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Do You Need a CFTC Whistleblower Lawyer?

Do You Need a CFTC Whistleblower Lawyer?

  • Are you a whistleblower with evidence of commodities fraud?

  • Has your company misappropriated or misused clients’ funds?
  • Is your career at risk because you've disagreed with your employer’s illegal or unethical trading?
  • Did you know that the law protects CFTC whistleblowers — and offers rewards for uncovering fraud?

The Dodd-Frank Act provides rewards for those who report their employer’s commodities and futures trading fraud to the proper authorities. By providing monetary rewards and employment protections for those who are bold enough to do the right thing, the government seeks to encourage whistleblowers to expose commodities fraud and market manipulation. If you have reported or are considering reporting your company’s misconduct, the Dodd-Frank Act could allow you to obtain a reward for alerting the authorities to the problem, and could protect you from retaliation by those responsible.

The Commodities and Futures Trading Commission’s whistleblower program was established by the Dodd-Frank Act. In addition to bringing numerous claims of violations of the Commodity Exchange Act and related laws before the CFTC for reward consideration, the whistleblower lawyers at The Employment Law Group® law firm are experienced in representing employees in Dodd-Frank Act cases in federal court. Our cases have been on the cutting edge of this law since its passage in 2010.

Representing an employee before a federal district court, our attorneys obtained one of the first judicial decisions in the country creating a broad definition of who qualifies for protection under the Dodd-Frank Act. In another case before a federal district court, we obtained a decision that created a favorable standard for employees by giving deference to decisions made by the Department of Labor.

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Important statutes in this area of law:

Notable TELG cases in this area of law:

  • Taylor v. Fannie Mae

    A federal judge laid down a standard favorable for employees by giving deference to decisions made at the Department of Labor’s Administrative Review Board.

     

  • Kramer v. Trans Lux, Inc.

    A federal judge in Connecticut determined that a plaintiff need not actually make disclosure to the SEC to be a whistleblower

     

     

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If you have been the victim of retaliation for exposing your company’s fraudulent activity, you may be entitled to reinstatement in your job, lost wages or benefits, attorney fees, and other litigation expenses. If you come forward with information that leads to successful prosecution of your employer’s fraud, you may be entitled to a financial reward for having done so.

As with all legal claims, deadlines are crucial. The Dodd-Frank Act has a six year statute of limitations, but delays in bringing forward a case may cause you to miss deadlines for other laws covering similar situations — the Sarbanes-Oxley Act, for instance, which requires filing within a much shorter time frame. Delays in coming forward with information also could make it harder to obtain a reward for exposing wrongdoing.

Frequently Asked Questions

CFTC Violations

  • Theft or misappropriation of client funds
  • Misrepresentation, misstatements, or omissions (such as false or misleading marketing and sales literature, or inaccurate or misleading non-disclosure) by commodity trading advisors; commodity pool operators; futures commission merchants; foreign exchange dealers; swap dealers or any persons associated with a swap dealer.
  • Off-exchange foreign currency (forex) trading fraud, or commodity or precious metals trading fraud
  • Ponzi and pyramid schemes
  • Registration violations
  • Trading fraud, including after-hours trading; algorithmic trading; front-running; insider trading; disruptive trading; inaccurate quoting or pricing information; program trading; attempted manipulation of commodity prices
  • Excessive, unearned, and unnecessary trading fees, mark-ups, and commissions

What financial products are covered by commodity and forex whistleblower protection laws?

  • Commodity options and futures,
  • Foreign currency exchange transactions
  • Commodity swaps
  • Options or derivatives on commodity futures

CFTC Whistleblower Rewards

How does the Dodd-Frank Act reward CFTC whistleblowers for doing the right thing?

Section 748 of the Dodd-Frank Act requires the Commodities and Futures Trading Commission (CFTC) to pay a reward to a whistleblower who voluntarily discloses original information covering trading fraud or unlawful activities and 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, foreign currency trading, or derivatives is covered under Section 748.

Additionally, employers are prohibited from terminating or discriminating against an employee who discloses information about fraudulent or unlawful conduct to the CFTC. To the extent that employer has retaliated against a whistleblower, the whistleblowing employee can then sue the employer for back pay, front pay, and reinstatement.

What is “Original Information?”

Original information means information that is:

  • derived from the independent knowledge of the whistleblower;
  • not known to the CFTC from any other source, unless the whistleblower is the original source of the information; and
  • 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.

How does the CFTC determine my reward?

