On May 20, 2014, the Commodities Futures Trading Commission (CFTC) announced an award of $240,000 to an anonymous whistleblower who provided "valuable information" concerning unexplained Commodity Exchange Act violations by an unidentified entity or person. The award was the first issued under the CFTC Whistleblower Program created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The CFTC press release claimed that the award illustrates the value of the Whistleblower Program in "protect[ing] market participants and the public through successful enforcement actions." Senior CFTC officials commented that the increasing number of "high quality tips, complaints and referrals" the CFTC receives has led to the Commission bringing important enforcement actions. According to Christopher Ehrman, Director of the CFTC Whistleblower Office, "this award will send the strong message that the CFTC will pay for information that helps us do our jobs."
That CFTC statement, however, is unclear as to its meaning or import for market participants. The CFTC provides no guidance as to: the nature of the violations or the commodity markets involved; the role of the whistleblower in aiding the CFTC's efforts to investigate and bring an enforcement action (whether formal or informal, although presumably settled successfully); whether the whistleblower reported through internal compliance programs before, or concurrent with, his or her report to the CFTC; or even the amount of the sanctions the CFTC collected as a result of the "original information" concerning Commodity Exchange Act violations that the whistleblower voluntarily provided to the CFTC. Instead, the CFTC's statement emphasizes its intent to protect the whistleblower's anonymity, without providing market participants any insight as to the rationale for its award or disclosure regarding the type of behavior that resulted in finding a violation.
This emphasis on whistleblower confidentiality, and the six-figure award, no doubt will spur others to come forward with whistleblower tips for the CFTC. Whether those tips will be the "high-quality" referrals the CFTC seeks remains to be seen. Instead, by sending a signal that the Whistleblower Program may just be like buying a lottery ticket – you can't win if you don't play – the CFTC may find itself inundated with tips. This will be a challenge for an underfunded agency seeking to distinguish valuable original information from simply opportunistic and anonymous tips.
This article is presented for informational purposes only and is not intended to constitute legal advice.
