Article: CFTC Whistleblower Program in Peril Over Potential $100 Million-Plus Payout

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CFTC Whistleblower Program in Peril Over Potential $100 Million-Plus Payout

Alexandra Berzon, 11 May 2021

The Commodity Futures Trading Commission’s whistleblower program is in turmoil over a potential payout exceeding $100 million to a former Deutsche Bank AG executive—one so large it would deplete the agency’s whistleblower funds and has led it to seek congressional action.

The executive had provided information that helped CFTC and Justice Department investigations that led to roughly $2.5 billion in settlements with Deutsche Bank in 2015, including $800 million with the CFTC. They alleged that the bank manipulated the London interbank offered rate, or Libor, a benchmark interest rate used to set short-term loans for global banks.

A unit of the German bank pleaded guilty to U.S. criminal charges, and acknowledged that it failed to adequately police employees.

Some CFTC officials who have reviewed the case internally have recommended the whistleblower payout, calculated as a percentage of the agencies’ legal settlements. But the application is under investigation by others, according to people familiar with the matter. Agency leaders have contended there is no mechanism to pay the bank executive and other applicants and keep funding the whistleblower program.

The CFTC pays whistleblowers from money it collects in enforcement penalties. But the agency’s whistleblower fund can be replenished only when it falls below $100 million. Penalties collected otherwise typically go into the U.S. Treasury.

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