Dodd-Frank’s Whistleblower Provisions

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.  The Act, which marks the biggest expansion of government power over banking and markets since the Great Depression, sets its aims at remedying the perceived regulatory holes that permitted the financial crisis of the early twenty-first century to have such far reaching and deleterious effects.[1] [2]

The legislation affects every financial institution operating within the United States, and bears significant implications for other commercial enterprises as well.  Vis-à-vis the influence these organizations maintain on the global stage, the Dodd-Frank Act is truly worldwide in its purview.  “As a result, both financial institutions and commercial companies must now begin to deal with the historic shift in U.S. banking, securities, derivatives, executive compensation, consumer protection and corporate governance that will grow out of the general framework established by the act.”[3]

In addressing the reform, CFTC Chairman, Gary Gensler, noted that the Act “will – for the first time – bring comprehensive regulation to the swaps marketplace.  Swaps dealers will be subject to robust oversight.  Standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties.  The Commission looks forward to implementing the Dodd-Frank bill to lower risk, promote transparency and protect the American public.”[4]

Perhaps paramount amongst the sweeping reforms provided for in the legislation are augmentations directed at helping governmental agencies protect against fraud and manipulation.

In the past, [financial agencies] had the ability to prosecute manipulation, but to prevail, [they] had to prove the specific intent of the accused to create an artificial price.  Under the new law…the Commission’s anti-manipulation reach is extended to prohibit reckless use of fraud-based manipulative schemes.  This closes a significant gap, as it will broaden the types of cases [it] can pursue and [improves] the chances of prevailing over wrongdoers.[5]

To help achieve these ends, Dodd-Frank has fostered the development of the CFTC’s whistleblower program.  Under these provisions, the Act allows for the payment of monetary awards to eligible whistleblowers and provides anti-retaliation protections for individuals who share information with or assist the CFTC in their investigations.[6]

Monetary Awards

  • The CFTC will pay awards to eligible whistleblowers who voluntarily provide original information about violations of the Commodity Exchange Act that lead to an enforcement action resulting in more than $1 million in monetary sanctions.
  • The CFTC can also pay whistleblower awards based on monetary sanctions collected by other authorities in actions that are related to a CFTC enforcement action, and are based on information provided by a CFTC whistleblower
  • The total amount of a whistleblower award will be between 10 and 30 percent of the monetary sanctions collected in either the CFTC action or the related action.
  • Information can be about the conduct that happened prior to the enactment of the Dodd-Frank Act (July 21, 2010)

Anti-Retaliation Protections

  • The Dodd-Frank Act prohibits retaliation by employers against individuals who provide information about possible violations of the Commodity Exchange Act, or who assist in any investigation or proceeding based on such information.

If you, or someone you know, has information regarding a potential market fraud or manipulation and would like to know more about your rights and protections, please do not hesitate to contact us at: team@gs2law.com


[1]Paletta, Damian; Lucchetti, Aaron (July 16, 2010). “Senate Passes Sweeping Finance Overhaul”. Wall Street Journal.

[2] Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).

[4] See Press Release, CFTC Chairman Gary Gensler, http://www.cftc.gov/LawRegulation/DoddFrankAct/index.htm.

[5] Final Rules, 76 Fed. Reg. at 41,410.

[6] See CFTC Whistleblower Rules, http://www.cftc.gov/ConsumerProtection/WhistleblowerProgram/index.htm.