Whistleblower Rewards

An Eagle with it's wings spread soaring through the blue sky, Representing a Whistleblower

While there may be minor differences in the methodology used to determine award percentages in the various whistleblower programs, nearly all follow the framework of the False Claims Act (FCA).

The False Claims Act

 

The False Claims Act contains qui tam provisions that allows private individuals to sue on behalf of the United States government to recover money that was fraudulently obtained by individuals and corporations. The FCA offers monetary awards to incentivize whistleblowers to come forward when they have reliable information involving fraud against the government.  If an action is successful, a whistleblower receives a percentage of the recovered proceeds, known as a relator’s share.  The award percentage is based on a number of factors, some of which are prescribed by statute and others that are within the discretion of the court.

  • If the government intervenes in the action, the relator will receive an award of between 15% and 25% of the collected proceeds from a judgment or settlement. 31 U.S.C. § 3730(d)(1)
    • If a court finds that the action was based primarily on public disclosures of information from certain sources, it has discretion to issue an award that it deems appropriate, but it cannot award more than 10% of the collected proceeds. 31 U.S.C. § 3730(d)(1)
  • If the government declines to intervene in the action, the relator will receive an award of between 25% and 30% of the collected proceeds from a judgment or settlement. 31 U.S.C. § 3730(d)(2)
  • Regardless of whether the government intervenes, the court has discretion to reduce the award percentage if it finds that the relator planned and initiated the violation that was the subject of the FCA action. 31 U.S.C. § 3730(d)(3)
    • If the relator is convicted of a criminal offense arising from their role in the FCA violation, the court must dismiss the relator from the action. A conviction also disqualifies the relator from receiving any share of the proceeds of the action. 31 U.S.C. § 3730(d)(3)
  • A successful relator is also entitled to recover reasonable expenses, fees, and costs incurred in the prosecution of the case, including attorneys’ fees. Unlike the relator share, these costs are paid directly by the defendant to the relator. 31 U.S.C. § 3730(d)(1)-(2)
  • The Department of Justice is responsible for recommending to the court the percentage to be awarded to the relator.  In practice, DOJ attorneys try to reach an agreement with the relator prior to making their recommendation to the court.
  • DOJ attorneys consider a number of factors in their determination of the appropriate relator’s share. DOJ guidelines suggest beginning with the 15% statutory minimum and making adjustments, within the statutory constraints, according to the guidelines.

Factors that support a potential increase in the award percentage include:

  • The relator promptly reported the fraud.

  • After learning of the fraud, the relator tried to stop it, or reported it to a supervisor or the government.

  • The investigation prompted by the qui tam complaint caused the offender to cease its fraudulent conduct.

  • The complaint warned the government about a significant safety issue.

  • The relator provided extensive, firsthand information of the fraud

  • The government was not aware of the fraud.

  • The relator provided substantial assistance with the investigation and/or pretrial preparation.

  • The relator’s counsel provided substantial assistance to the government.

  • The case went to trial.

  • The FCA recovery was relatively small.

Factors that support a potential decrease in the award percentage include:

  • The relator participated in the fraud.

  • The relator substantially delayed reporting the fraud or filing the complaint.

  • The relator, or relator’s counsel, violated FCA procedures, g., violating the seal by disclosing confidential information.

  • The relator had limited firsthand knowledge of the fraud.

  • The relator’s knowledge was based primarily on public information.

  • The government was already aware of the fraud.

  • The relator, or relator’s counsel, failed to assist after filing the complaint or hindered the government’s investigation.

  • The government expended substantial effort to develop the facts necessary to win the lawsuit.

  • The case settled shortly after the complaint was filed or with little need for discovery.

  • The FCA recovery was relatively large.

The IRS Whistleblower Program

The IRS Whistleblower Office offers a reward for individuals who provide credible information involving one or more tax violations. A whistleblower who provides information that results in a recovery is awarded a percentage of the recovered proceeds. The statute provides general guidelines for determining the percentage to be awarded to the whistleblower. The IRS Whistleblower Office retains discretion to increase or decrease the percentage based on the facts and circumstances of a particular case.

  • The IRS processes submissions from its whistleblower program under two different sections of the Internal Revenue Code, section 7623(a) and 7623(b).

