An Introduction to the Commodity Futures Trading Commission’s Whistleblower Program

March 4, 2016

For the time being, it might be helpful to think of the Commodity Future Trading Commission’s whistleblower reward program as the younger sibling of the more well-known SEC Whistleblower Program.  Like the SEC program, the CFTC Whistleblower Program aims at ferreting out abuses and violations regarding the financial system under the authority of the 2010 Dodd-Frank Act, providing individuals who submit tips that lead to over $1 million in sanctions with 10 to 30 percent of the recovered amount. The CFTC program, however, governs violations of the Commodities Exchange Act, working to curb illegality within the futures market—where futures of commodities such as agricultural products, oil and gasoline, and financial instruments are traded. Following the implementation of the Dodd-Frank Act, the CFTC is also responsible for regulating the $400 trillion swaps market, which is approximately 12 timces the size of the market for which the CFTC was previously responsible.

Although the programs were created at the same time, the CFTC program has been slightly slower to lift off, having paid just two awards to whistleblowers since it began accepting tips in September 2012.  In May 2015, however, the Director of the CFTC’s Whistleblower Office, Chris Ehrman, indicated that the program was picking up steam, noting that the number of tips was “getting quite high” and stating that the agency was “hitting a critical point where we’re going to start getting more awards out, and I think they’re going to be bigger.”  While the agency has issued just one award for $290,000 since Mr. Ehrman made that comment, the agency is clearly looking to utilize the $300 million fund it has set aside for whistleblower payments. With substantial funding and robust commitment to the program’s aims, the CFTC Program has ample room to increase the amount and frequency of the awards for quality tips.

Lisa J. Banks, a partner with Katz Banks Kumin, created a detailed CFTC Whistleblower Practice Guide, which was published in February 2016.  This is the first of a series of blog posts distilling some of the key takeaways from Ms. Banks’ Guide.  In future posts, we will continue to provide helpful information regarding this low-profile program that is likely to expand in the coming years.

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