October 26, 2021. The Commodity Futures Trading Commission (CFTC) granted its largest-ever award to a single whistleblower earlier this month in connection with successful enforcement actions by both a U.S. federal regulator and a foreign regulator. Because the CFTC found the whistleblower’s information met its standards for helping the Commission successfully complete an investigation, the whistleblower was awarded $200 million. The monetary sanctions enforced upon the bank (unnamed in the CFTC’s release) totaled more than $3 billion. The Wall Street Journal and other news outlets identified the bank as Deutsche Bank AG. According to the allegations, the bank manipulated Libor, the London interbank offered rate, which is a “benchmark interest rate used to set short-term loans for global banks.” Manipulating this benchmark caused a cascade effect for all transactions based upon Libor.
The whistleblower was a former Deutsche Bank executive. The CFTC initially denied the whistleblower’s application for an award but reversed that decision upon the whistleblower requesting reconsideration. Under the CFTC’s Whistleblower Program, whistleblowers “are eligible to receive between 10-30% of the monetary sanctions collected.” The Whistleblower Program was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and since its first award in 2014, this $200 million award is the largest yet. The program has distributed more than $300 million to whistleblowers over 7 years.
Prior to the July 2021 passage of the CFTC Fund Management Act, a whistleblower reward of this magnitude would have depleted the Consumer Protection Fund and threatened the operational funds for the Whistleblower Office and the Office of Customer Education and Outreach. The CFTC Fund Management Act provided for the creation of a separate fund to maintain the Whistleblower Office’s operations. The whistleblower will be paid from a percentage of sanctions, but the Commission is only allowed to reserve $100 million for the Customer Protection Fund.
Commissioner Dawn D. Stump released a dissent regarding this recent whistleblower award, noting, “I believe we must undertake close scrutiny to assure ourselves that, in a given case, it is appropriate to take money from the Customer Protection Fund for an award to a whistleblower who provided information to a foreign futures authority about a violation of foreign laws.” Commissioner Stump’s dissent largely argued that awarding reports of foreign violations takes away from the focus of the Fund, which is to award reports of domestic financial violations.
In today’s global economy, the CFTC needs whistleblowers to report financial wrongdoing in order to protect consumers. The Commodity Exchange Act includes anonymity and confidentiality protections for whistleblowers to encourage sharing knowledge of misconduct.
If you would like to report securities, commodities, and banking fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Renée was the architect of the Big Lender Initiative at DOJ, which recovered billions of dollars and required banks and mortgage companies to admit wrongdoing. Eva was the Senior Counsel for Health Care Fraud. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Renée at [email protected] (tel.: 202-417-3664) or contact Eva Gunasekera at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at https://www.fraudfighters.net/.