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SEC Whistleblower Lawyer Blog

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The SEC recently awarded two whistleblowers a total of $98M for original information they submitted that led to the opening of an investigation and a successful enforcement action involving misconduct. The first whistleblower received the lion’s share of the bounty, which totaled over $87 million. For the second whistleblower, the award totaled over $16 million. Both awards were percentages of the financial sanctions collected in the case, which both included SEC actions as well as another enforcement action by a different federal agency.The SEC recently awarded two whistleblowers a total of $98M for original information they submitted that led to the opening of an investigation and a successful enforcement action involving misconduct.

The first whistleblower received the lion’s share of the bounty, which totaled over $87 million. For the second whistleblower, the award totaled over $16 million. Both awards were percentages of the financial sanctions collected in the case, which both included SEC actions as well as another enforcement action by a different federal agency. Continue reading

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On August 8, 2024, the U.S. Commodity Futures Trading Commission (the “CFTC”) announced a whistleblower award of over $1 million dollars. While the Commodity Exchange Act ensures confidentiality protections for CFTC whistleblowers, this award highlights the CFTC’s commitment to regulating digital assets. The heavily redacted CFTC order states that the whistleblower received the award because the whistleblower voluntarily provided the information, through form TCR, and their information led to a successful enforcement action. This action uncovered improper trading previously unknown to the CFTC, underscoring the growing importance of whistleblower tips in detecting misconduct. CFTC Director of Enforcement Ian McGinley noted, "During the last fiscal year, digital asset cases accounted for almost 50% of the CFTC's docket, with a majority of whistleblower tips that year related to digital assets."On August 8, 2024, the U.S. Commodity Futures Trading Commission (CFTC) announced a whistleblower award of over $1 million dollars. While the Commodity Exchange Act ensures confidentiality protections for CFTC whistleblowers, this award highlights the CFTC’s commitment to regulating digital assets.

The heavily redacted CFTC order states that the whistleblower received the award because the whistleblower voluntarily provided the information, through form TCR, and their information led to a successful enforcement action. Continue reading

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Billionaire investor and founder of Hayman Capital Management, Kyle Bass, succeeded in obtaining a reversal of the SEC's denial of his bid to receive a whistleblower bounty for exposing fraud at United Development Funding (UDF), a Dallas-based land developer.  Bass filed a whistleblower tip regarding UDF to the SEC after one of his analysts found proof that it was a Ponzi scheme. In a surprising move, the SEC overturned its prior denial and awarded Bass $400,000 for providing information that helped the agency secure civil penalties against certain UDF executives.  Notably, this is the first time the SEC has reversed a denial of a whistleblower award.Billionaire investor and founder of Hayman Capital Management, Kyle Bass, succeeded in obtaining a reversal of the SEC’s denial of his bid to receive a whistleblower bounty for exposing fraud at United Development Funding (UDF), a Dallas-based land developer. Bass filed a whistleblower tip regarding UDF to the SEC after one of his analysts found proof that it was a Ponzi scheme. Continue reading

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On June 17, 2024, the U.S. Securities and Exchange Commission (“SEC”) announced a $37 million dollar whistleblower award, marking this the first whistleblower award of 2024. While the Dodd-Frank Act mandates confidentiality regarding the whistleblower's identity and enforcement action, this substantial award underscores the SEC's ongoing commitment to investor protection. Chief of the SEC’s Office of the Whistleblower, Creola Kelly, emphasized, “Today’s award illustrates the importance of the SEC’s whistleblower program, as the whistleblower’s information helped the agency return millions of dollars to harmed investors.”On June 17, 2024, the U.S. Securities and Exchange Commission (SEC) announced a $37 million dollar whistleblower award, marking this the first whistleblower award of 2024. While the Dodd-Frank Act mandates confidentiality regarding the whistleblower’s identity and enforcement action, this substantial award underscores the SEC’s ongoing commitment to investor protection. Continue reading

