On October 21, 2021, the Commodity Futures Trading Commission (“CFTC” or “Commission”) announced that it had awarded a single, unnamed whistleblower nearly $200 million for information that led to a successful enforcement action relating to interest rate manipulation at a large financial firm.
The decision came after the Claims Review Staff initially recommended that the CFTC deny the claimant’s whistleblower award application. This Preliminary Determination was followed by a request for reconsideration in which the claimant offered additional information concerning how their insight assisted in the government’s investigation. Analyzing this additional information, the Commission reevaluated the application and decided that the claimant’s information was “specific, credible, and timely” and “significantly contributed” to the successful enforcement of the Covered Action as well as two Related Actions. Specifically, the whistleblower’s information aided the Commission in understanding the company’s trading position.
Because the CFTC had already opened an investigation into potential benchmark manipulation, the claimant could achieve an award only by establishing that they “significantly contributed” to the success of the ongoing action. In this case, one of the questions before the Commission was whether a whistleblower could, without providing direct evidence, significantly contribute to an investigation by providing information leading to evidence of wrongdoing. Ultimately, the Commission deemed that, though the claimant did not provide direct evidence of violations, information leading to such evidence was sufficient to constitute a significant contribution. Specifically, the CFTC found a “meaningful nexus” between the whistleblower’s information and the Commission’s ability to successfully complete its investigation and reach settlement.
The information provided by the whistleblower helped to justify sanctions by not only the CFTC, but another federal regulator, a foreign regulator, and certain state regulators. While the claimant applied for whistleblower awards for related actions brought by each regulatory body, the CFTC found that the whistleblower qualified for awards only related to the recoveries made by the federal and foreign regulators, as the information proffered by the whistleblower was never shared with the state regulators. Nonetheless, the record bounty serves as an important reminder of employees’ and other whistleblowers’ crucial role in holding corporations accountable and as a deterrent for similarly situated companies.
Under the CFTC’s whistleblower program, individuals are eligible to receive between 10 and 30 percent of the recouped money. To revitalize the program, U.S. lawmakers also recently passed legislation to maintain the CFTC whistleblower program. Federal whistleblower programs, such as the CFTC program, have recovered billions in taxpayer dollars and are an important tool in the government’s enforcement toolkit. Likewise, the underlying enforcement action here represents an important step in the Commission’s ongoing effort to ensure the integrity of global financial markets.
The legal team at Miller Shah LLP has significant experience representing whistleblower matters. If you have any questions regarding this subject or this posting, please contact John Roberts (jcroberts@millershah.com) or Alec Berin (ajberin@millershah.com). We can also be reached toll-free at (866) 540-5505.
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Sources:
“Release Number 8453-21.” CFTC, https://www.cftc.gov/PressRoom/PressReleases/8453-21.
“U.S. Regulator Awards Whistleblower $200 Million Record Payout over Benchmark Rigging Case.” CNBC, CNBC, 22 Oct. 2021, https://www.cnbc.com/2021/10/21/us-regulator-awards-whistleblower-200m-record-payout-over-benchmark-rigging-case.html.
