Comment on CFTC-2026-1222, CFTC-2026-1222-0001, Stephen, Hasegawa

I am a partner with Phillips & Cohen, LLP. Our firm's mission is to represent whistleblowers who help protect the government fisc and the financial markets. As the discussion of the Commission’s Proposed Rule makes clear, whistleblowers have been a critical partner in the Commission’s efforts to enforce the commodities laws, to ensure fair dealing in the commodities markets, and to redress fraud in those markets. I appreciate the Commission’s Proposed Rule establishing a presumptive 30% award in matters in which the aggregate award will total no more than $5 million, absent the presence of certain negative factors specified in Proposed Rule 165.9(d)(1)(ii)-(iv). I believe that the Commission is correct that the Proposed Rule will save staff time and will allow the Commission to shift resources to the evaluation of whistleblower awards in larger cases. I share the Commission’s hope that this, in turn, will alleviate delays in resolution of award claims in larger matters, and ultimately will reinforce incentives for whistleblowers to come forward with information that aids the Commission’s enforcement of the commodities laws. Accordingly, I support the Proposed Rule. I am concerned, however, that the Proposed Rule potentially creates an unintended inconsistency in whistleblower awards. Under the Proposed Rule, if the Commission recovers $16.66 million in “collected proceeds,” a whistleblower whose submission led to that recovery would receive a presumptive award of approximately $5 million (absent the presence of negative factors), which is 30% of the Commission’s recovery. However, If an identically situated whistleblower brought the Commission information that led to the Commission’s recovery of $17 million in “collected proceeds,” an amount exceeding the threshold set in the Proposed Rule, that whistleblower would not be entitled to the same presumption and could receive as little as $1.7 million, which is 10% of the Commission’s recovery. Although this potential disparity would narrow as the Commission’s recovery increases, it would persist, up to a Commission recovery of $50 million in collected proceeds (in which the minimum statutory award would be $5 million, or 10% of the Commission’s recovery). I do not believe the Commission intended its Proposed Rule to create weaker incentives for whistleblowers to bring cases resulting in large recoveries than for whistleblowers whose information results in smaller recoveries. The Commission could eliminate this inconsistency by adding to the Proposed Rule another provision stating that the Commission shall apply its ordinary rules to evaluate and calculate awards in matters in which collected proceeds exceed the amount for which the presumption could apply, provided that, absent applicability of the same enumerated exceptions described in the Proposed Rule, the aggregate award in those cases shall fall within the statutory range and shall be no less than $5 million. That addition would ensure that whistleblowers whose information leads to recoveries larger than those that trigger the presumption do not receive smaller awards than whistleblowers for whom the proposed presumption applies.