Fiscal Year 2022 Sets New Records for CFTC Whistleblower Program
Fiscal year 2022 was sure to be a record-breaking year for the Commodity Futures Trading Commission Whistleblower Reward Program, as it started with a $200 million whistleblower award – an award so large that Congressional intervention was needed. The CFTC Whistleblower Program’s annual report to Congress for Fiscal Year 2022 confirms this, reporting more than $203 million in total awards.
Created by the Dodd-Frank Act, the CFTC Whistleblower Program pays awards to eligible whistleblowers who voluntarily provide the Commission with original information, about matters within the CFTC’s jurisdiction, that lead to the recovery of more than $1 million in monetary sanctions. The CFTC 2022 Annual Report on the Whistleblower Program identifies the number of whistleblower awards granted and the total amount of CFTC whistleblower awards paid, along with other information of interest to potential whistleblowers and their attorneys.
According to the CFTC Whistleblower 2022 Annual Report, during the fiscal year ending September 30, 2022, the Commission:
- Issued 5 final orders granting whistleblower rewards based on ten applications for awards, including some final orders that made awards to multiple whistleblowers;
- Made whistleblower awards of more than $203 million;
- Issued 37 additional final orders denying 48 other applications for whistleblower rewards on the grounds that the applicants did not meet the legal requirements for an award;
- Received a record-breaking 1,506 new whistleblower submissions using the CFTC “tip, complaint, or referral,” or “TCR” forms and procedures; and,
- Received 152 whistleblower award applications using the CFTC WB-APP forms and procedures, exceeding the prior year’s high-water mark.
With this year’s whistleblower awards, the CFTC reports that it has granted more than $330 million in awards. While this is great news for whistleblowers, it is even better news for the integrity of the markets regulated by the CFTC: In prior years, the Commission has reported that between 30% and 40% of its ongoing investigations involve some whistleblower component.
While the CFTC Whistleblower Reward Program has paid more than $330 million in awards, that total is driven by a few large awards – seen in the big steps in 2018 and 2022.
The popularity of the program continues to grow, however, with the number of TCRs submitted hitting an all-time high.
And, as we have reported in prior years, the number of whistleblower award applications (WB-APPs) continues to grow as well, even without material increases in the number of covered actions, referring to recoveries that are eligible for payout of whistleblower awards. Indeed, 2022 set a new record for the number of WB-APP submissions.
The increasing number of TCRs and WB-APPs puts a burden on the CFTC Whistleblower staff. While new program funding should help on the administrative side, it seems that whistleblowers will face increasing competition for CFTC attention and whistleblower rewards.
Lessons for Potential CFTC Whistleblowers
The CFTC Whistleblower Program provides incentives to individuals to report violations occurring in markets regulated by the CFTC. Monetary rewards, prohibitions on job retaliation, and confidentiality protect and compensate whistleblowers who report improper conduct. Whistleblowers play a vital role in CFTC enforcement efforts, exposing bad actors and violations of the laws and regulations that protect market participants and our financial system.
The CFTC 2022 Annual Report states that whistleblower submissions covered a wide range of wrongful activities, including insider trading; position limit violations; reporting violations; false statements to the government; failures to supervise; record-keeping or registration violations; swap dealer business conduct; wash trading; solicitation, misappropriation, and other types of fraud; and the use of deceptive or manipulative devices in trading, including spoofing and other forms of disruptive trading or market manipulation.
With so many more TCRs being submitted, and so many WB-APPs being submitted, it is important for a whistleblower to ensure that they have met all program requirements and presented their information and arguments in the most effective way possible. Frauds that violate the Commodity Exchange Act and applicable regulations are often complicated, and an experienced attorney can help evaluate evidence, effectively present information to government decision-makers, and protect the whistleblower’s claim for an award, including in any related action.
The whistleblower attorneys of Constantine Cannon have extensive experience representing Dodd-Frank whistleblowers before the CFTC and SEC, and understand the complicated, constantly changing landscape of whistleblower laws. If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please contact us for a confidential consultation.
- The CFTC Whistleblower Program
- What Whistleblowers Should Know about the Dodd-Frank Act
- Fraud in Markets Regulated by the CFTC
- Think you have a whistleblower case?
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