The Commodity Futures Trading Commission awarded approximately $200 million to a single whistleblower earlier this month based on the individual’s “significant contribution” to the success of a CFTC action and two Related Actions by other enforcement agencies. This is not just the largest award of the CFTC to date under its Dodd-Frank whistleblower program, but larger than any award ever made to a single whistleblower by the SEC under Dodd-Frank. Although the Commission maintains whistleblower confidentiality and its award decision is heavily redacted, the Wall Street Journal reports that the whistleblower tip involved alleged LIBOR manipulation at Deutsche Bank.
Several key points about this award decision:
- The whistleblower’s request for an award was initially denied. The whistleblower’s counsel then submitted a request for reconsideration, which included an affidavit from a federal official (likely from the Department of Justice, based on the WSJ coverage), explaining how the whistleblower’s information directly contributed to the successful outcome. The CFTC then reconsidered all of the evidence and reversed course, granting the award.
- Federal investigations were already underway when the whistleblower came forward. In addition, the individual did not provide “direct evidence” of the violations themselves. Nevertheless, according to the CFTC, the whistleblower’s information “led directly to evidence” by increasing regulators’ understanding of a key issue, which in turn helped the government obtain important witness admissions.
- The award notes that the “Federal Regulator” (again, likely the DOJ) relied in part on information that the whistleblower provided to the press, before providing that information to the Federal Regulator. The CFTC deemed this to be “original information” “voluntarily provided” to the Federal Regulator because the whistleblower had provided the information to other government agencies before the article went to print. The CFTC decision explained that the news article “caused the Federal Regulator to focus its attention” on the information the whistleblower provided.
- The $200 million whistleblower award is comprised not only of a percentage of the CFTC’s own monetary recovery and that of another US Federal Regulator, but also the recovery of a Foreign Regulator (apparently the UK Financial Conduct Authority, per the WSJ article). Although uncommon, this is consistent with Dodd-Frank’s statutory definition of “Related Action.”
To date, whistleblower tips to the CFTC have contributed to enforcement actions resulting in more than $3 billion in monetary sanctions. While the SEC’s whistleblower bounty program has received more publicity, this record-breaking award serves as a reminder to all companies that may come under the jurisdiction of the CFTC that the CFTC also has a robust whistleblower bounty program under Dodd-Frank and the magnitude of this award will no doubt spur a new wave of tips filed with both regulators.
For more information about the whistleblower award provisions of Dodd-Frank, see Orrick’s treatise “Corporate Whistleblowing in the Sarbanes-Oxley/Dodd-Frank Era” published by PLI.