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

The US Commodity Futures Trading Commission (CFTC) announced on September 11 that it plans to automatically award successful whistleblowers 30 percent of any enforcement penalties collected if the tipster is due to receive less than $5 million. This change is intended to expedite payouts and reduce paperwork for the majority of whistleblower awards, aligning the agency’s program with that of the Securities and Exchange Commission.

The CFTC's whistleblower program, established in response to the 2008 financial crisis, aims to encourage individuals to share original and timely tips to assist in the agency's efforts to target bad actors. Qualified whistleblowers can receive payouts ranging from 10 to 30 percent of the collected penalties. The CFTC noted that analyzing each award to determine the percentage takes time, especially in the case of awards for smaller penalties, which account for over 80 percent of the agency's whistleblower awards.

By setting a fixed amount for smaller penalties, the agency believes this move will allow resources to be better allocated to more complex cases. Whistleblower Office director Raagnee Beri emphasized the importance of the Whistleblower Programme in supporting the CFTC's enforcement efforts and stated that this final rule will protect and enhance the program's effectiveness, further incentivizing whistleblowers to report.