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.
Important statutes in this area of law:
Commodity whistleblower incentives and protection ; securities whistleblower incentives and protection ; civil action to protect against retaliation in fraud cases
Notable TELG cases in this area of law:
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.
A federal judge in Connecticut determined that a plaintiff need not actually make disclosure to the SEC to be a whistleblower
In addition to bringing numerous claims before the Commodities and Futures Trading Commission (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.
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 delay 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. Delay in coming forward with information also could make it harder to obtain a reward for exposing wrongdoing.
Frequently Asked Questions
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.
CFTC Whistleblower Rewards
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.
- 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
Financial products covered by commodity and forex whistleblower protection laws?
- Commodity options and futures,
- Foreign currency exchange transactions
- Commodity swaps
- Options or derivatives on commodity futures
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.
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.
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.