  • A submission to the IRS Whistleblower Program is processed under section 7623(b) if the amount in dispute exceeds $2 million. 26 U.S.C. § 7623(b)(5)(B)

  • If the dispute involves an individual taxpayer, the individual’s gross income must exceed $200,000 for at least one of the taxable years in question. 26 U.S.C. § 7623(b)(5)(A)

  • Section 7623(b) provides for an award ranging from 15% to 30% of the proceeds collected in a judgment or settlement of an action, and any related action, that is based on information provided by a whistleblower. 26 U.S.C. § 7623(b)
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      • “Proceeds” means penalties, interest, additions to tax, and additional amounts provided under the internal revenue laws as well as criminal fines, civil forfeitures, and violations of reporting requirements. 26 U.S.C. § 7623(c)

      • If the IRS Whistleblower Office determines that the whistleblower’s information is based primarily on disclosures from certain statutorily specified sources, it has discretion to issue an award that it deems appropriate, but it cannot award more than 10% of the proceeds collected. 26 U.S.C. § 7623(b)(2)(A)

      • If the whistleblower was the original source of the information in the statutorily specified sources, the 10% maximum award does not apply. 26 U.S.C. § 7623(b)(2)(B)

      • If the Whistleblower Office determines that the whistleblower planned and initiated the actions that led to tax violations, it has discretion to “appropriately reduce” the award percentage. 26 U.S.C. § 7623(b)(3)

      • If the whistleblower is convicted of a criminal offense for their role in the tax violation at issue, the IRS Whistleblower Office is prohibited from issuing any award to the whistleblower. 26 U.S.C. § 7623(b)(3)

      • A whistleblower has the right to appeal the Whistleblower Office’s decision regarding an award determination. The appeal must be filed with the Tax Court within 30 days of the determination. 26 U.S.C. § 7623(b)(4)
    • If a whistleblower submission does not meet the requirements of section 7623(b), the IRS handles it under section 7623(a) which may be eligible for a discretionary award. There is no right of appeal for a whistleblower award issued under section 7623(a).

The SEC Whistleblower Program

The SEC Office of the Whistleblower offers monetary incentives to whistleblowers who provide information of suspected securities violations. If the information leads to an enforcement action resulting in sanctions exceeding $1 million, an eligible whistleblower can receive between 10% and 30% of the monetary sanctions collected.

A whistleblower must comply with a number of conditions and procedures to be eligible for an award.

  • Information must be submitted voluntarily.

    • A whistleblower must submit information prior to receiving a request, inquiry or demand from the SEC, Congress, certain enumerated investigative entities, or federal or state authorities. 

    • If a whistleblower is required to report to the SEC because of a pre-existing legal or contractual obligation, or a duty based on a judicial or administrative order, the submission will not be considered voluntary.  17 C.F.R. § 240.21F-4(a)(3)

  • A submission must be based on original information. Information is considered original if it is:

    • Derived from the whistleblower’s independent knowledge or independent analysis.

      • Independent knowledge means facts in the whistleblower’s possession that is not derived from publicly available sources. 17 C.F.R. § 240.21F-4(b)(2)

      • Independent analysis means an examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public. 17 C.F.R. § 240.21F-4(b)(3)

      • The SEC specifically excludes the following circumstances from the definitions of independent knowledge and independent analysis:
        • Information that is protected by attorney-client privilege (unless an exception applies). 17 C.F.R. § 240.21F-4(b)(4)(i)

        • Information obtained by the whistleblower or the whistleblower’s employer while in the course of providing legal representation to a client. 17 C.F.R. § 240.21F-4(b)(4)(ii)

        • Information that was obtained due to the whistleblower’s position as:

          • An officer or executive of a company who was informed about the allegations of misconduct, or when the information was discovered during the company’s compliance processes. 17 C.F.R. § 240.21F-4(b)(4)(iii)(A)

          • An employee whose primary responsibilities involve compliance or internal auditing, or where the whistleblower was employed by a firm that performed compliance or internal audit functions for the company. 17 C.F.R. § 240.21F-4(b)(4)(iii)(B)

          • An employee of a firm that was retained to conduct an investigation into possible violations of the law. 17 C.F.R. § 240.21F-4(b)(4)(iii)(C)

          • An employee of a public accounting firm who obtained information while performing duties required under federal securities laws where the information involves a violation by the client’s management or employees.  17 C.F.R. § 240.21F-4(b)(4)(iii)(D)

        • Information that was obtained in a way that violates a federal or state criminal law as determined by a U.S. court. 17 C.F.R. § 240.21F-4(b)(4)(iv)
        • Certain exceptions apply to the exclusions set forth in § 240.21F-4(b)(4)(iii). 17 C.F.R. § 240.21F-4(b)(4)(v)

        • Information obtained from a person who is subject to any of the exclusions in § 240.21F-4, unless an exception applies to the person from whom the information was obtained, or if the whistleblower is submitting information which involves that person. 17 C.F.R. § 240.21F-4(b)(4)(vi)

    • If the SEC receives the same information from another person, it will consider the whistleblower to be an original source of the information if the other person obtained the information from the whistleblower.  17 C.F.R. § 240.21F-4(b)(5)

    • If the SEC is already aware of some information about a matter from other sources, and the whistleblower is not the original source of that information, the SEC will still consider the whistleblower as an original source for any information derived from their independent knowledge or analysis that materially adds to the information known by the SEC. 17 C.F.R. § 240.21F-4(b)(6)

