The Commodity Futures Trading Commission announced last week that Vincente Martinez has been appointed as the first director of the Commission’s recently created Whistleblower Office. According to CFTC Chairman Gary Gensler:
The CFTC’s Whistleblower Office, which the agency implemented under the Dodd-Frank Act, provides the public an avenue to help catch misconduct in the markets and improve the CFTC’s ability to be an effective cop on the beat.
Mr. Martinez joins the CFTC from the Securities and Exchange Commission, where he served as an Assistant Director in the Division of Enforcement. At the SEC, Martinez helped establish the Office of Market Intelligence, which drafted the SEC’s own whistleblower rules and currently oversees the SEC’s collection and analysis of whistleblower tips. The CFTC consulted the SEC’s Office of Market Intelligence in crafting its whistleblower program, and the CFTC’s whistleblower rules are nearly identical to the SEC’s. Thus, Martinez will be very familiar with the CFTC’s whistleblower program, and ready to step in as “an effective cop on the [CFTC] beat.”
The CFTC whistleblower bounty program, which went into effect in October 2011, provides an award for whistleblowers who voluntarily come forward with original information that leads to a successful enforcement action in which the CFTC recovers monetary sanctions in excess of $1 million. Qualified CFTC whistleblowers are entitled to an award of 10-30% of the amount recovered. Like the SEC rules, the CFTC rules do not require a whistleblower to report a potential violation internally before reporting to the government.
The CFTC rules, however, differ from the SEC rules in two significant respects: First, unlike the SEC rules, the CFTC rules do not exclude employees of public accounting firms from eligibility for a whistleblower award, meaning outside auditors of CFTC-regulated entities may blow the whistle on their clients. Second, the CFTC rules do not contain a “double dip” provision, meaning the CFTC does not exclude from eligibility for an award whistleblowers who previously recovered a bounty from another regulator in a criminal or enforcement matter related to the same alleged misconduct.