Both the SEC and the CFTC were authorized by the Dodd-Frank Act to reward certain persons for providing information that leads to an enforcement action. Prompted by such a “whistleblower’s” notification, the CFTC investigated and initiated a widely-reported civil enforcement action against a trader. Under the CFTC’s implementation of the whistleblower program, for information that leads to monetary sanctions in excess of $1 million, whistleblowers can be paid between 10% and 30% of the sanction.
While CFTC’s whistleblower program has only paid one award – $240,000 in May 2014, Chris Ehrman, the Director of CFTC’s Whistleblower Office, has recently stated that the CFTC is anticipating the distribution of more awards. Moreover, Ehrman hopes to pay one or two significant awards by the end of 2015. The efforts of the CFTC to expand knowledge of its program seem to be generating tips from potential whistleblowers at an increased level recently as more individuals learn about CFTC’s program. Ehrman stated that he has been working over the last few years to elevate the profile of the process to reward whistleblowers and pay more awards. Ehrman and CFTC have been increasing marketing efforts for the whistleblower program by attending trade shows and speaking on various panels about the subject.
Although both the SEC and the CFTC were authorized by the Dodd-Frank Act to reward certain persons for providing information that leads to an enforcement action, there is a difference in interpretation between the regulators regarding protection from retaliation. The law attempts to provide protection from retaliation to persons who act as whistleblowers. Although both agencies operate under the same legal authority, the SEC construes Dodd-Frank as conferring powers on SEC to bring separate enforcement actions against registrants for retaliation against whistleblowers; while the CFTC believes the anti-retaliation protection only assures a private right of action for whistleblowers themselves. It will be interesting to see how this difference plays out in the future.