  • Original information must lead to a successful enforcement action. The SEC considers any the following scenarios to be a successful enforcement action for purposes of issuing an award:

    • The whistleblower provided specific and credible original information that caused the SEC to open an investigation, reopen a previously closed investigation, or investigate different conduct in a pending investigation, which resulted in a successful enforcement action based on the conduct reported by the whistleblower. 17 C.F.R. § 240.21F-4(c)(1)

    • The whistleblower provided information about conduct that was already under investigation by the SEC or another governmental authority, and the whistleblower’s information significantly contributed to the success of the action. 17 C.F.R. § 240.21F-4(c)(2)

    • The whistleblower reported a suspected violation pursuant to their company’s internal compliance procedures. The whistleblower reported the same information to the SEC, either concurrently or after making the internal report to the company. As a result of the whistleblower’s internal report, the company initiated an investigation and reported either the whistleblower’s original information or the results of the investigation to the SEC, and the information satisfied either § 240.21F-4(c)(1) or (c)(2). 17 C.F.R. § 240.21F-4(c)(3)

  • An action means a judicial or administrative proceeding brought by the SEC.  17 C.F.R. § 240.21F-4(d)

    • For purposes of issuing a whistleblower award, an action is also defined as either of the following:

      • A non-prosecution agreement or deferred prosecution agreement entered into by the U.S. Department of Justice. 17 C.F.R. § 240.21F-4(d)(3)(i)

      • A settlement agreement resolving violations of securities laws entered into by the SEC outside of a judicial or administrative proceeding. 17 C.F.R. § 240.21F-4 (d)(3)(ii)

  • A successful enforcement action must result in monetary sanctions exceeding $1million.

    • Monetary sanctions is defined as an order to pay money resulting from an SEC action, or related action, that is any of the following:

      • Specifically designated as a penalty, disgorgement, or interest. 17 C.F.R. § 240.21F-4 (e)(1)(i)

      • Ordered as relief for violations that are the subject of the covered action or related action. 17 C.F.R. § 240.21F-4(e)(1)(ii)

      • Money deposited into a disgorgement fund or other fund as a result of the action or settlement of the action. 17 C.F.R. § 240.21F-4(e)(2)

  • The SEC Office of the Whistleblower determines the amount of an award.
    • Subject to any statutorily imposed limits, the Commission has discretion regarding the amount awarded. 17 C.F.R. § 240.21F-5(a)

    • The amount of the award ranges from 10% to 30% of the monetary sanctions collected. 17 C.F.R. § 240.21F-5(b)

    • If there are multiple whistleblowers eligible to receive an award, the SEC will separately determine the percentage awarded to each whistleblower. Regardless of the number of whistleblowers, the total amount awarded will never be less than 10% or greater than 30% of the amount the SEC or other authorities collect. 17 C.F.R. § 240.21F-5(c)

  • The SEC considers a number of factors in determining the amount of an award.

    • Factors the Commission can consider to increase the percentage awarded to a whistleblower:

      • The significance of the information provided by the whistleblower.

        • The nature, reliability and completeness of the information provided and how it related to the successful enforcement action. 17 C.F.R. § 240.21F-6(a)(1)(i)

        • The degree to which the information supported one or more successful claims brought in the Commission’s action or related action. 17 C.F.R. § 240.21F-6(a)(1)(ii)

      • Assistance provided by the whistleblower:

        • The extent by which the whistleblower provided ongoing, extensive, and timely cooperation and assistance. 17 C.F.R. § 240.21F-6(a)(2)(i)

        • The timeliness of the whistleblower’s initial report to the SEC or to their company’s internal compliance or reporting system. 17 C.F.R. § 240.21F-6(a)(2)(ii)

        • The extent to which the whistleblower’s  assistance conserved the resources of the SEC. 17 C.F.R. § 240.21F-6(a)(2)(iii)

        • The extent to which the whistleblower encouraged or authorized others to assist the SEC when they might not have otherwise participated in the investigation. 17 C.F.R. § 240.21F-6(a)(2)(iv)

        • The whistleblower’s efforts to remediate the harm caused by the violations, including assistance in recovering funds and providing evidence of the misconduct. 17 C.F.R. § 240.21F-6(a)(2)(v)

        • Specific difficulties or hardships encountered by the whistleblower as a result of reporting to the SEC and assisting in the enforcement action. 17 C.F.R. § 240.21F-6(a)(2)(vi)

      • Law enforcement interests:

        • The degree to which an award enhances the Commission’s  enforcement efforts and protects investors. 17 C.F.R. § 240.21F-6(a)(3) (i)

        • The degree to which an award incentivizes other whistleblowers to provide significant information and assistance, even in cases where monetary sanctions are limited. 17 C.F.R. § 240.21F-6(a)(3)(ii)

        • The extent to which the subject matter is an SEC priority; the scope, duration and pervasiveness of the misconduct exposed; the type and severity of the violations; and the number of violations.  17 C.F.R. § 240.21F-6(a)(3)(iii)

        • The dangers to investors, including the harm caused by, and resulting from, the underlying violations, and the number of individuals or entities harmed. 17 C.F.R. § 240.21F-6(a)(3)(iv)

        • The quality and degree of the whistleblower’s assistance, including the timeliness and truthfulness of that assistance to the SEC and criminal authorities.17 C.F.R. § 240.21F-6(a)(3)(v)

      • The whistleblower’s participation in their company’s internal compliance systems.

