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CFTC Issues its First Ever Whistleblower Award for Tip on Securities Violation

Date Published
May 23, 2014

The Commodity Futures Trading Commission (CFTC) announced this week that the agency will make its first ever award to a whistleblower for a tip in relation to securities violations. The award was made by the CFTC under its two-year-old Whistleblower Program, which was put in place to encourage whistleblowers to come forward with information about fraud in the commodities and futures markets. This whistleblower will receive approximately $240,000 for the information that he provided.

The CFTC created this incentive program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (or in its shortened form, the Dodd-Frank Act). Under the CFTC’s program, a whistleblower who provides information that leads to an enforcement action resulting in a sanction that is in excess of $1 million, is entitled to receive a monetary reward. Whistleblowers are able to receive between 10% and 30% of the total monetary amount collected.

The Dodd-Frank Act also put in place anti-retaliation rules, intended to protect whistleblowers from being fired, or having other adverse employment actions taken against them in retaliation for providing information to the CFTC, or for assisting the CFTC in an investigation.  No details concerning the name of the whistleblower in this case or the action taken as a result of the given information have been provided at this time, as part of an effort by the CFTC to protect the whistleblower from retaliation.

The U.S. Securities and Exchange Commission (the SEC) has a very similar whistleblower program in place that covers all of the various securities laws that are within the jurisdiction of the SEC, as opposed to the CFTC.  The SEC whistleblower program covers, among other things, fraud in the securities markets, fraud by broker-dealers and investment advisors, and violations of the Foreign Corrupt Practices Act (the FCPA).

If you have information about possible securities laws violations, and want more information about either the CFTC or SEC whistleblower programs, then call (202) 973-0900 to speak with a lawyer at the law office of Tycko & Zavareei LLP.

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