The amount of the reward ranges from 10 to 30 percent of the amount recovered by the CFTC as a result of the information the whistleblower provides. The CFTC will consider the following factors to determine the amount of the reward:

  • the significance of the information provided by the whistleblower;
  • the degree of assistance provided by the whistleblower;
  • the interest of the CFTC in deterring similar violations of law; and
  • other factors that the CFTC may establish by rule or regulation.

What kinds of disclosures are eligible for an award?

Disclosures regarding illegal manipulation of commodities and futures markets exceeding $1 million are eligible for an award.  The whistleblower must disclose the violation to the CFTC before a government authority requests the information from the whistleblower.  A whistleblower who first discloses the violation internally to his or her employer will still be eligible for a reward if the whistleblower also discloses the violation to the CFTC within 120 days.

Are there restrictions on who can receive a CFTC whistleblower reward?

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;
  • gains the information by auditing financial statements as required by law;
  • fails to submit information to the CFTC as required by a CFTC rule; or
  • is an employee of the Department of Justice or an appropriate regulatory agency, a self-regulatory organization, the Public Company Accounting Oversight Board, or a law enforcement organization.

To be eligible to receive a reward, does a whistleblower have to be employed by the company committing the CFTC violation?

No. Whistleblowers are not required to have worked at the company that committed the CFTC violation.

What if I’m unhappy with the award that the CFTC has given me as a result of my information?

You need to first understand that issuing a reward is at the government’s discretion. Even still, the regulations provide that an individual who is unhappy with the size of his or her reward may appeal the award decision. It is especially important to have an attorney represent you during this process.

CFTC Whistleblower Protection

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

Yes. Employers are prohibited from terminating or discriminating against an employee who discloses information about fraudulent or unlawful conduct to the CFTC. Employers are also prohibited from retaliating against employees who participate in a CFTC investigation or any judicial or administrative proceeding that is related to a whistleblower’s disclosure.

What forms of retaliation are prohibited?

The Dodd-Frank Act prohibits a broad range of adverse employment actions, including firing, demotion, suspension, threatened adverse employment actions, harassment, or any conduct that would dissuade an employee from reporting CFTC violations.

What compensation can a prevailing employee recover?

A prevailing employee can:

  • be reinstated to his/her former position;
  • recover the wages owed to the employee in the form of back pay with interest;
  • recover compensatory damages; and
  • recover attorney fees and litigation costs, including expert witness fees.

Are CFTC whistleblower retaliation claims subject to mandatory arbitration?

No. The employee’s right to file a whistleblower retaliation claim under Section 748 cannot be waived as a condition of employment or by a mandatory arbitration agreement.

CFTC Whistleblower Process

What happens after I disclose information to the CFTC?

Usually, the CFTC will take some time to investigate your matter before contacting you or your attorney. If your tip seems to have some merit, you may be called in to an interview with the CFTC or asked to provide more documentation. This is another area where an attorney can help you – both by helping you prepare and organize your documentation so that it is more accessible for the government attorneys and with assisting you to prepare for and participate in follow-up interviews with the CFTC’s investigators.

Am I allowed to remain anonymous when I provide information to the CFTC?

Yes and no. The regulations provide that an individual can provide information anonymously only if he or she is represented by an attorney. Even then, you may eventually need to disclose your identity to the CFTC. This is true if the CFTC needs to interview you or in the event that you want to claim a reward. Even still, the CFTC takes whistleblower anonymity very seriously and will work to protect your identity, even after issuing you an award.

What if I’m concerned about being complicit in the fraud? Do I have anything to worry about?

That depends. Simply because you came forward with information will not necessarily shield you from liability. This is typically true if you were the brains behind the fraudulent scheme or if you took significant steps to help your company further it. This is perhaps one of the strongest reasons to retain counsel. An experienced attorney can work with you to help minimize your exposure while working with the CFTC.

Am I required to have an attorney to provide information to the CFTC? How does an attorney help me prepare my submission?

Actually, no. Anyone can complete the Form TCR and submit it to the CFTC.

However, while it is theoretically possible for an individual to submit information to the CFTC without an attorney, retaining counsel is advisable for a number of reasons. First and foremost, an attorney experienced in futures and commodities issues will be able to craft your disclosure in a way that will make your claim more appealing and easily discernible to the CFTC.

I’m an experienced professional who deals with commodities and futures trading on a daily basis. I know about the fraudulent conduct and can articulate it clearly for the CFTC. Do I really need to have an attorney help me?

Absolutely. Individuals that work in this field, particularly those that are part of a company’s compliance, accounting, or finance function, may have additional procedural hurdles to jump through. This could include making internal disclosures before contacting the CFTC or waiting for a defined period of time before bringing their information to the government. Even if (or, especially if) you are an expert in the field, you should speak with an attorney who is experienced working with CFTC whistleblowers.