The U.S. Commodities and Futures Trading Commission (“CFTC”) has approved an award of more than $10 million to a tipster through its whistleblower program. The award – only the third in the program’s five-year history – is not only the largest ever approved by the agency, it is more than 30 times larger than its closest competitor, a $290,000 award paid in 2015. The CFTC redacted the tipster’s identity – along with the precise amount of the award and the percentage of total recovery – from the final order, which is available here.
The CFTC’s whistleblower program arose from the Dodd-Frank Act in 2010, and it exists to reward tipsters who voluntary provide information that leads to successful enforcement actions for violations of the Commodity Exchange Act (“CEA”). Such tipsters are eligible to receive between 10 to 30% of the CFTC’s recovery where sanctions imposed exceed $1 million. The awards are paid through the CFTC Customer Protection Fund, which is financed wholly from sanctions paid by violators of the CEA.
Eligibility to receive a reward, however, does not amount to a guarantee. Indeed, the CFTC has issued 38 denial orders, as compared to the three orders approving awards. Participants in the U.S. Securities and Exchange Commission’s (“SEC’s”) whistleblower program – also a product of Dodd-Frank – have a much higher batting average. The SEC has approved 21 applications for awards, while denying 33.
In a press release announcing the award, Aitan Goelman, CFTC’s Director of Enforcement said, “By providing robust financial incentives and enhanced protections to whistleblowers, the Commission incentivizes people to come forward with high quality information about serious violations of the law that we might not otherwise uncover. An award this size shows the importance that the Commission places on incentivizing future whistleblowers.” Encouraging participation in the program is one thing. Would-be tipsters are left to hope that the award also signals the CFTC’s new-found dedication to compensating those individuals who provide information that leads the agency to significant recoveries.