US derivatives regulator clears faster payouts for tipster awards under US$5 million

[NEW YORK] The Commodity Futures Trading Commission (CFTC) plans to automatically award successful whistle-blowers 30 per cent of any enforcement penalties collected if a tipster is due to receive US$5 million or less, the agency said on Friday (Sep 11). 

The derivatives regulator said the change would speed up payouts and reduce paperwork for the majority of whistle-blower awards and align the agency’s whistle-blower programme with its fellow Wall Street watchdog, the Securities and Exchange Commission. Awards are subject to the commission’s discretion, the CFTC said.

Established after the 2008 financial crisis, the CFTC’s whistle-blower programme aims to motivate people to share original, timely tips to help the agency crack down on bad actors. Qualified whistle-blowers may be eligible for payouts ranging from 10 to 30 per cent of collected penalties. 

Analysing each award to determine the percentage takes time, the CFTC said when it proposed the automatic threshold in June. Setting a set amount for smaller penalties – which make up more than 80 per cent of the CFTC’s whistle-blower awards – will free up resources to devote to larger, more complex cases, the agency said in the final rule. 

“The Whistleblower Program plays an important role in supporting the commission’s enforcement programme,” Whistleblower Office Director Raagnee Beri said in a statement.

“This final rule will protect and enhance the programme’s effectiveness and further incentivise whistle-blowers to report.” BLOOMBERG