The CFTC Ups the Ante in the Whistleblower Award Game
Not to be outdone by the SEC’s recent landmark whistleblower awards (discussed here and here), the Commodity Futures Trading Commission (“CFTC”) just awarded its fifth and largest whistleblower award to date to a single whistleblower, $30 million.
The CFTC is an independent federal agency which regulates the U.S. derivatives markets, including futures, options, and swaps. Similar to the SEC and pursuant to the same legislation — the Dodd-Frank Act — the CFTC’s whistleblower program rewards eligible whistleblowers anywhere between 10 to 30 percent of monetary sanctions collected from a successful enforcement action. Here, the whistleblower reported to the CFTC that JPMorgan failed to disclose to investors potential conflicts of interests while directing those investors to the bank’s own investment funds, which also charged larger management fees than competitors. The $30 million award, which stemmed from the bank’s $307 million settlement with the CFTC, was $20 million more than the CFTC’s prior largest award.
As the size of enforcement settlements grow, so do the size of whistleblower awards. And as these growing whistleblower awards are publicized, it becomes increasingly important for companies to develop and advertise internal reporting procedures, allowing for the potential resolution of regulatory and compliance issues through established compliance programs.