        • The extent to which the whistleblower reported suspected securities violations through internal compliance procedures either before or concurrently reporting to the SEC. 17 C.F.R. § 240.21F-6(a)(4)(i)

        • The extent to which the whistleblower assisted their company’s internal investigation of the reported securities violations. 17 C.F.R. § 240.21F-6(a)(4)(ii)

    • Factors the Commission can consider to decrease the percentage awarded to a whistleblower:

      • The whistleblower’s culpability or level of involvement in the misconduct, including:

        • The whistleblower’s role in the securities violations. 17 C.F.R. § 240.21F-6(b)(1)(i)

        • The whistleblower’s education, training, experience, and position of responsibility at the time of the violations. 17 C.F.R. § 240.21F-6(b)(1)(ii)

        • The degree to which the whistleblower acted with intent and knowledge of wrongdoing, separately and relative to others involved. 17 C.F.R. § 240.21F-6(b)(1)(iii)

        • The extent to which the whistleblower benefitted financially from the violations. 17 C.F.R. § 240.21F-6(b)(1)(iv)

        • Whether the whistleblower is a recidivist. 17 C.F.R. § 240.21F-6(b)(1)(v)

        • The severity of the underlying fraud committed by the whistleblower. 17 C.F.R. § 240.21F-6(b)(1)(vi)

        • Whether the whistleblower knowingly interfered with the SEC’s investigation. 17 C.F.R. § 240.21F-6(b)(1)(vii)

      • Unreasonable delays in reporting the violations:

        • The extent to which the whistleblower was aware of the relevant facts and failed to report the violations or take steps to prevent them from occurring or continuing. 17 C.F.R. § 240.21F-6(b)(2)(i)

        • The extent to which the whistleblower was aware of the relevant facts but only reported them after learning about an investigation or enforcement action. 17 C.F.R. § 240.21F-6(b)(1)(ii)

        • Any legitimate justifications for the whistleblower’s delay in reporting the violations. 17 C.F.R. § 240.21F-6(b)(2)(iii)

      • The whistleblower’s interference with internal compliance and reporting systems, including:

        • Interfering with the company’s established compliance procedures to prevent or delay detection of the violations. 17 C.F.R. § 240.21F-6(b)(3)(i)

        • Making false statements that impeded the company’s efforts to detect, investigate, or rectify the reported violations. 17 C.F.R. § 240.21F-6(b)(3)(ii)

        • Providing a false document knowing it contained information that impeded the company’s efforts to detect, investigate, or rectify the reported violations. 17 C.F.R. § 240.21F-6(b)(3)(iii)

    • Factors considered when the amount of the award is $5 million or less.
      • The SEC will award the whistleblower the maximum permitted by statute provided that there are no negative award factors or any policy considerations that would be undermined by such an award. 17 C.F.R. § 240.21F-6(c)(2)

    • Consideration of the dollar amount of an award.

      • When the SEC considers the factors for increasing or decreasing the amount of an award, it may consider the dollar amount of a potential award for the purpose of increasing, but not decreasing, the amount of the award amount. 17 C.F.R. § 240.21F-6(d)

  • Awards based on Related Actions.

    • The SEC will pay an award based on amounts collected in certain related actions.

      • A related action is one brought by certain enumerated governmental entities or self-regulatory organizations that is based on the original information provided directly by the whistleblower, or provided by the SEC, to a governmental entity or self-regulatory organization that led the SEC to recover monetary sanctions exceeding  $1million. 17 C.F.R. § 240.21F-3(b)(1)

      • The same original information that the whistleblower provided to the SEC must also lead to a successful enforcement in a related action. The same criteria are used for an award determination in a related action. 17 C.F.R. § 240.21F-3(b)(2)

  • Ineligibility for an award.

