Despite struggling to submit a claim by fax, a whistleblower, along with four others, are sharing over US$8 million in an award from the U.S. Commodity Futures Trading Commission (CFTC) for tipping off the regulator to alleged misconduct that resulted in successful enforcement action.
The CFTC announced a whistleblower award for five tipsters that provided information to the regulator about a fraud scheme.
“These whistleblowers reported to the CFTC soon after recognizing the fraud,” said Raagnee Beri, director of the CFTC’s whistleblower office, in a release. “Their contributions of information and assistance helped the CFTC bring and complete an enforcement action with a substantial recovery of funds for defrauded investors.”
According to the CFTC’s order, the claim for a whistleblower award from the person that provided the initial tip — which led to the regulator opening an investigation — came late, arriving via fax less than an hour after the deadline for filing a claim.
However, the regulator exercised its discretion to waive the deadline, citing “extraordinary circumstances” — technical difficulties that arose when attempting to fax their claim to the CFTC.
Alongside the initial claimant, four other tipsters also shared in the award. The order noted that, while the first tipster sparked the initial investigation, which makes their information “more significant,” the others all provided more sustained assistance to the regulator, which factored into their share of the award.
Four of the tipsters accepted the CFTC’s initial decision on allocating the award, while one of them appealed, seeking a larger share. According to the regulator’s order, that tipster argued that they deserved as a larger share of the award as they claimed to be “the most significant whistleblower” in this case; and alleged that they fell victim to identity theft as a consequence of the resulting investigation.
The CFTC rejected both those arguments, deeming them “meritless.”
It found that there’s no support for the claim that they were the “most significant” whistleblower in the case. And, it also ruled that their alleged identity theft didn’t amount to “unique hardships” that arose as a result of them acting as a whistleblower, which could have impacted their share of the award.
“Overall, the alleged harms [the tipster] suffered from the identity theft are not significant to rise to the level of a unique hardship, and he/she fails to provide evidence of a causal link between the publication of his/her information and the alleged identity theft,” it said.
The order said that identity theft doesn’t represent a “unique hardship” — noting that the CFTC and the U.S. Securities and Exchange Commission (SEC) have recognized “termination and industry blackballing as unique hardships.”
“Potential job loss and termination are risks that prospective whistleblowers consider, and it is necessary to provide whistleblowers with incentives to come forward in the face of these hardships,” it said. “Higher … credit monitoring fees do not merit similar incentivization.”