The Commodity Futures Trading Commission (“CFTC”) recently announced the first ever award under its Whistleblower Program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The whistleblower is set to receive approximately $240,000 for providing valuable information about violations of the Commodity Exchange Act (“CEA”).
The CFTC has remained tight-lipped about the specifics of the award, and has not disclosed the whistleblower’s identity or the enforcement action with which he or she was involved. The CFTC also has declined to state the percentage of sanctions represented by the award – which, under the Dodd-Frank Act, may range from 10 to 30 percent of the amount recovered by the CFTC. The lack of information surrounding the award makes it difficult to discern what it may mean for companies going forward, but the CFTC’s demonstrated commitment to protecting whistleblower anonymity will likely lend greater confidence to potential whistleblowers who may be considering filing tips.
According to Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, “[t]he CFTC’s Whistleblower Program is attracting high-quality tips and cooperation we might not otherwise receive and is already having an impact on the Commission’s enforcement mission.” The CFTC hopes this award will “send the strong message that the CFTC will pay for information that helps us do our jobs,” according to Christopher Ehrman, Director of the Whistleblower Office.
Given the likelihood of increased whistleblower activity, companies should ensure they have compliance programs in place to prevent and detect potential violations of the CEA, and to mitigate penalties that may result from inadvertent violations. The Dodd-Frank Act prohibits retaliation against employees who provide the CFTC with information about possible violations, meaning companies also should ensure they have appropriate policies prohibiting whistleblower retaliation and providing a complaint procedure for any employee who believes he or she has suffered from retaliation.
While this is the first such award granted by the CFTC, the Dodd-Frank Act also created a similar Whistleblower Program providing monetary incentives for individuals to report violations of the federal securities laws to the Securities and Exchange Commission (“SEC”). Eligible whistleblowers under the SEC Whistleblower Program are subject to the same requirements as those established under the CFTC Whistleblower Program. The SEC’s Whistleblower Program has been more active, to date – receiving 3,238 whistleblower tips in 2013 versus the CFTC’s 138 – and the SEC has publicized whistleblower awards up to and exceeding $14 million. We have previously discussed the SEC’s Whistleblower Program in our alerts, including SEC Touts Monetary Benefits of Whistleblowing.