    • Unless an exception applies, a whistleblower is ineligible for an  award in any of the following circumstances:

      • The whistleblower is, or at the time of acquiring the original information submitted to the SEC, was employed by the SEC, the Department of Justice, a law enforcement organization, or any other enumerated governmental agency or private entity. 17 C.F.R. § 240.21F-8(c)(1)

      • The whistleblower is, or at the time of acquiring original information submitted to the SEC, was a member, officer, or employee of a foreign government  or a foreign financial regulatory authority. 17 C.F.R. § 240.21F-8(c)(2)

      • The whistleblower is convicted of a criminal violation related to the covered action or a related action. 17 C.F.R. § 240.21F-8 (c)(3)

      • The whistleblower provided original information to the SEC that was obtained through an audit of a company’s financial statements. 17 C.F.R. § 240.21F-8(c)(4)

      • The whistleblower is the spouse, parent, child, or sibling of a member or employee of the SEC, or resides in the same household as a member or employee of the SEC. 17 C.F.R. § 240.21F-8(c)(5)

      • The whistleblower acquired original information submitted to the SEC from another person who obtained the information from an audit of a company’s financial statements, or for the purpose of evading the rules governing ineligibility. 17 C.F.R. § 240.21F-8 (c)(6)(i)-(2)

      • The whistleblower knowingly and willfully made a false statement or used a fraudulent document in any dealings with the SEC with intent to mislead or otherwise impede the SEC or another governmental or private entity. 17 C.F.R. § 240.21F-8(c)(7)

The CFTC Whistleblower Program

The CFTC’s Whistleblower Office offers monetary awards to whistleblowers who provide information of suspected violations of the Commodity Exchange Act. If the information leads to an enforcement action resulting in sanctions exceeding $1 million, an eligible whistleblower can receive between 10% and 30% of the monetary sanctions collected.

A whistleblower must comply with a number of conditions and procedures to be eligible for an award under the CFTC Whistleblower Program.

  • Information must be voluntarily submitted.

    • A whistleblower must submit information prior to receiving a request, inquiry or demand from the CFTC, Congress, certain enumerated investigative entities, or federal or state authorities. 17 C.F.R.  § 165.2(o)(1)

    • If a whistleblower is required to report to the CFTC because of a pre-existing legal or contractual obligation, or a duty based on a judicial or administrative order, the submission will not be considered voluntary.  17 C.F.R. § 165.2(o)(2)

  • A voluntary submission must be based on original information. Information is considered original if it is:
    • Derived from the whistleblower’s independent knowledge or independent analysis.

      • Independent knowledge means facts in the whistleblower’s possession that is not generally known or available to the public. 17 C.F.R. § 165.2(g)

      • Independent analysis means a whistleblower’s own analysis, either done alone or in combination with others. 17 C.F.R. § 165.2(h)

      • The CFTC specifically excludes the following circumstances from the definition of independent knowledge:

        • Information obtained from publicly available sources such as corporate filings, the media and the internet. 17 C.F.R. § 165.2(g)(1)

        • Information obtained from a communication that was subject to attorney-client privilege (unless an exception applies). 17 C.F.R. § 165.2(g)(2)

        • Information obtained by the whistleblower or the whistleblower’s employer while in the course of providing legal representation to a client. 17 C.F.R. § 165.2(g)(3)

        • Information obtained due to the whistleblower’s position as an officer or executive of a company who was informed about the allegations of misconduct, or when the information was discovered during the company’s auditing or compliance process (unless an exception applies). 17 C.F.R. § 165.2(g)(4)

        • Information obtained through the whistleblower’s status as an employee whose principal duties involve compliance or internal auditing (unless an exception applies). 17 C.F.R. § 165.2(g)(5)

        • Information obtained in a way that violates a federal or state criminal law as determined by a U.S. court. 17 C.F.R. § 165.2(g)(6)

  • Voluntarily submitted original information must lead to a successful enforcement action. The CFTC considers any the following scenarios to be a successful enforcement action for purposes of issuing an award:

    • The whistleblower provided original information that caused the CFTC to open an investigation, reopen a previously closed investigation, or investigate different conduct in a pending investigation, which resulted in a successful enforcement action based on conduct reported by the whistleblower. 17 C.F.R. § 165.2(i)(1)

    • The whistleblower provided original information about conduct that was already under investigation by the CFTC or another governmental authority, and the whistleblower’s information significantly contributed to the success of the action. 17 C.F.R. § 165.2(i)(2)

    • The whistleblower reported a suspected violation pursuant to their company’s internal compliance procedures. The whistleblower also reported the same information to the CFTC, either concurrently or after making the internal report to the company. The company later reported the whistleblower’s information to the CFTC or reported the results of an investigation initiated in response to the whistleblower’s information. 17 C.F.R. § 165.2(i)(3)
  • Claims Review Staff will issue a Preliminary and Final Determination.

