CFTC Commissioner Floats Enforcement Reforms
In a speech CFTC Commissioner Summer K Mersinger discusses the need for reform of the CFTC’s approach to enforcement.
This week the CFTC announce (click here) a USD $8 million whistleblower award to a company insider who provided information and assistance that led the CFTC and other unnamed agencies to bring multiple successful enforcement actions. According to the CFTC’s announcement, the whistleblower provided direct evidence of his/her own intent in the relevant (offending) transactions including about clients, co-workers and senior leadership at the impacted entity.
The CFTC’s Whistleblower Office Director was quoted as saying:
"Based on the whistleblower’s involvement in the underlying conduct, the whistleblower provided extremely valuable insider information at a critical time during the investigations.”
The CFTC also published this heavily redacted 6-page Order relating to the whistleblower award claims. Very little of value can be gleaned from the Order other than confirmation that the whistleblower’s reward was reduced given the claimant's personal culpability in the wrongdoing. The Order also confirms that the recipient “double dipped”, receiving a second award for a “Related Action”.
A Related Action is a judicial or administrative action brought by any one of a broad range of actors including the following:
The Order provides no indication as to which of these entities was involved in the Related Action.
Finally, the Order acknowledges that neither of the agencies’ investigations would have started without the whistleblower and indeed that the second unnamed agency’s case “piggybacked” off the CFTC case.
This award again confirms that US Federal agencies with whistleblower award schemes are not only entirely comfortable in acceptable support from guilty actors but are also willing to reward them handsomely for their cooperation.
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