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CFTC: Looking for a Few Good Whistleblowers

Posted  May 7, 2021

When it comes to their respective whistleblower programs, the Commodity Futures Trading Commission (CFTC) does not get the same respect or attention the Securities and Exchange Commission (SEC) does.  That is largely because the SEC Whistleblower Program has been an unparalleled success, with whistleblower awards being made (and highly promoted) virtually every week or two.  Last year was a record-breaking year for the program, which included a blockbuster $114 million award in October and a $50 million award last June.  The agency made another $50 million award last month, with the total whistleblower award tally to date exceeding $800 million to more than 150 whistleblowers.

Notably, 6 of the Top-10 whistleblower awards doled out last year were made under the SEC program.  The CFTC Whistleblower Program, however, tells a very different story.  The whistleblower payouts to date stand at a relatively paltry $120 million.  And unlike the regular stream of SEC awards, the CFTC awards are few and far between.  While the agency made a $3 million award in April, the most recent one before that was a $250,000 award in September.  And where not a month goes by without some heralding of the SEC’s prolific awards program (last month it was all about honoring departing SEC Whistleblower Chief Jane Norberg), the CFTC program typically gets nary a notice.

But not for lack of trying.  With its comparatively (to the SEC) limited resources and scope of enforcement authority, the CFTC still does its best to foster its program and bring whistleblowers into the fold.  It does this by promoting the awards it makes and highlighting the critical role whistleblowers play in the enforcement scheme.  In announcing last month’s award, for example, CFTC Acting Director of Enforcement Vincent McGonagle did not mince his praise of whistleblowers, highlighting the more than $1 billion in sanctions whistleblowers have helped the agency recover:

This milestone illustrates that the CFTC’s Whistleblower Program has had a tremendous impact on increasing our enforcement efforts in its short history.  In many of our actions, whistleblowers’ assistance has been critical in revealing wrongdoing, and their tips ultimately conserve the CFTC’s time and resources.

The CFTC also publishes a stream of Whistleblower Alerts to further put out the call to would-be whistleblowers that the agency wants to hear from them.  The most recent alert, released just last week, spells this message out loud and clear.  It is directed at “Corrupt Practices in the Commodities and Derivatives Markets,” encouraging whistleblowers to report “actions that seek to improperly influence officials or agents with personal payments or rewards – commonly thought of as bribes or kickbacks.”  According to the Alert, these actions could include:

  • Corrupt practices that impact the prices in commodity markets that drive U.S. derivatives prices or that are used to manipulate benchmarks, such as those that serve as the basis for related derivatives contracts.
  • Corrupt payments used to secure business in connection with regulated activities like trading, advising, or dealing in swaps or derivatives, paid out of funds investors believed were being used to invest.
  • Corrupt practices are used to misappropriate material nonpublic information that traders would want to know.

With its multiple other alerts, the CFTC has highlighted other enforcement areas for which it is seeking whistleblower assistance, including Virtual Currency Fraud, Insider Trading, Money Laundering, and Spoofing.  The bottom line in all this is the CFTC Whistleblower Program may always be stuck in the shadow of its more prominent and better resourced sister agency.  But it seems to be doing everything it can to get the message out to whistleblowers that they can expect to receive a very warm embrace if they approach the agency with evidence of fraud or misconduct in the commodities or derivative markets.  And perhaps a sizeable monetary award to boot.

Constantine Cannon has substantial experience representing whistleblowers before the CFTC.  So if you think you may have evidence of fraud or misconduct in this area and would like to speak with one of our experienced whistleblower lawyers, please do not hesitate to contact us.

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Tagged in: CFTC Whistleblower Reward Program, Fraud in CFTC-Regulated Markets, Importance of Whistleblowers, Whistleblower Eligibility,