    • The CFTC publishes a “Notice of Covered Action” on its website whenever a covered action results in monetary sanctions totaling more than $1 million. A whistleblower has 90 days from the date when the Notice of Covered Action is posted to file a claim for an award. The CFTC will not contact a whistleblower or a whistleblower’s attorney if their submission results in a Notice of Covered Action. A whistleblower’s claim will be barred if they do not file a claim within 90 days of the date when the Notice of Covered Action was posted. 17 C.F.R. § 165.7(a)

    • If the whistleblower submitted original information to the CFTC anonymously and is claiming an award on a disclosed basis, the whistleblower must disclose their identity on Form WB-APP, Application for Award for Original Information. 17 C.F.R. § 165.7(c)(1)

    • If the whistleblower is claiming an award on an anonymous basis, they must be represented by counsel. The whistleblower must provide their attorney with a signed and completed Form WB-APP. The whistleblower’s attorney will in turn submit the form to the CFTC in a manner that does not disclose the whistleblower’s identity. 17 C.F.R. § 165.7(c)(2)

    • CFTC Claims Review Staff will issue a Preliminary Determination to either grant or deny an award. If an award is granted, the Preliminary Determination will include the proposed percentage to be awarded to the whistleblower. A copy of the Preliminary Determination is sent to the whistleblower regardless of whether an award is granted. 17 C.F.R. § 165.7(g)(1)

      • If the whistleblower disagrees with the denial of an award or if an award is granted, the proposed percentage, they can submit a written response explaining the basis for their objection to the denial or the proposed percentage to be awarded. 17 C.F.R. § 165.7(g)(2)

        • If the whistleblower doesn’t file an objection within 30 days, the Preliminary Determination becomes a Final Order of the Commission. Failure to timely object to a Preliminary Determination is deemed a waiver of the right to appeal the Preliminary Determination. 17 C.F.R. § 165.7(h)

      • After considering the whistleblower’s objections, Claims Review Staff will issue a Proposed Final Determination. 17 C.F.R. § 165.7(i)

      • A Commissioner can request that a Proposed Final Determination be reviewed by the Commission. If such a request is made, the Commission will review the record and issue a Final Order. If no such request is made within 30 days, the Proposed Final Determination becomes a Final Order of the Commission. 17 C.F.R. § 165.7(j)

  • The CFTC Whistleblower Office determines the amount of an award.

    • If a whistleblower meets all of the applicable conditions and requirements, the CFTC will determine the amount of the award as set forth in 17 C.F.R. § 165.7.

    • A whistleblower award will be at least 10%, but not more than 30%, of the monetary sanctions collected in an action or related action. 17 C.F.R. § 165.8(a)(1)-(2)

      • If more than one whistleblower is eligible for an award in the same action or related action, the CFTC will determine the percentage awarded to each whistleblower.  The total amount awarded to all whistleblowers in the aggregate will not be less than 10%. nor more than 30%. of the amount collected by the CFTC or other authorities. 17 C.F.R. § 165.8(b)
    • The CFTC must consider the following factors when determining the amount of an award:

      • The significance of the whistleblower’s information to the success of the action. 17 C.F.R. § 165.9(a)(1)

      • The assistance provided by the whistleblower and whistleblower’s attorney. 17 C.F.R. § 165.9(a)(2)

      • The CFTC’s interest in deterring the type of misconduct that resulted in the violations at issue. 17 C.F.R. § 165.9(a)(3)

      • The extent to which the award improves the CFTC’s ability to enforce the Commodity Exchange Act, protect customers, and encourage future whistleblowers to provide information. 17 C.F.R. § 165.9(a)(4)

      • Potential adverse incentives from oversize awards. 17 C.F.R. § 165.9(a)(5)

    • Factors that the Commission can consider to increase the percentage awarded to a whistleblower:

      •  Significance of the information provided by the whistleblower.

        • The nature, reliability and completeness of the information provided and how it related to the successful enforcement action. 17 C.F.R. § 165.9(b)(1)(i)

        • The degree to which the information supported one or more successful claims brought in the Commission’s action or related action. 17 C.F.R. § 165.9(b)(1)(ii)

      • Assistance provided by the whistleblower:

        • The extent to which the whistleblower provided ongoing, extensive, and timely cooperation and assistance. 17 C.F.R. § 165.9(b)(2)(i)

        • The timeliness of the whistleblower’s initial report to the CFTC or to their company’s internal compliance or reporting system. 17 C.F.R. § 165.9(b)(2)(ii)

        • The extent to which the whistleblower’s assistance conserved the resources of the CFTC. 17 C.F.R. § 165.9(b)(2)(iii)

        • The extent to which the whistleblower encouraged or authorized others to assist the CFTC when they might not have otherwise participated in the investigation. 17 C.F.R. § 165.9(b)(2)(iv)

        • The whistleblower’s efforts to remediate the harm caused by the violations, including assistance in recovering funds and providing evidence of the misconduct. 17 C.F.R. § 165.9(b)(2)(v)

        • Specific difficulties or hardships encountered by the whistleblower as a result of reporting to the CFTC and assisting in the enforcement action. 17 C.F.R. § 165.9(b)(2)(vi)

      • Law enforcement interests:

        • The extent to which an award improves the Commission’s  ability to enforce commodities laws. 17 C.F.R. § 165.9(b)(3)(i)

