Posts Tagged ‘Dodd-Frank’

Commodity Future Trading Commission Announces First Whistleblower Award

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Photo Credit: CFTC Website

On Tuesday, May 20, 2014, the Commodity Future Trading Commission (“CFTC”) announced that it would be making its first award to a whistleblower who reported a fraud through the CFTC’s Whistleblower Program.  A $240,000 award will be made an an anonymous whistleblower who brought valuable information regarding violations of the Commodity Exchange Act.  The CFTC’s Whistleblower Program was established in 2010 and is intended to reward individuals who provide information leading to CFTC enforcement actions which result in more than $1 million monetary sanctions.  The program has several unique aspects, including making awards based on information provided to the CFTC even if another agency ultimately collects the sanctions, and allowing a whistleblower to file his complaint anonymously.

If you believe you know of violations of the Commodity Exchange Act and would like more information about filing a CFTC complaint, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office by phone at 813-397-2300.

From the CFTC Whistleblower website:

CFTC Issues First Whistleblower Award

Washington, DC — Commodity Futures Trading Commission (CFTC) Acting Chairman Mark Wetjen announced today that the agency will make its first award to a whistleblower as part of the Commission’s Whistleblower Program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The person will receive approximately $240,000 for providing valuable information about violations of the Commodity Exchange Act.

“I am pleased to announce this first award which illustrates that the CFTC’s Whistleblower Program is a valuable resource for the American public. Information received under the Whistleblower Program helps the agency better protect market participants and the public through successful enforcement actions,” said CFTC Acting Chairman Wetjen.

Acting Director of the CFTC’s Division of Enforcement Gretchen Lowe said, “Here, the whistleblower provided specific, timely and credible information that led to the Commission bringing important enforcement actions. The CFTC’s Whistleblower Program is attracting high-quality tips and cooperation we might not otherwise receive and is already having an impact on the Commission’s enforcement mission.”

Christopher Ehrman, the Director of the Whistleblower Office, said that the number of high quality tips, complaints and referrals received continues to increase. “Our Whistleblower Program is a necessary enforcement tool for the agency, and my hope is that this award will send the strong message that the CFTC will pay for information that helps us do our jobs.”

Under the Dodd-Frank Act, the CFTC’s Whistleblower Program provides monetary awards to persons who report violations of the Commodity Exchange Act if the information leads us to an action that results in more than $1 million in monetary sanctions. Whistleblowers are eligible for 10 to 30 percent of monies collected. The CFTC can also pay awards based on monetary sanctions collected by other authorities in actions that are related to a successful CFTC action, and are based on information provided by a CFTC whistleblower. The Dodd-Frank Act whistleblower provisions also prohibit retaliation by employers against employees who provide the CFTC with information about possible violations, or who assist us in any investigation or proceeding based on such information.

To learn more about the CFTC’s Whistleblower Program and how to provide a tip, visit Consumer Protection at


SEC Announces Additional Reward for First Whistleblower

Washington D.C., April 4, 2014 — The Securities and Exchange Commission has announced that the whistleblower who received the first award under the agency’s new whistleblower program will receive an additional $150,000 payout after the SEC collected additional funds in the case.

The whistleblower, who the SEC did not identify in order to protect confidentiality, has now been awarded a total of nearly $200,000 since the award was announced on Aug. 21, 2012. The award recipient helped the SEC stop a multi-million dollar fraud by providing documents and other significant information that allowed its investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims.

The award represents 30 percent of the amount collected in the SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed under the law. The additional payout comes after the SEC collected an additional $500,000 from one of the defendants in the case.

“This latest payment shows that the SEC’s aggressive collection efforts pay dividends not only for harmed investors but also for whistleblowers,” said Sean McKessy, chief of the SEC’s Whistleblower Office. “As we collect additional funds from securities law violators, we can increase the payouts to whistleblowers.”

The SEC expects to collect additional money from defendants in this case as some are making payments under a periodic payment schedule ordered by the court.

The 2010 Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Awards can range from 10 percent to 30 percent of the money collected. The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.

For more information about the whistleblower program and how to report a tip, visit


Whistleblower Programs Beefed Up for Federal Agencies

Burned by its failure to catch the Bernard Madoff Ponzi scheme, despite years of warnings from a tipster, the Securities and Exchange Commission couldn’t say no when Congress ordered it to pay whistleblowers.

There’s little love in official Washington for the Edward Snowden kind that takes secrets to the media. But people who turn in their bosses or companies to the government are viewed as heroes — eligible for compensation — in more and more corners of the federal bureaucracy.

