By Lene Powell, J.D.
A whistleblower award of more than $1 million highlighted the CFTC’s support for internal reports and cooperation with other regulators. In granting the award, the CFTC overcame several procedural wrinkles, including that the whistleblower reported different wrongdoing than that ultimately charged and that the whistleblower’s Form TCF was not filed until after the CFTC’s investigation concluded.
Internal report to another regulator. According to the award, the whistleblower "initially submitted his/her information to another regulator through his/her company’s internal reporting procedures." The other regulator then passed the information along to the CFTC. The whistleblower subsequently gave an interview to Division of Enforcement staff and provided documents through the employer’s counsel.
The report states that the "employer acted as [the claimant’s] representative in submitting the information to the other regulator." The report to the other regulator was not considered mandatory.
"We have also decided to give credit to Claimant 1 for causing the case to be opened, because the information that Claimant 1 provided, albeit up through his/her compliance process and then over via the other regulator, was sufficiently specific, credible, and timely to cause the Commission to open an investigation," the report stated.
According to CFTC Director of Enforcement James McDonald, the CFTC is committed to working with other regulators to maximize enforcement effectiveness. "Today’s award shows how referrals from other regulators can have a meaningful impact on the Commission’s enforcement program, and lead to whistleblower awards from the CFTC," said McDonald.
Different misconduct reported. The CFTC noted that whistleblowers are eligible for award for a tip that leads to evidence of a violation the CFTC ultimately charges—even if the reported conduct itself does not form the basis for those charges.
"As the specific facts and circumstances of this matter demonstrate, the whistleblower does not have to identify the exact wrongdoing the CFTC ultimately charges—it is enough for their information to lead CFTC investigators directly to evidence of one or more of the agency’s claims," said CFTC Whistleblower Office Director Christopher Ehrman. "Here, the whistleblower identified a problem in one area, and our Division of Enforcement used that knowledge and the whistleblower’s subsequent assistance to uncover illegality in another."
Form TCR timing. Another wrinkle that could have potentially derailed an award was that the whistleblower filed a Form TCR to perfect his/her status as a whistleblower after the CFTC’s investigation concluded.
"[W]e find that Claimant 1 complied with the form and manner requirements of the Rules per the language of Rule 165.3(a), which does not require a whistleblower to submit information on a Form TCR in his/her initial submission," the report stated.
Award. The CFTC did not name the precise amount of the award, describing it as "more than $1 million."
A second claimant had also applied for an award, but that claim had previously been denied in a preliminary determination that subsequently became final.