An Unusually Busy Summer for the CFTC Results in Record Whistleblower Awards Totaling over $75 million
This summer the Commodity Futures Trading Commission (CFTC) issued its first award since August 2016. On July 12, 2018, the CFTC announced a $30 million award, which was only the fifth award under the CFTC’s whistleblower program and the largest since the program’s creation in 2011. Just four days later, on July 16, the CFTC announced a sixth award of over $70,000, a comparatively paltry sum, but notable as the first instance of a CFTC award to a foreign whistleblower. Then, on August 2, the CFTC announced a series of awards totaling $45 million. This recent flurry of activity is notable for its marked shift from the CFTC’s formerly seemingly dormant whistleblower program and suggests that additional CFTC awards will be in the offing.
The CFTC’s Whistleblower Program
In 2010, the Dodd-Frank Act expanded the powers of the CFTC, including by empowering the CFTC to create its whistleblower program. Under this program, a whistleblower becomes eligible for an award when the whistleblower’s action leads to a final judgment or settlement of more than $1 million in monetary sanctions. See 7 U.S.C. § 26. Whistleblowers who provide the CFTC information have 90 days after the sanction is made public to apply for an award. See 17 C.F.R. § 165.7. Further, awards are only given to whistleblowers who offer original information voluntarily and provide continual cooperation to the CFTC. See id. § 165.5.
Eligible whistleblowers may receive between 10 to 30 percent of the monetary sanction assessed by the CFTC. See id. § 165.8(a). The CFTC’s first whistleblower award (in an amount of approximately $240,000) was announced on May 20, 2014. Prior to August, the CFTC averaged less than one award per calendar year.
Increased Volume and Size of Awards Coincides with Greater Anti-Retaliation Protections
The recently issued awards unsurprisingly coincide with a record-breaking number of tips received in 2017. In 2016, the CFTC received 273 tips, a slight increase from the previous year. However, in 2017 the CFTC received 465 whistleblower tips and complaints – a 70% increase. See Commodity Futures Trading Commission, Annual Report On The Whistleblower Program And Customer Education Initiatives: 2017 Annual Report (October 2017).
The increase also follows a significant strengthening of the CFTC’s anti-retaliation protections for whistleblowers created in 2017. Under the new rules, the CFTC can take action against an employer that “retaliates against a whistleblower by discharge, demotion, suspension, direct or indirect threats or harassment, or any other manner of discrimination” because the whistleblower provided “information to the Commission after reporting the information through internal whistleblower, legal or compliance procedures.” 17 C.F.R. § 165.20(b). Further, anti-retaliatory protections “apply whether or not the whistleblower satisfies the requirements, procedures, and conditions to qualify for an award.” Id. § 165.20(c). Whether there is a causal relationship between strengthened anti-retaliation protections and the uptick in number and size of awards is unclear. What is clear, however, is that the prediction (or foreshadowing) of Christopher Ehrman, the Director of the CFTC’s Whistleblower Office, has come true. At a conference in November 2017, Ehrman said, “this year for us is going to be huge.” And so it has been already.