US Derivatives Regulator Approves $200M Record Payment to a Whistleblower

Femi Ashekun/

The Commodity Futures Trading Commission (GFTC) has awarded almost $200 million to a former Deutsche Bank employee who raised concerns about the manipulation of the Libor interest rate benchmark, marking the largest-ever payment under US whistleblower programmes.

Reports say Deutsche Bank, along with Barclays and Société Générale, was among the banks that reached settlements with the CFTC and other agencies over the Libor manipulation scandal.

The CFTC, in a statement (Release Number 8453-21), yesterday, said the payment had been made for “timely original information” that significantly contributed to an already “open investigation”.

The statement titled, CFTC Awards Nearly $200 Million to a Whistleblower … Largest Award to a Single Whistleblower, adds that the information led to a “successful enforcement action, as well as to the success of two related actions, by a US federal regulator and a foreign regulator”.

The US government agency did not identify the whistleblower, their employer or the associated regulatory action.

But Financial Times reports that the award was related to a $2.5 billion settlement paid by Deutsche Bank after a regulatory investigation into the manipulation of Libor, the disgraced interest rate benchmark underpinning global finance that was found to have been rigged by bankers a decade ago and that will begin to fade away next year.

The CFTC statement reads, “The Commodity Futures Trading Commission today announced an award of nearly $200 million to a whistleblower whose specific, credible, and timely original information significantly contributed to an already open investigation and led to a successful enforcement action, as well as to the success of two related actions, by a US federal regulator and a foreign regulator.

“According to the order, the whistleblower’s information led the CFTC to important, direct evidence of wrongdoing.

“In order to qualify for an award, a whistleblower who significantly contributed to the success of an enforcement action must demonstrate that there is a ‘meaningful nexus’ between the information provided and the CFTC’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding. The Commission determined here that the whistleblower met this standard. 

“The whistleblower’s claim in connection with a third related action by a state regulator was denied because the whistleblower’s information was never shared with the state regulator. 

“With this award, the CFTC has granted whistleblower awards associated with enforcement actions that have resulted in monetary sanctions totaling more than $3 billion.”

Providing background information about the CFTC’s Whistleblower Programme, the statement further says, “The CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Since issuing its first award in 2014, the CFTC has awarded more than $300 million to whistleblowers.

“The CFTC issues awards related not only to the agency’s enforcement actions, but also in connection with actions brought by other domestic or foreign regulators if certain conditions are met.

“The Commodity Exchange Act (CEA) provides confidentiality protections for whistleblowers. Regardless of whether the CFTC grants an award, the CFTC will not disclose any information that could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances. Consistent with this confidentiality protection, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information or the exact dollar amount of the award granted.

“Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund, which was established by Congress, and is financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from injured customers to fund the programme.”

0