Largest-Ever Whistleblower Award Nets CFTC Tipster Almost $200 Million
On October 21, the Commodity Futures Trading Commission (CFTC)聽announced聽that it paid nearly $200 million to a whistleblower, a colossal award that is certainly the largest the CFTC has ever made, but also the largest award made under any federal whistleblower-reward program to a single whistleblower, including the False Claims Act.
The CFTC the whistleblower’s tip provided important, “direct evidence of wrongdoing” and led to a successful enforcement action.聽 It also assisted two related regulatory actions, one conducted by a U.S. federal agency and another by a foreign agency. The whistleblower was eligible for the award because the CFTC found a 鈥渕eaningful nexus鈥� between the information the whistleblower provided and the CFTC鈥檚 ability to obtain monetary sanctions.
As is its practice, the CFTC is not divulging the name of the bad actor about which the whistleblower provided information.聽 But given the size of the award and prior reporting, there aren鈥檛 a lot of contenders.
According to the whistleblower鈥檚 lawyers, the whistleblower鈥檚 information to manipulation of crucial financial benchmarks used by global banks to price fixed income futures, options, swaps, and other derivative products.
That sounds to us quite a bit like the London interbank offered rate or LIBOR.聽 Between and , the CFTC imposed penalties of over $3.2聽billion on entities for manipulating LIBOR.聽 But which member of the rogue鈥檚 gallery could it be?
The smart money is on Deutsche Bank, which the CFTC $800 million in 2015 to settle LIBOR-related manipulation charges, the largest fine the agency ever imposed. Notably, the CFTC鈥檚 announcement about Deutsche Bank mentioned related actions by the U.S. Department of Justice, which imposed a $775 million criminal penalty, as well as the United Kingdom Financial Conduct Authority, which fined Deutsche Bank about $313 million.聽 All told, that amounts to about $1.9 billion.
News reports also finger Deutsche Bank as the likely target. Back in May, the 聽reported on a potential $100 million-plus award for a Deutsche Bank whistleblower that threatened to destroy the CFTC whistleblower program.聽 CFTC whistleblower awards are paid from a fund financed by sanctions fraudsters pay to the CFTC.
But the fund is capped at $100 million鈥攁 sum, the CFTC realized, that is not large enough to meet the scale of Deutsche Bank鈥檚 wrongdoing. As one commentator it, 鈥淒eutsche Bank is such an unprecedented catastrophe that no one even 11 years ago could have predicted it would be forced to聽聽as to bankrupt a critical part of a federal agency.鈥�
As we wrote about earlier, Congress had to step in with a funding fix, which President Biden 聽in July. The bill,听, saved the CFTC whistleblower program from financial collapse.
The award is also notable because it is the first CFTC award that is based in part on fines that a foreign regulator imposed. That part of the whistleblower鈥檚 award drew a from Dawn DeBerry Stump, a CFTC commissioner appointed by former President Donald Trump.
Today鈥檚 blockbuster award demonstrates the power of the CFTC and other whistleblower reward programs to snuff out corruption and other corporate misdeeds that will not come to light unless whistleblowers are incentivized to come forward.
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If you have useful information on potential securities violations or other corporate wrongdoing and would like to speak to a member of our experienced聽whistleblower team, please do not hesitate to聽contact us.
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