2019, the CFTC issued a $2 million CFTC whistleblower award to two whistleblowers. The whistleblowers provided multiple interviews and documents that were “highly informative” and provided the agency “with significant information” that prompted the CFTC to open an investigation. The whistleblowers also reported the violations to another organization that conducted a separate investigation and shared its findings with the CFTC. Find the order here.|
|$2 million||March 4, 2019||On March 4, 2019, the CFTC announced an award of over $2 million to a whistleblower. The whistleblower conducted an "independent analysis" of market data, which aided greatly in the CFTC’s investigation. The whistleblower was not an insider. The order is here.|
|$1.5 million||May 6, 2019||On May 6, 2019, the CFTC announced a $1.5 million award to a whistleblower who tried to report it internally first. The CFTC granted the reward to the whistleblower for both a CFTC action and a related action brought by another federal regulator. Find the order here.|
|$290,000||September 29, 2015||On September 29, 2015, the CFTC announced an award of $290,000 to a whistleblower. Two applicants applied for the award, but the CFTC only awarded one of the whistleblowers because the “the information provided by the second applicant did not lead to a successful enforcement . . . action.”|
|$240,000||May 20, 2014||On May 20, 2014, the CFTC announced its first-ever whistleblower award of $240,000. The then-acting director of the CFTC reported that the whistleblower provided “specific, timely and credible information” that led to a successful investigation.|