Commodity Futures, Options, and Derivatives Whistleblowers

Posted about 4 years ago. 1 helpful vote

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1

Can a whistleblower recover a reward for disclosing fraud to the CFTC?

Section 748 of the Dodd-Frank Act authorizes the CFTC to pay a reward to a whistleblower who voluntarily discloses original information covering fraud or unlawful activity, leading to a sanction exceeding $1 million. Penalties, disgorgement, and interest paid count towards the $1 million threshold. Nearly any unlawful manipulation of commodity futures or derivatives is covered under Section 748.

2

How much is the reward?

The amount of the reward is at the discretion of the CFTC, but ranges from 10 to 30 percent of the amount recouped by the CFTC. Factors the CFTC will consider to determine the amount of the reward include the significance of the information provided by the whistleblower, the degree of assistance provided by the whistleblower, the interest in the CFTC in deterring violations of the law, and other factors that the CFTC may establish by rule or regulation.

3

What constitutes "original information?"

Original information means information that is: (1) derived from the independent knowledge of the whistleblower; (2) not known to the CFTC from any other source, unless the whistleblower is the original source of the information; and (3) not exclusively derived from an allegation made in a judicial or administrative hearing, a government report, audit, or investigation, or the news media, unless the whistleblower is a source of the information.

4

What restrictions are there on receiving a whistleblower reward from the CFTC?

The CFTC is prohibited from granting a reward to a whistleblower who is convicted of a crime related to the judicial or administrative action for which the whistleblower provided information; who gains the information by auditing financial statements as required by law; who fails to submit information to the CFTC as required by a CFTC rule; or who is an employee of the Department of Justice or an appropriate regulatory agency, a self-regulatory organization, or a law enforcement organization.

5

Are employees who blow the whistle to the CFTC protected from retaliation?

Section 748 prohibits an employer from terminating or discriminating against an employee who discloses information about fraudulent or unlawful conduct to the CFTC or assists in a CFTC investigation or judicial or administrative action related to the whistleblower's disclosure.

6

What acts of retaliation are prohibited?

Section 748 prohibits a broad range of adverse employment actions, including termination, demotion, suspension, threatened adverse employment actions, harassment, and any conduct that would dissuade a reasonable employee from whistleblowing.

7

What remedies are available?

A prevailing employee may receive: (1) reinstatement; (2) back pay with interest; (3) compensatory damages; and (4) attorney fees and litigation costs, including expert witness fees.

8

Are Section 748 claims subject to mandatory arbitration?

Section 748 whistleblower retaliation claims are exempt from mandatory arbitration agreements.

9

Where do Section 748 whistleblowers file their claim?

Section 748 whistleblowers can bring a claim directly in federal court within 2 years of the date on which the retaliation occurred.

Additional Resources

Commodity Futures Trading Commission

Whistleblower Provisions Of The Dodd-Frank Act

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