CFTC Whistleblower NDAs and Separation Agreements: When the Contract Gets in the Way

An employer cannot lawfully use a CFTC whistleblower NDA or confidentiality agreement to block direct reporting of possible commodity trading violations. The restriction may sit in an employment contract or in the separation agreement handed over on departure. You may know how a trading desk obtained its pricing information, why a benchmark moved or what the company told an investigator. Then the agreement tells you that company information must stay inside the company. That conflict deserves more than a quick reassurance about boilerplate.

The Commodity Futures Trading Commission brought its first action over agreements impeding whistleblower communications against Trafigura in June 2024. Its allegation reached the language of the agreements themselves.

What Does a CFTC Confidentiality Agreement Restrict?

A CFTC confidentiality agreement impeding whistleblower communication restricts information the agency needs to investigate possible violations of the Commodity Exchange Act. The Commodity Futures Trading Commission prohibits using confidentiality or arbitration agreements to obstruct that direct contact, including enforcing or threatening to enforce those terms.

The practical question is what the document tells the employee about speaking outside the business. A definition of confidential information, a restriction on disclosure and an exception for legally required disclosures work together. In Trafigura, the CFTC alleged that this combination left employees confused about voluntary contact with its investigators.

A 2019 International Labour Organization paper, Law and Practice on Protecting Whistle-Blowers in the Public and Financial Services Sectors, identifies several ways employment terms can discourage reporting. They include requiring an internal report before approaching an outside body, requiring the employee to give up a whistleblower award and treating disclosure as a breach of the employment contract.

The paper’s useful insight is that the restriction can target different parts of the decision to speak. One term controls who hears the information first. Another takes away the financial incentive. Another makes the employee believe that telling an outside authority breaks a promise to the company. We look at those terms together, because the heading on the document tells only part of the story.

Direct Communication With CFTC Staff

The Commodity Exchange Act’s whistleblower protections protect the program’s rights and remedies from being signed away. Those provisions matter when a contract appears to place the company in charge of outside communications. We examine the agreement and the reporting concern with the CFTC whistleblower lawyers suited to the matter. The issue is the actual language, the information it covers and the communication it could obstruct.

Trafigura Put the Agreement’s Words in the Case

On June 17, 2024, the CFTC ordered Trafigura Trading LLC to pay a $55 million civil penalty to resolve allegations involving misuse of confidential trading information, benchmark manipulation and impediments to whistleblower communications. The penalty covered the whole settlement, with no separate amount assigned to the agreements.

The CFTC alleged that, between July 31, 2017 and 2020, Trafigura required employees to sign employment agreements and requested separation agreements from former employees. According to the agency, the provisions broadly restricted disclosure of company information to third parties and lacked express permission to share information voluntarily with the CFTC or law enforcement.

The order described an exception for disclosures required by law or court order. A provision allowing a compelled response still left voluntary reporting unaddressed. The CFTC alleged that the restrictions confused current and former employees and impeded their direct communications with its staff.

The agency’s position went further than an allegation that a manager had threatened to enforce a contract. It said language that, on its face, prohibits communication with the Commission can itself violate the rule, without another act blocking contact. The contract could be the obstacle. Just the words on the page.

CFTC Severance Agreements and the Voluntary Reporting Exception

The voluntary reporting exception in a CFTC severance agreement was part of the remedy in Trafigura. The company agreed to change the nondisclosure provisions in its employment, termination and severance agreements so that no term would be understood to limit lawful, voluntary communication with government regulators or law enforcement.

The required changes also covered filing a complaint and disclosing information. They extended to federal, state and local agencies. The settlement addressed what the employee would understand from the contract, as well as imposing a financial penalty.

The Contracts Still Had to Change

One commissioner disputed treating the agreement alone as prohibited conduct, and another challenged the evidence and interpretation of the documents. The settlement still required Trafigura to change its agreements.

Why the Agreement Matters on a Commodity Trading Desk

Commodity trading records connect physical cargoes, pricing information and derivatives positions. A benchmark can determine both the price of the oil and the value of futures or swaps tied to it. Someone who understands the connection can explain a transaction that looks quite different when each trading book is viewed alone.

The Trafigura order illustrates that connection. The CFTC alleged that the business obtained a Mexican trading entity’s confidential gasoline pricing formulas and monthly import plans. The agency alleged that Trafigura traders used the information in trading and pricing decisions. It also alleged that some documents were hand-delivered from Mexico to the United States on paper, leaving no electronic record that Trafigura had them. An employee who understood how those documents arrived could explain something an electronic archive would miss.

The same order alleged benchmark manipulation through physical purchases. The CFTC alleged that Trafigura’s derivatives position stood to gain more from higher benchmark prices than the business would lose by paying more for physical fuel oil. According to the CFTC, heavy bidding and buying in the benchmark’s trading window helped create artificially high prices that benefited that position.

A pricing formula, an import plan, a cargo purchase and a derivatives position each explain part of that commercial story. An insider may understand why they belong together. Broad confidentiality language can sit over precisely the information that makes the trading intelligible to an investigator. We assess the agreement alongside what you know about the business.

Do I Have to Report Violations of the Commodity Exchange Act Internally First to Be Eligible for a Whistleblower Award?

Internal reporting is generally not required for a CFTC whistleblower award. Eligibility depends on the information and how it was obtained. We work through those questions with you, including any terms that appear to require company approval before outside contact.

Qualifying CFTC whistleblowers share a reward of 10% to 30% of the money collected through an enforcement action. The ordinary threshold is more than $1 million in monetary sanctions ordered. The significance of the information and the assistance provided matter to the award assessment.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program with its own rules. For a commodity-trading concern, we assess the CFTC award question alongside the agreement and the underlying conduct.

How Does the CFTC Protect Whistleblowers?

The Commodity Futures Trading Commission has protections for whistleblower information, direct communication and qualifying reporting or assistance. We address how those protections apply with you and the CFTC whistleblower lawyers we bring in.

If anonymity or confidentiality is part of your decision to speak, that belongs in our conversation from the outset. We examine the employment agreement, separation terms and any revised wording alongside what you know about the trading.

Build Your CFTC Whistleblower Case With Us

If an NDA or exit agreement is standing between you and speaking about commodity trading misconduct, speak to our whistleblower experts about the agreement and what you know. We connect the contract terms to your knowledge of the business to build your strongest CFTC whistleblower case, and bring in CFTC whistleblower lawyers who understand the transactions. We stay beside you throughout the case, working through the reporting decisions with you.