CFTC’s 2023 Annual Report on Whistleblower Program Highlights Program’s Success and Important Role of Whistleblowers
The CFTC’s 2023 Annual Report to Congress on its whistleblower program highlights the success of the program and strongly reinforces the important role whistleblowers play in rooting out commodity frauds.
The CFTC’s Whistleblower Program “provides monetary incentives to individuals who report possible violations of the Commodity Exchange Act that lead to a successful enforcement action,” and provides “privacy, confidentiality, and anti-retaliation protections for whistleblowers.” The program awards whistleblowers with up to 30% of the government recovery resulting from information they voluntarily provide. The CFTC’s 2023 Annual Report underscores the impact of the whistleblower program: since its inception, the CFTC has made roughly $350 million in whistleblower awards associated with enforcement actions bringing in more than $3 billion in government recoveries.
According to the Report, between October 1, 2022 through September 30, 2023, the CFTC “granted seven applications for whistleblower awards, totaling approximately $16 million” — one whistleblower received an award of approximately $15 million. This comes on the heels of the “CFTC’s issuance of a record-breaking award of nearly $200 million to a single whistleblower in the previous fiscal year.” As usual, the report is sparse on details about the confidential whistleblowers, but certain points are worth emphasizing.
First, when describing the information provided by whistleblowers who received CFTC awards, the Report mentions that the information “accurately described the misconduct at issue, both factually and legally”; was “highly significant”; “conserved substantial [CFTC] resources”; and “led … staff to expand its analysis of the misconduct and further analyze the harm suffered by customers ….” Similarly, when describing the assistance provided by whistleblowers who received awards, the CFTC noted that the whistleblowers “provided a high degree of ongoing support to … staff, including … interpreting key evidence, facilitating the appearance of another witness, and helping to conserve Commission resources.” These guideposts offer insight into how a whistleblower and his or her attorney can present information and assistance to maximize the chances of receiving as high an award as possible.
Second, the CFTC noted that whistleblower tips related to “crypto/digital asset schemes and romance scams continued to be high.” This may be the case for years to come. More broadly, the CFTC received over 1,500 whistleblower tips over the past year, according to the Report. Those tips relate to, among other things, “fraudulent solicitation and subsequent misappropriation of crypto/digital assets (e.g., pump-and-dump schemes, fraudulent representations of moneymaking opportunities, or refusals to honor withdrawal requests),” as well as “market manipulation, spoofing, insider trading, corruption, illegal swap dealer business conduct, recordkeeping or registration violations, and fraud or manipulation related to digital assets, precious metals, and forex trading.”
Third, the CFTC Report highlighted its efforts to educate the public about the CFTC whistleblower program and provide outreach. The goals of these efforts are to “generate more high-impact whistleblower tips in the future and help keep markets safe for participants.” In other words, the CFTC wants to hear from whistleblowers who have information on commodities frauds to help protect markets.
If you have information relating to potential commodities fraud or securities fraud and want to speak to a member of the Constantine Cannon whistleblower team to learn what it means to be a whistleblower, please do not hesitate to contact us for a free and confidential consultation.