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A Guide for CFTC Whistleblowers
Thursday, March 28, 2024

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Act included provisions that directed the Commodity Futures Trading Commission (CFTC) to establish a whistleblower program to allow whistleblowers to recover a financial award for bringing forward evidence of misconduct or violations of the Commodities Exchange Act (CEA). The Dodd-Frank Act also established important workplace protections for whistleblowers, prohibiting their employers from retaliating against them for blowing the whistle.

If you have uncovered evidence of misconduct and want to bring it to the CFTC for enforcement actions, here is what you need to know.

What Types of Commodity Exchange Act Misconduct Can Support a Whistleblower Claim?

The CFTC is in charge of enforcing the CEA and its attendant regulations. These govern the U.S. derivatives markets, including those for:

  • Options
  • Futures
  • Swaps

These are incredibly complex markets where sophisticated and complicated transactions occur every day. Opportunities for fraud and other deceitful conduct abound. These opportunities can take the form of: 

  • Securities fraud
  • Ponzi schemes
  • Misappropriating or mishandling customer funds
  • Fraudulent solicitation
  • Market manipulation or attempted market manipulation
  • Manipulating benchmark rates, like LIBOR
  • Spoof orders made with the intention of canceling them before they are completed
  • Wash sales
  • Non-competitive transactions or self-dealing
  • Undercapitalization of corporate entities
  • Failure to segregate customer funds
  • Interfering with an audit
  • Failing to comply with recordkeeping regulations
  • Making false statements to the CFTC
  • Violations of CFTC orders

To blow the whistle on these sorts of misconduct and be eligible for CFTC whistleblower awards, the information you need to have uncovered must be original. Under the CEA (7 U.S.C. § 26(a)(4)) to be original, the information must be:

  1. Derived from your independent knowledge or analysis,
  2. Not already known to the CFTC through another source, and
  3. Not solely derived from public information, unless you were the source of that public information.

Information is “derived from your independent knowledge or analysis” if it is either nonpublic factual information in your possession or the result of your assessment of publicly available information (17 C.F.R. § 165.2). Note that this does not require that the information be first-hand knowledge.

How to File a CFTC Whistleblower Claim

The process for filing a CFTC whistleblower claim is remarkably easy: The CFTC has an online Tip, Complaint, or Referral Form (TCR Form) where you enter all your information and the details you want to disclose to the agency. Even better, the filing has confidentiality protections and can be done anonymously if you are concerned about workplace reprisals. If you are especially concerned about retaliation, you can file the TCR anonymously and mention which documents in your disclosure could conceivably be used to determine your identity.

However, filling out this form should not be your first step in whistleblowing. It should be one of your last ones.

Unlike under some other federal whistleblower statutes, when you blow the whistle under the CFTC you are completely reliant on the government’s prosecution of your case. While other whistleblowers can elect to prosecute their claim as a qui tam action on behalf of the government if the law enforcement agency declines to intervene, that is not an option for CFTC whistleblowers. If the CFTC does not think your TCR is worthy of investigation, that is the end.

For this reason, your TCR must be well-supported and have to present a strong case that misconduct has occurred. It should only be filed after you have conducted a thorough preliminary investigation of your own and turned over every stone you can access in your search for incriminating evidence.

CFTC Whistleblowers are Protected from Retaliation

One of whistleblowers' biggest concerns is whether reporting evidence of misconduct to the CFTC would imperil their job. This is for good reason, as most whistleblowers only have access to the incriminating evidence because of their job. Furthermore, when the misconduct gets reported, it will often make their employer look bad and may even deprive the company of a lucrative, though illegal, business strategy.

CFTC whistleblowers, however, are protected from retaliation by the terms of the CEA once they file their TCR. The CEA forbids workplace discrimination against whistleblowers, whether directly or indirectly caused by the employer. This includes:

  • Discharge
  • Demotion
  • Suspension
  • Harassment
  • Threatening to do any of the above

If you can show that any of these adverse employment actions are connected to you providing information to the CFTC or assisting in a CFTC investigation, then it is unlawful whistleblower retaliation and the CEA gives you the right to file a lawsuit in federal court. These lawsuits can recover your back pay, with interest, reinstatement or front pay, special damages like compensation for your emotional distress, as well as court costs and attorneys’ fees (7 U.S.C. § 26(h)(1)(C)).

Importantly, all whistleblowers benefit from the CEA’s anti-retaliation provision, even those who would not be eligible for a whistleblower award.

The CFTC Whistleblower Program

Any whistleblower who voluntarily provides original information that leads to a successful enforcement action that recovers at least a million dollars is eligible for whistleblower awards. That award is between 10 and 30 percent of what the CFTC recovered from the monetary sanctions collected. The CFTC has discretion in what percentage to offer, but 7 U.S.C. § 26(c)(1)(B) requires the Commission to consider:

  • How important the whistleblower’s information was in securing a favorable outcome
  • How helpful the whistleblower was during the case
  • The Commission’s interest in deterring misconduct and incentivizing whistleblowers to come forward 

Additionally, if the information leads to a related action, then the whistleblower is entitled to a percentage of the recovery in that case. This can happen if the CFTC refers the case to another state or federal law enforcement agency, such as the U.S. Department of Justice (DOJ), and they conduct their investigation and prosecution. If that case reaches a financial settlement, the whistleblower would also be entitled to a share of the monetary sanctions paid. 

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