The Commodity Futures Trading Commission ("CFTC") yesterday announced by far its largest whistleblower award to date, agreeing to pay "more than $10 million" to a whistleblower who provided key information leading to a successful enforcement action.
In accordance with Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank"), which established the CFTC's whistleblower program, the CFTC has not publicly disclosed information that could reasonably be expected to reveal the whistleblower's identity. In addition to not identifying the whistleblower, the CFTC has specified neither the exact amount of the award nor the successful enforcement action for which the whistleblower provided information.
Yesterday's award dwarfs the two previous awards under the CFTC's whistleblower program, which were in the amounts of approximately $290,000 and $240,000. Under Dodd-Frank Section 748, the CFTC may determine to pay between 10 percent and 30 percent of the amount of the monetary sanctions that it has collected in connection with the enforcement action for which an eligible whistleblower has provided original information. By comparison, the largest whistleblower award that the SEC has paid to date was more than $30 million.
Our Take
The whistleblower award announced yesterday represents another milestone in the CFTC's empowerment under Dodd-Frank. Because it signals the CFTC's willingness to give a whistleblower a potentially outsized award for reporting a failure to comply with the CFTC's regulations, it gives financial institutions and other entities subject to the CFTC's regulation an even greater incentive to comply with those regulations.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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