Report Finds Whistleblowers Instrumental to Uncovering Financial Fraud
The Commodity Futures Trading Commission (“CFTC” or “Commission”) recently released the annual report for its whistleblower reward program, stating that it awarded more than $15 million to whistleblowers this past year.
Since the Dodd-Frank Act established the CFTC whistleblower program in 2010, it has issued fourteen whistleblower awards totaling approximately $100 Million. The CFTC actions associated with those awards have resulted in sanctions orders totaling more than $800 million.
The Commission’s Whistleblower Office (“WBO”) received 455 whistleblower tips and complaints in 2019. Additionally, whistleblowers submitted 88 supplements to their previous filings. The total number of whistleblower complaints received in 2019 was down from the past year. However, the WBO explained this to be attributable to increased interest in virtual currencies and the CFTC publicity around them during 2018.
Commodities fraud whistleblowers have long been on the front lines of assisting authorities in conducting effective financial regulation. Paying whistleblower rewards is well established as one of the most effective ways to ensure that financial scandals come to light and to protect consumers and taxpayers from fraud and illegal conduct. The CFTC report highlights how whistleblowers are instrumental in alerting the CFTC to potential financial crimes. The WBO reports that it received tips and complaints regarding activities such as Bank Secrecy Act violations; failures to register; false reporting; foreign bribery; fraud involving virtual currencies, precious metals, foreign currency exchange, or binary options; inadequate risk controls; insider trading or front-running; money laundering; retaliation against employees; as well as spoofing and other forms of disruptive trading or market manipulation.
“The CFTC is building a world-class whistleblower program,” said Stephen M. Kohn, partner at Kohn, Kohn & Colapinto, LLP, a firm of qui tam lawyers. “The support the Commission gives to whistleblowers and its increased commitment to giving whistleblower awards is a major step forward in fighting fraud,” Kohn continued. Kohn is also a founder of the National Whistleblower Center, where he serves as the chairman of the board.
The CFTC’s Whistleblower Program pays monetary awards to eligible whistleblowers who voluntarily provide the CFTC with original information on violations of the Commodity Exchange Act that leads to a successful enforcement action resulting in financial sanctions exceeding $1,000,000. Rewards under the program are mandatory for qualified whistleblowers and must be in the range of 10-30% of the collected proceeds. Employers cannot retaliate against whistleblowers or encumber potential whistleblowers from communicating with the CFTC.
Read the CFTC report: FY19 Annual Whistleblower Report to Congress