CFTC Whistleblower Award (January Update)

The U.S. Commodity Futures Trading Commission (CFTC) Rewards Eligible Individuals Who Disclose Violations of the Commodity Exchange Act (CEA)

The U.S. Commodity Futures Trading Commission (CFTC) is responsible for ensuring compliance and transparency within the domestic commodity futures and options markets. Its primary source of enforcement authority is the Commodity Exchange Act (CEA), which regulates all relevant trading activities and requires that all futures and options trade on organized exchanges.

To enforce the CEA, the CFTC relies heavily on whistleblowers to come forward with information that the Commission would otherwise be unable to obtain on its own. To incentivize whistleblowing, the CFTC protects whistleblowers’ identities and prohibits whistleblower retaliation—and it also compensates whistleblowers who assist with the pursuit of successful enforcement actions. If you have information that you believe may be useful to the CFTC and are interested in seeking a CFTC whistleblower award, we encourage you to speak with a whistleblower lawyer at Oberheiden P.C. promptly.

Reporting Corporate Misconduct and Seeking a CFTC Whistleblower Award

The CFTC accepts whistleblower complaints involving all forms of corporate fraud and misconduct related to the offer and sale of commodity futures and options. The CEA is extremely broad, and the breadth of its language allows the CFTC to pursue enforcement actions in a wide range of scenarios. In recent years, the CFTC has issued several Whistleblower Alerts highlighting priority enforcement areas. Some examples of areas that are of particular interest to the CFTC include:

• Corrupt practices in the commodities and derivatives markets 
• Romance investment fraud in the commodities and derivatives markets 
• Spoofing in the commodities and derivatives markets 
• Insider trading and improper use of material non-public information (MNPI)
• Anti-money laundering (AML) violations 
• Fraud and manipulation of carbon markets
• Virtual currency fraud 

Whistleblowers who disclose these and other forms of corporate fraud and misconduct to the CFTC can receive awards ranging from 10 to 30 percent of the amount the CFTC recovers in an ensuing law enforcement proceeding, provided that this amount exceeds $1 million of monetary sanctions collected. As a result, CFTC whistleblower’s award can vary greatly. However, these awards tend to be fairly substantial, as the CFTC carefully chooses which cases to pursue based on the severity of the violations involved (among other factors). Some examples of recent CFTC whistleblower’s award include:

• More than $18 million awarded to a CFTC whistleblower event on October 12, 2023
• More than $300,000 awarded to a CFTC whistleblower on September 27, 2023
• More than $15 million awarded to two CFTC whistleblowers on September 19, 2023
• Approximately $625,000 awarded to four CFTC whistleblowers event on March 25, 2022
• Approximately $10 million awarded to a CFTC whistleblower event on March 17, 2022
• Approximately $1 million awarded to two CFTC whistleblowers event on November 22, 2021
• Nearly $200 million awarded to a CFTC whistleblower on October 15, 2021

Again, these are just examples. The CFTC established its Whistleblower’s Program following the enactment of the Dodd-Frank Act in 2010; and, since that time, it has seen a consistent increase in both whistleblower complaints and whistleblower awards.

Under the CFTC’s Whistleblower Program, individuals seeking awards must follow stringent rules to establish their eligibility, and they must be prepared to assist with the CFTC’s investigative and enforcement efforts to maximize the percentage of their CFTC whistleblower awards. At Oberheiden P.C., we represent CFTC whistleblowers throughout the United States and around the world. If you are thinking about submitting a whistleblower complaint, we can explain everything you need to know, assist with preparing your whistleblower complaint, work with the CFTC on your behalf, and assist with collecting your whistleblower award if the CFTC’s enforcement efforts are successful.

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Requirements and Process for Seeking a CFTC Whistleblower Award

Seeking a CFTC whistleblower award starts with properly submitting a complaint under the CFTC’s Whistleblower Program. As the CFTC explains, “[t]o be eligible for a whistleblower award, an individual (or group of individuals) must first submit a Form TCR – Tip, Complaint, or Referral.” As the CFTC goes on to explain, “[t]he Form TCR may be submitted electronically via the website, or by fax or mail.”

The CFTC’s Form TCR requires an extensive amount of information, and prospective whistleblowers must ensure that they complete the form correctly in order to preserve their eligibility for both the protections and compensation afforded to CFTC whistleblowers. For this reason, among others, working with experienced legal counsel is strongly recommended. Prospective whistleblowers must also sign Form TCR under penalty of perjury; and, if a whistleblower may be implicated in the fraud or other wrongdoing that is the subject of their complaint, the whistleblower must be very careful to ensure that submitting their complaint does not result in personal exposure to civil or criminal liability.

Additional requirements for submitting a whistleblower complaint to the CFTC and establishing eligibility for a CFTC whistleblower award include:

1. Providing Information to the CFTC “Voluntarily”

To be eligible for a CFTC whistleblower award, you must provide information to the CFTC voluntarily. This means that you must provide the information, “before the Commission sends you, your lawyer, or your employer a request, inquiry or demand for the information,” and before you receive, “a request, inquiry, or demand from Congress, another regulatory or enforcement agency or a self-regulatory organization.”

2. Submitting “Original Information” to the CFTC

Establishing eligibility for a CFTC whistleblower award also requires the submission of “original information.” As the CFTC explains: “’Original information’ is information not already known to the Commission that is derived from (i) your independent knowledge (information in your possession that is not generally known or available to the public), or (ii) your independent analysis (your examination and evaluation of information that may be publicly available but which reveals information that is not generally known). Also, if the Commission received the same information previously from someone else, your information will not be considered original information unless you can show that you were the ‘original source’ of the information.”

3. Assisting with a Successful CFTC Enforcement Action

Finally, beyond submitting a formal complaint using Form TCR, you must also assist the CFTC staff with pursuing a successful enforcement action. The more assistance you provide, the greater the percentage of the CFTC’s recovery you are likely to receive if the Commission’s enforcement action is successful.

The CFTC’s whistleblower office emphasizes the critical role whistleblowers play in identifying fraud, flagging possible violations, and supplying valuable evidence that supports an ongoing investigation. When individuals come forward to the CFTC Whistleblower Office with information about a potential violation of the CEA or the Consumer Protection Act, they receive strong confidentiality protections and the opportunity to remain anonymous while reporting violations. If their information leads to a successful enforcement action resulting in more than $1 million in monetary sanctions, the whistleblower may be eligible for an award funded through the CFTC’s Customer Protection Fund.

After the CFTC completes an enforcement action, it issues a Notice of Covered Action, allowing whistleblowers to submit an award application that the Commission will review and CFTC interpret under its rules to determine eligibility. Awards are available only when the information provided by the whistleblower significantly contributed to proving violations of the commodities laws, and the agency determines that the tip meaningfully advanced its investigation.

FAQs: Serving as a CFTC Whistleblower