Commodity Futures, Options, and Derivatives Whistleblower

Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Commodity Futures Trading Commission (CFTC) to pay a reward to a whistleblower who voluntarily discloses original information covering fraud or unlawful activity, leading to a sanction exceeding $1 million. Penalties, disgorgement, and interest paid count towards the $1 million threshold. Nearly any unlawful manipulation of commodity futures or derivatives is covered under Section 748. The CFTC recently adopted rules implementing the Dodd-Frank Act.

How much is the CFTC whistleblower reward?

What kinds of disclosures are eligible for an award?

What is "original information?"

Are there restrictions on who can receive a CFTC whistleblower reward?

To be eligible to receive a reward, does a whistleblower have to be employed by the company committing the CFTC violation?

Are employees who blow the whistle to the CFTC protected from retaliation by their employer?

What forms of retaliation are prohibited?

What compensation can a prevailing employee recover?

What should I do if I've uncovered a CFTC violation?

How much is the CFTC whistleblower reward? Back to top

The amount of the reward ranges from 10 to 30 percent of the amount recovered by the CFTC as a result of the information the whistleblower provides. The CFTC will consider the following factors to determine the amount of the reward:

• the significance of the information provided by the whistleblower;
• the degree of assistance provided by the whistleblower;
• the interest of the CFTC in deterring violations of securities laws; and
• other factors that the CFTC may establish by rule or regulation.

What kinds of disclosures are eligible for an award?   Back to top

Disclosures regarding illegal manipulation of commodities and futures markets exceeding $1,000,000 are eligible for an award.  The whistleblower must disclose the violation to the CFTC before a government authority requests the information from the whistleblower.  A whistleblower who first discloses the violation internally to his or her employer will still be eligible for a reward if the whistleblower also discloses the violation to the CFTC within 120 days.

What is “original information?” Back to top

Original information means information that is

1. derived from the independent knowledge of the whistleblower;
2. not known to the CFTC from any other source, unless the whistleblower is the original source of the information; and
3. not exclusively derived from an allegation made in a judicial or administrative hearing, a government report, audit, or investigation, or the news media, unless the whistleblower is a source of the information.
   

Are there restrictions on who can receive a CFTC whistleblower reward? Back to top

The CFTC is prohibited from granting a reward to a whistleblower who

• is convicted of a crime related to the judicial or administrative action for which the whistleblower provided information;
• gains the information by auditing financial statements as required by law;
  
• fails to submit information to the CFTC as required by a CFTC rule; OR
  
• is an employee of the Department of Justice or an appropriate regulatory agency, a self-regulatory organization, the Public Company Accounting Oversight Board, or a law enforcement organization.

To be eligible to receive a reward, does a whistleblower have to be employed by the company committing the CFTC violation? Back to top

No. Whistleblowers are not required to have worked at the company that committed the CFTC violation.

Are employees who blow the whistle to the CFTC protected from retaliation by their employer? Back to top

Yes. Employers are prohibited from terminating or discriminating against an employee who discloses information about fraudulent or unlawful conduct to the CFTC. Employers are also prohibited from retaliating against employees who participate in a CFTC investigation or any judicial or administrative proceeding that is related to a whistleblower's disclosure.

What forms of retaliation are prohibited? Back to top

The Dodd-Frank Act prohibits a broad range of adverse employment actions, including firing, demotion, suspension, threatened adverse employment actions, harassment, or any conduct that would dissuade an employee from reporting CFTC violations.

What compensation can a prevailing employee recover? Back to top

A prevailing employee can:

1. be reinstated to their former position;
2. recover the wages owed to the employee in the form of back pay with interest;
3. recover compensatory damages; and
4. recover attorney fees and litigation costs, including expert witness fees.

Are CFTC whistleblower retaliation claims subject to mandatory arbitration? Back to top

No. The employee's right to file a whistleblower retaliation claim under Section 748 cannot be waived as a condition of employment or by a mandatory arbitration agreement.

What should I do if I’ve uncovered a CFTC violation? Back to top

If you have uncovered a violation of CFTC regulations or feel that you have been the subject of retaliation because of your disclosure regarding violations of CFTC regulations, contact The Employment Law Group® law firm at 1-888-603-0983 or inquiry@employmentlawgroup.com.

The Employment Law Group® law firm recently published an article on the whistleblower provisions of the Dodd-Frank Act.

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