The Commodity Futures Trading Commission (CFTC) whistleblower program provides monetary incentives to individuals who have knowledge of possible violations of the Commodity Exchange Act that lead to successful enforcement action.
While there is a great deal of discretion, it is fundamentally up to the United States Federal Trade Commission whether to give an award and how much within certain parameters. When there is a covert action of $1,000,000 or more and the whistleblower otherwise qualifies, the award is supposed to be between ten and 30 percent of the proceeds. There is a great deal of discretion within the range.
For more information about the CFTC whistleblower program and how an attorney could help, call today. A seasoned whistleblower lawyer could help you recover the award you deserve.
Common Businesses Regulated by the CFTC
The CFTC mostly will regulate trades in futures or commodities; metal, oil, heating oil, and gasoline. They are also supposed to regulate swaps in both kinds of bundled securities, but traditionally they more readily handle commodities that are traded on a regular basis as well.
Factors that Can Increase the Likelihood of an Award
The CFTC whistleblower program is supposed to consider various factors that affect the amount of the award such as:
- The significance of the information provided by the whistleblower
- The degree to which the information supports the claims
- How the claim relates to the successful enforcement
- Additional assistance the whistleblower may provide
- The individual worked with the government continues to help provide evidence
- The timeliness of their report to the Commission
Other factors are whether there is additional law enforcement interest (i.e. criminal activity), the degree to which an award enhances the Commission’s ability to enforce commodities, the dangers to market participants that may have been avoided or prevented, the reliability and effectiveness of the whistleblower and their information, and their participation in internal compliance systems. If they did anything to thwart that, there could be an issue.
The Commission must consider these factors and they make them part of their rules. The Commission can apply its reasoning based on these factors, and there is a lot of discretion to make an award.
The Commission limits its award to the covert action regardless of the number of whistleblowers who may receive an award. One would presume that if there is more than one whistleblower, they might increase the award within the scope of ten and 30 percent, but that is not necessarily the case.
Factors That Could Decrease an Award
The first factor that might decrease a whistleblower’s award is the culpability of the whistleblower. If the whistleblower is convicted of a crime related to the activity they are reporting, they can be disqualified from obtaining an award. This is different from having a role in the activity, being involved in it, or benefiting from the violations, whether the whistleblower is a recidivist.
If they are egregiously involved in wrongdoing, there is a reduction of the award amount as opposed to a disqualification. A criminal conviction could lead to a disqualification. The Commission also considers reducing an award through an unreasonable reporting delay.
The requirement of the law is that an “unreasonable reporting delay” is part of it. When a whistleblower sits on information for years, that might be a problem. The Commission considers whether or not the whistleblower was aware of relative facts and only reported them after warning about a related inquiry, investigation, or enforcement.
When the whistleblower interferes with internal compliance and reporting systems, that is a reason for the Commission to lower the award. If the whistleblower provided false writing or documents, that could lower an award, and if they outright lie to the Commission, that could be a disqualifying factor for an award.
How a CTFC Whistleblower Program Attorney Could Help
When trying to obtain an award, there is much to understand and provide to the Commission. First, the person must file the TCR complaint form. The Commission must take a related action to obtain monetary sanctions and the whistleblower must apply for the award once there is covert action.
There are many reasons why a whistleblower might contact counsel when going through the process in addition to the fact that making an application for an award on an anonymous basis requires counsel per CFTC regulations. Call today to learn more about the CFTC whistleblower program and how an attorney could help.