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On June 17, 2024, the U.S. Commodity Futures Trading Commission (the “CFTC”) reached a $55 million settlement with Trafigura Trading LLC, marking a significant aggressive shift in the agency's approach to whistleblower protections.  This case sets a new precedent in the CFTC’s enforcement program and underscores the CFTC's commitment to protecting whistleblowers. In its settlement, the CFTC alleged that Trafigura manipulated oil derivatives prices, exploited confidential information to gain an unfair advantage in gasoline transactions and, most importantly, that Trafigura failed to carve out an exception for whistleblowers in its employment agreement's confidentiality provisions. This marks the first time the CFTC has publicly taken a position on this whistleblower protection issue.  The whistleblower carveout requires non-disclosure provisions to explicitly permit communications with law enforcement or regulators.  The CFTC argues that absent these carveouts, such provisions cause confusion and impede voluntary, direct communications with regulators, like the CFTC, about possible violations.On June 17, 2024, the U.S. Commodity Futures Trading Commission (the “CFTC”) reached a $55 million settlement with Trafigura Trading LLC, marking a significant aggressive shift in the agency’s approach to whistleblower protections. This case sets a new precedent in the CFTC’s enforcement program and underscores the CFTC’s commitment to protecting whistleblowers. Continue reading

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The latest $1.25 million award from the Commodities Futures Trading Commission (CFTC) goes to a whistleblower who first reported misconduct internally to their employer, who then ignored the report. Following 120 days of the company’s inaction, the individual submitted the information to the CFTC, who immediately opened an investigation. As part of the CFTC’s “safe harbor” rule, the whistleblower must wait 120 days after reporting internally before submitting information. This is the first time the CFTC’s 120-day “safe harbor” provision has applied to a whistleblower who worked in an auditing or internal compliance capacity. Individuals in these positions have more stringent requirements. This whistleblower complied with those requirements when reporting. The information from the whistleblower was original and given voluntarily. It was the only reason the CFTC opened its investigation. The information “was quite significant,” according to the order, calling it “useful” during the investigation.The latest $1.25 million award from the Commodities Futures Trading Commission (CFTC) goes to a whistleblower who first reported misconduct internally to their employer, who then ignored the report. Following 120 days of the company’s inaction, the individual submitted the information to the CFTC, who immediately opened an investigation. Continue reading

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The US Department of Justice is planning to launch its own whistleblower program using the same model as the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC). They will offer financial incentives to individuals who report wrongdoing and are ineligible for other rewards. Deputy Attorney General Lisa Monaco announced the pilot program at an American Bar Association conference on white collar crime on March 7, 2024. The DOJ will develop the program over the next 90 days and launch the program later in the year. The Department will study the SEC’s and other federal whistleblower programs to develop its own. “Going back to the days of ‘Wanted’ posters across the Old West, law enforcement has long offered rewards to coax tipsters out of the woodwork,” Monaco said. “Now’s the time to expand our use of this tool in corporate misconduct cases and apply it to reward whistleblowing.”The US Department of Justice is planning to launch its own whistleblower program using the same model as the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC). They will offer financial incentives to individuals who report wrongdoing and are ineligible for other rewards. Continue reading

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The Commodity Futures Trading Commission’s Whistleblower Office has a new director, Brian Young. The announcement was made recently by CFTC’s chairman, Rostin Behnam. He comes from the Department of Justice (DOJ), where he was previously the acting director of litigation for the Antitrust Division. Brian Young started his career at the Department of Justice (DOJ) as an Attorney General’s Honors Program Attorney in the Fraud Section of the Civil Division. There, he prosecuted violations of the civil False Claims Act, with a significant number initiated by whistleblowers. His work primarily targeted fraud within federal healthcare and defense programs. Young also managed criminal prosecutions under the Sherman Act and handled civil merger and antitrust conduct litigation. Before that, he spent 11 years in the Fraud Section of the Criminal Division, holding various positions. Eventually, he was appointed as the chief of the Fraud Section’s Litigation Unit, where he supervised the litigation efforts of around 150 white-collar prosecutors.The Commodity Futures Trading Commission’s Whistleblower Office has a new director, Brian Young. The announcement was made recently by CFTC’s chairman, Rostin Behnam. He comes from the Department of Justice (DOJ), where he was previously the acting director of litigation for the Antitrust Division. Continue reading

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