The U.S. Commodity Futures Trading Commission on Tuesday awarded $2.5 million to a whistleblower who exposed misleading pricing at Cargill related to swap trades.
In 2017, the agency fined Cargill $10 million after an investigation found the company provided misleading information to customers on thousands of complex swaps. The Commodity Futures Trading Commission (CFTC) said Cargill effectively hid as much as 90% of its expected revenue, including expected profits and other costs used when setting the price. Swaps are a financial tool that exist in a number of forms as a way to manage risk.
The amount awarded to the whistleblower would have been larger had the informant come forward sooner, the CFTC said in a news release.
"Today's award goes to a whistleblower who assisted the CFTC at every step of the investigation," said James McDonald, director of the CFTC's Division of Enforcement, in a prepared statement. "Although this award was substantial, it was reduced because of an unreasonable delay in reporting the violations. We hope this case illustrates the importance of reporting violations to the CFTC as soon as reasonably possible. Reporting early lessens the harm violators can inflict on the public and hastens our investigations to bring the culprits to justice."
The CFTC redacted the length of the whistleblower's delay and how much the award was reduced as a result.
"Our client stood on principle, and is appreciative of the exhaustive work done by the CFTC," Shayne Stevenson, partner at Hagens Berman law firm, which represented the whistleblower, said in a statement. "We are pleased to have maximized our client's whistleblower claim and to have protected the whistleblower's anonymity and best interests."
Congress created CFTC's Whistleblower Program in 2010 under the Dodd-Frank law. Whistleblowers are eligible for between 10% and 30% of the fines collected from securities violators. The whistleblowers are paid out of the CFTC Customer Protection Fund created by Congress and funded through securities penalties.
Minnetonka-based Cargill, one of the world's largest of agriculture commodities traders, neither admitted nor denied CFTC's 2017 findings, but agreed to pay the fine and enhance its internal controls and employee training programs.
On Tuesday, Cargill reiterated that it has made internal changes, adding, "We support governmental whistleblower programs. Out of respect for the privacy and confidentiality of CFTC's process, we can't comment further on today's settlement."