CFTC Starts Flexing Muscle in New Whistleblower Program


Although it has been nearly four years since the passage of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act, changes to the Act and the myriad of regulations that support it are common. New programs directed under the Act continue to come online. Recently, a new whistleblower program created by the Act under the auspices of the Commodity Futures Trading Commission (CFTC) has begun to make its presence felt by issuing the first monetary awards to whistleblowers whose information leads to significant monetary sanctions.

Whistleblower systems have long existed under Dodd-Frank as well as other acts and are a frequent information-gathering tool of the SEC and other financial sector agencies. However, May 2014 represented the first time such measures have been utilized by the CFTC. This could provide new incentives for high-level employees in the derivative futures and swaps sector to disclose fraud, manipulation, abusive practices and systemic risk.

There are several limitations to the CFTC’s new whistleblower program:

  • CFTC only pays whistleblower awards if the information provided leads to financial sanctions in excess of $1 million.
  • Awards are only payable for information provided on or after July 21, 2010 — the date of passage of the Dodd-Frank Act.
  • Whistleblowers must claim awards by filing required documentation with the CFTC no later than 90 days after the agency takes action against the offending company.
  • Whistleblower awards are typically 10 to 30 percent of the total amount of monetary sanctions ordered.

The Dodd-Frank Act is a complex law that is constantly changing through legislative amendment, regulatory promulgation and judicial interpretation.


Topics:  CFTC, Dodd-Frank, Enforcement Actions, Popular, Whistleblower Protection Policies, Whistleblowers

Published In: Civil Rights Updates, Finance & Banking Updates, Labor & Employment Updates, Securities Updates

DISCLAIMER: 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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