CFTC Whistleblower Program

The Commodity Futures Trading Commission (CFTC) Overview

The Commodity Futures Trading Commission (CFTC) was established as an independent federal agency in 1974, operating under the statutory framework of the Commodity Exchange Act (CEA) of 1936. The CFTC has exclusive jurisdiction over futures trading in all commodities.

Since its inception, the scope of the CFTC’s jurisdiction has expanded beyond the agricultural sector to include a wide array of commodities such as gold, oil, and certain financial instruments. The Commodity Exchange Act defines “commodity” to include “all services, rights, and interests . . . in which contracts for future delivery are presently or in the future dealt in.”

Expansion Post-2008 Financial Crisis

Following the financial crisis of 2008, the CFTC’s authority was extended to regulate the swaps market, which involves privately traded contracts in the over-the-counter market. This expansion was part of broader financial reforms aimed at increasing market transparency and stability.

The CFTC Whistleblower Program

The Commodity Futures Trading Commission’s (CFTC) Whistleblower Program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Frank Wall Street Reform and Consumer Protection Act) in 2010. The Dodd-Frank Act also created the Customer Protection Fund, which finances whistleblower awards. Since issuing its first whistleblower award in 2014, the CFTC has recovered over $3 billion and awarded more than $330 million to whistleblowers.

The CFTC and SEC Whistleblower Programs share a similar framework for evaluating information submitted by whistleblowers. Both agencies have claims review staff who issue preliminary determinations and assess the validity of an award claim. Whistleblowers can review the records of their case and contest any denial of an award during the preliminary determination stage.

Submitting Information to the CFTC

The CFTC seeks “original information” that is “voluntarily submitted” regarding potential violations of the Commodity Exchange Act (CEA). “Original information” is data previously unknown to the CFTC, derived from the whistleblower’s independent knowledge or analysis. Independent knowledge consists of information that is not generally known or publicly available, while independent analysis involves evaluating publicly accessible information in a new and insightful way.

“Voluntary submission” means the information is provided to the CFTC before any request, inquiry, or demand is made to the whistleblower, their legal representative, or their employer.

Criteria for Whistleblower Rewards

The CFTC Whistleblower Program offers rewards of 10% to 30% of collected proceeds to eligible whistleblowers whose information leads to a successful enforcement action resulting in monetary sanctions exceeding $1 million. Whistleblowers may also qualify for a monetary award if their information results in the successful enforcement of a “related action,” which is a judicial or administrative proceeding brought by certain government entities based on the information provided through the CFTC Whistleblower Program.

Factors influencing the award percentage include:

• The significance of the information provided.
• The level of assistance during the investigation.
• The deterrent effect on certain types of commodities violations.
• The whistleblower’s involvement in their company’s internal compliance process.

Conversely, factors that may reduce the award percentage include:

• The whistleblower’s role in the misconduct.
• Unreasonable delays in reporting the violation.
• Interference with the company’s internal compliance and reporting processes.

Funding of Awards

A key distinction between the CFTC and SEC whistleblower programs is the funding of awards. The CFTC issues whistleblower rewards from its Customer Protection Fund, financed through monetary sanctions paid by violators of the CEA. The SEC funds awards directly from the monetary sanctions collected from violators in enforcement proceedings.

Protecting Anonymity

Whistleblowers can anonymously submit information to the CFTC Whistleblower Program but must be represented by an attorney to qualify for an award. The CFTC requires whistleblowers to verify their identity before issuing any award payment. The Commodity Exchange Act mandates that the CFTC protects a whistleblower’s anonymity by not disclosing information that could reveal their identity, except under specific circumstances such as judicial or administrative proceedings.

Anti-Retaliation Protections for Whistleblowers

Under the Dodd-Frank Act, employers are prohibited from retaliating against whistleblowers. This includes prohibitions on discharging, demoting, suspending, threatening, harassing, or discriminating against whistleblowers in any way that affects their employment terms and conditions. Employers also cannot enforce confidentiality agreements that would prevent employees from communicating with the Commission.

Whistleblowers who experience retaliation can file a private lawsuit against their employer in federal court. Successful claims can result in remedies such as reinstatement, back pay, litigation costs, and attorneys’ fees. The CFTC also has the authority to take enforcement actions against employers who retaliate against whistleblowers.

By participating in the CFTC Whistleblower Program, individuals can contribute to the enforcement of the Commodity Exchange Act and help maintain the integrity of the commodities markets while being eligible to receive significant monetary awards for their efforts.