        • The degree to which an award incentivizes future whistleblowers to provide information and assistance, even when monetary sanctions are limited. 17 C.F.R. § 165.9(b)(3)(ii)

        • The extent to which the subject matter is a CFTC priority; the scope, duration and pervasiveness of the misconduct exposed; the type and severity of the violations; and the number of violations.  17 C.F.R. § 165.9(b)(3)(iii)

        • The dangers to market participants, including the harm caused by, and resulting from, the underlying violations, and the number of individuals or entities harmed. 17 C.F.R. § 165.9(b)(3)(iv)

        • The quality and degree of the whistleblower’s assistance, including the timeliness and truthfulness of that assistance to the CFTC and criminal authorities. 17 C.F.R. § 165.9(b)(3)(v)

      • The whistleblower’s participation in their company’s internal compliance systems.

        • The extent to which the whistleblower reported suspected commodities violations through internal compliance procedures either before or concurrently reporting to the CFTC. 17 C.F.R. § 165.9(b)(4)(i)

        • The extent to which the whistleblower assisted their company’s internal investigation of the reported commodities violations. 17 C.F.R. § 165.9(b)(4)(ii)

    • Factors that the Commission can consider to decrease the percentage awarded to a whistleblower:

      • The whistleblower’s culpability or level of involvement in the misconduct, including:

        • The whistleblower’s role in the commodities violations. 17 C.F.R. § 165.9(c)(1)(i)

        • The whistleblower’s education, training, experience, and position of responsibility at the time of the violations. 17 C.F.R. § 165.9(c)(1)(ii)

        • The degree to which the whistleblower acted with intent and knowledge of wrongdoing, separately and relative to others involved. 17 C.F.R. § 165.9(c)(1)(iii)

        • The extent to which the whistleblower benefitted financially from the violations. 17 C.F.R. § 165. (c)(1)(iv)

        • Whether the whistleblower is a recidivist. 17 C.F.R. § 165.9(c)(1)(v)

        • The severity of the underlying fraud committed by the whistleblower. 17 C.F.R. § 165.9(c)(1)(vi)

        • Whether the whistleblower knowingly interfered with the CFTC’s investigation. 17 C.F.R. § 165.9(c)(1)(vii)

      • Unreasonable delays in reporting the violations:

        • The extent to which the whistleblower was aware of the relevant facts and failed to report the violations or take steps to prevent them from occurring or continuing. 17 C.F.R. § 165.9(c)(2)(i)

        • The extent to which the whistleblower was aware of the relevant facts but only reported them after learning about an investigation or enforcement action. 17 C.F.R. § 165.9(c)(2)(ii)

        • Any legitimate justifications for the whistleblower’s delay in reporting the violations. 17 C.F.R. § 165.9(c)(2)(iii)

      • The whistleblower’s interference with internal compliance and reporting systems, including:

        • Interfering with the company’s established compliance procedures to prevent or delay detection of the violations. 17 C.F.R. § 165.9(c)(3)(i)

        • Making false statements that impeded the company’s efforts to detect, investigate, or rectify the reported violations. 17 C.F.R. § 165.9(c)(3)(ii)

        • Providing a false document knowing it contained information that impeded the company’s efforts to detect, investigate, or rectify the reported violations. 17 C.F.R. § 165.9(c)(3)(iii)

    • When determining the amount of an award, the CFTC cannot consider the balance of the its Customer Protection Fund. 17 C.F.R. § 165.9(d)

  • Awards based on Related Actions.

    • If a whistleblower complies with all of the applicable requirements of  the CFTC Whistleblower Program, they are eligible to receive an award from the monetary sanctions collected in a “Related Action.” 17 C.F.R. § 165.11(a)

    • A related action is one that is based on original information voluntarily submitted by a whistleblower that led to the successful resolution of the CFTC action. 17 C.F.R. § 165.2(m)

    • It includes a judicial or administrative action brought by any of the following:

      • The Department of Justice.
      • A department or agency of the federal government.
      • A registered entity, registered futures association, or self-regulatory organization.
      • A state criminal or appropriate civil agency.
      • A foreign futures authority.

  • Ineligibility for an award.

    • Subject to an applicable exemption, a whistleblower is ineligible for an award in any of the following circumstances:

      • The whistleblower is, or at the time of acquiring the original information submitted to the CFTC, was employed by the CFTC, the SEC, the Department of Justice, a law enforcement organization, or any other enumerated governmental agency or private entity. 17 C.F.R. § 165.6(a)(1)

      • The whistleblower is convicted of a criminal violation related to the action at issue. 17 C.F.R. § 165.6(a)(2)

      • The whistleblower submits information that is based on facts underlying a covered action that was submitted previously by another whistleblower. 17 C.F.R. § 165.6(a)(3)

      • The whistleblower submits information that was acquired by an individuals described in 17 C.F.R. § 165.6(a)(1), (2), (3) or (6).