“Let’s face it, blowing whistles is a career limiting, if not a career-ending act,” said Sean X. McKessy, chief of the SEC’s Office of the Whistleblower. In the high-dollar world of securities, he said, only a significant financial incentive would counterbalance that.

“We now have rewarded six people who have enabled us to prevent an ongoing fraud or conduct from getting worse,” he said. “I think that sends a message.”

Skeptics are countering that if the modest number of payouts doesn’t increase this year, faith in the program will wane.

“I have to tell you that the program has had small returns so far,” said Patrick Burns, co-director of Taxpayers Against Fraud, a nonprofit group that backs whistleblowers. “The SEC is an apple tree. … We think it will produce more apples in the future.”

The Dodd-Frank financial reform law requires that when the SEC gets a tip that results in a payment by the company of $1 million or more, the whistleblower gets between 10 and 30 percent of the amount recovered. Awards should tend to the high side when the whistleblower tried to report the fraud within the company first.

The SEC’s Office of the Whistleblower has so far paid $14.88 million to its six whistleblowers. That total, though, is dominated by one $14 million payout on a case the SEC declines to detail.

Click here to read more in the Pittsburgh Post-Gazette.


Overview of the SEC Whistleblower Program

The Whistleblower Program is designed to aid the SEC’s efforts to protect investors from those who violate the securities laws by encouraging those who are aware of misconduct to come forward to report it to us so that prompt and effective action can be taken to prevent or stop the misconduct.”

—Sean X. McKessy, Chief, Office of the Whistleblower

In response to the fiscal crisis of the late-2000s, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.  Commonly referred to as “Dodd-Frank,” the legislation restored much of the regulatory authority that had deteriorated over the previous decades.  The authors of the legislation recognized the crucial role that whistleblowers have served in exposing corporate fraud and protecting the public coffers.  Therefore, as part of these reforms, Dodd-Frank created the Securities and Exchange Commission’s Office of the Whistleblower.

The Office of the Whistleblower rewards citizens for exposing violations of the federal securities laws and offers protections in the event that employers retaliate against employees who report the abuse to the Securities and Exchange Commission (“SEC”).  Specifically, Dodd-Frank authorizes the SEC to provide monetary awards to eligible individuals who come forward with high-quality, original information that leads to a SEC enforcement action in which over $1,000,000 in sanctions is ordered. The range for awards is between 10% and 30% of the money collected.  Prior to Dodd-Frank, whistleblowers could seek rewards from the SEC of up to only 10% of regulatory penalties.

According the SEC, an eligible whistleblower “is a person who voluntarily provides us with original information about a possible violation of the federal securities laws that has occurred, is ongoing, or is about to occur.”  If the information provided causes the SEC to initiate a new investigation, re-open a previously closed investigation, or pursue a new line of inquiry in connection with an ongoing investigation, and the SEC brings a successful enforcement action based at least in part on the information provided, the whistleblower may be entitled to a reward.

This is an exciting and promising development in the ongoing fight against taxpayer fraud.  The whistleblower program began operating in August 2011 and the first award was made just one year later in August 2012.  That first whistleblower received nearly $50,000, which was 30% of the amount collected in an SEC enforcement action against the perpetrators of the scheme.  Most recently, the SEC said three unnamed whistleblowers would each receive 5% of any sanctions collected in a Massachusetts federal court case against an investment fund that swindled its investors of nearly $2 million.  The SEC said in an administrative order that the whistleblowers “voluntarily provided original information to the commission that led to the successful enforcement” of the matter.

This is only the beginning.  According to Sean McKessy, chief of the SEC’s Office of the Whistleblower, “we are likely to see more awards at a faster pace now that the program has been up and running and the tips we have gotten are leading to successful cases.”

One of the primary reasons the SEC’s whistleblower bounty program is beginning to show signs of success is the number of safeguards in place to protect citizens who provide helpful tips.  Among the numerous protections afforded by Office of the Whistleblower, anyone wishing to provide information pertaining to securities fraud may do so anonymously.  However, in order to do so, you must have an attorney represent you in connection with your submission and you must also provide the attorney with a completed form signed under penalty of perjury at the time you make your anonymous submission.

The James Hoyer law firm has many years of experiencing representing whistleblowers and advocating on their behalf, including claims submitted anonymously to the SEC.  If you believe you have information regarding a possible violation of federal securities laws or regulations and are considering submitting your information to the SEC, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Sean Keefe