Whistleblower

Whistleblower in financial markets refers to an individual who reports violations of securities laws, commodities laws, or other financial regulations to regulatory authorities such as in the U.S. to the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Whistleblowers play a crucial role in detecting and preventing fraud, protecting investors, and maintaining the integrity of financial markets.
== History ==
The modern era of whistleblower protection and incentives in financial markets began with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This legislation established whistleblower programs at both the SEC and CFTC, offering financial rewards and protection against retaliation for individuals who provide information leading to successful enforcement actions.
== SEC Whistleblower Program ==
The SEC Whistleblower Program has been highly successful since its inception. In fiscal year 2023, the SEC paid almost $600 million to whistleblowers, including a record-breaking single award of $279 million.
 
Whistleblowers can receive between 10% and 30% of the monetary sanctions collected when these exceed $1 million.
=== Notable Cases ===
In August 2023, the SEC awarded $104 million to seven whistleblowers for their role in uncovering and reporting securities violations. 
A $279 million award was given to a whistleblower who provided information about a bribery-for-business scheme allegedly involving Swedish telecommunications giant Ericsson.
== CFTC Whistleblower Program ==
The CFTC Whistleblower Program, like its SEC counterpart, offers awards to individuals who provide information leading to successful enforcement actions. Since its inception in 2014, the CFTC has granted whistleblower awards amounting to approximately $380 million. Whistleblowers can receive between 10% and 30% of the recovered amount if their information leads to successful action and resolution by the CFTC. The CFTC takes extensive measures to protect whistleblowers' identities, including scrubbing all documents related to litigation discovery to prevent inadvertent exposure. To submit a whistleblower tip, individuals must visit www.Whistleblower.gov and complete a TCR (tips, complaints, and referrals) form. The process can be anonymous initially, but the CFTC will eventually need to know the whistleblower's identity to proceed with the case.
=== Notable Cases ===
In June 2024, the CFTC awarded over $8 million to an insider whistleblower who provided significant information leading to multiple enforcement actions.
In October 2023, the CFTC made an $18 million award to a single whistleblower who provided detailed information and assistance in a CFTC enforcement action and a related action by another agency.
== Impact on Financial Markets ==
Whistleblowers have played a crucial role in uncovering major financial frauds and misconduct. Their contributions have led to billions of dollars in fines and penalties against financial institutions, helping to maintain market integrity and protect investors. Effective whistleblowing mechanisms are now recognized as a key feature of good governance and anti-corruption systems in financial institutions.
== References ==
Category:Regulation
Category:Securities and Exchange Commission
Category:Commodity Futures Trading Commission
Category:Whistleblower