      • The whistleblower knowingly and willfully makes a false statement or uses a fraudulent document, or omits any material fact, in any dealings with the CFTC. 17 C.F.R. § 165.6(a)(5).

      • The whistleblower acquired original information submitted to the CFTC through, or as a result of, their role as a member, officer or employee of either a foreign regulatory authority or law enforcement organization. 17 C.F.R. § 165.6(a)(6)

      • The whistleblower is, or at the time of acquiring original information submitted to the CFTC, was a member, officer, or employee of a foreign regulatory authority or law enforcement organization. 17 C.F.R. § 165.6(a)(7)

      • The whistleblower acquired original information submitted to the CFTC from another person for the purpose of evading the rules governing ineligibility. 17 C.F.R. § 165.6(a)(8)

The Auto Whistleblower Program

NHTSA offers monetary awards to whistleblowers who provide original information involving safety related vehicle defects, as well as failure to comply with mandatory notice requirements. If the information leads to an enforcement action resulting in monetary sanctions exceeding $1 million, an eligible whistleblower can receive between 10% and 30% of the sanctions collected

  • A submission must be based on original information. Information is considered original if it meets all of the following conditions:
    • It is derived from the independent knowledge or analysis of an individual. 49 U.S. C. § 30172 (a)(3)(A) 
    • It is not known to NHTSA or the Department of Transportation from any other source (unless the whistleblower is the original source of the information). 49 U.S. C. § 30172 (a)(3)(B)
    • It isn’t derived exclusively from an allegation made in a judicial or administrative proceeding, a governmental report or  investigation, or from the news media (unless the whistleblower is a source of the information). 49 U.S. C. § 30172 (a)(3)(C)
  • Original information must lead to a successful enforcement of a covered action.
    • A covered action is any administrative or judicial action, or related action, brought by NHTSA, the Department of Transportation, or the Department of Justice that in results in monetary sanctions exceeding $1million. 49 U.S. C. § 30172(a)(1)
    • Successful resolution means any settlement or adjudication of a covered action. 49 U.S. C. § 30172(a)(5)
  • NHTSA has discretion to grant or deny an award.
    • Subject to limited statutory constraints, NHTSA has discretion to grant or deny an award; determine the amount of the award; and decide who receives an award. 49 U.S. C. § 30172(c)(1)(A)
  • NHTSA determines the amount of an award.
    • NHTSA must apply all of the following criteria when making an award determination:
      • Whether the whistleblower reported or attempted to report the information internally. 49 U.S. C. § 30172(c)(1)(B)(i)
      • The significance of the whistleblower’s information to the success of the covered action. 49 U.S. C. § 30172(c)(1)(B)(ii)
      • The level of assistance provided by the whistleblower and the whistleblower’s attorney in the action. 49 U.S. C. § 30172(c)(1)(B)(iii)
      • Any other factors that NHTSA deems relevant. 49 U.S. C. § 30172(c)(1)(B)(iv)
    • If the whistleblower’s information leads to the successful resolution of a covered action, NHTSA may pay an award of not less than 10% nor more than 30% of the monetary sanctions collected. 49 U.S. C. § 30172(b)(1)(A)-(B)
  • Ineligibility for an award.
    • Subject to an applicable exemption, a whistleblower is ineligible for an  award in any of the following circumstances:
      • The whistleblower is convicted of a criminal violation related to the subject matter of the covered action. 49 U.S. C. § 30172(c)(2)(A)
      • The whistleblower deliberately causes or substantially contributes to the alleged violation without being directed to do so by a manufacturer, part supplier or dealership. 49 U.S. C. § 30172(c)(2)(B)
      • The whistleblower submits information that is based on facts underlying the covered action that was previously submitted by another whistleblower. 49 U.S. C. § 30172(c)(2)(C)
      • The whistleblower fails to provide information in a form that may be required by regulation. 49 U.S. C. § 30172(c)(2)(D)
      • The whistleblower failed to report or attempt to report the information internally, provided that the entity had an internal reporting mechanism and subject to any of the following exceptions. 49 U.S.C. § 30172(c)(2)(E)
        • The whistleblower reasonably believed that an internal report would have resulted in retaliation. 49 U.S.C. § 30172(c)(2)(E)(i)
        • The whistleblower reasonably believed that the information was:
          • Already internally reported. 49 U.S.C. § 30172(c)(2)(E)(ii)(I)
          • Already subject to or part of an internal inquiry or investigation. 49 U.S.C. § 30172(c)(2)(E)(ii)(II)
          • Otherwise already known to the manufacturer, part supplier, or dealership.  49 U.S.C. § 30172(c)(2)(E)(ii)(III)
        • NHTSA has good cause to waive the requirement.  49 U.S.C. § 30172(c)(2)(E)(iii)
Whistleblower Resources
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