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CFTC whistleblower program hits milestone:  $1B in monetary sanctions

Whistleblowers’ information has led to CFTC enforcement actions that now have totaled over $1 billion in monetary sanctions, underscoring the critical role whistleblowers play in stopping fraud and violations of commodities law.

“This milestone illustrates that the CFTC’s Whistleblower Program has had a tremendous impact on increasing our enforcement efforts in its short history,” said CFTC Acting Director of Enforcement Vincent McGonagle in a statement last month.

An estimated 30% to 40% of all active investigations at the CFTC are due to whistleblowers, a CFTC official recently said. Since passage of the Dodd-Frank Act in 2010, the CFTC has actively encouraged whistleblowers to come forward. The law authorized the CFTC’s and the Securities and Exchange Commission’s whistleblower programs.

The CFTC milestone was announced the same day as the CFTC announced a $3 million whistleblower award for information that led to an investigation and a successful enforcement action.

Major strides have been made in the CFTC’s whistleblower program in the past year. The CFTC issued $20 million in awards to 16 whistleblowers in fiscal year 2020. This was a big jump from the previous two fiscal years, when only 5 whistleblowers received awards each year.

The number of whistleblower reports submitted to the CFTC also jumped in fiscal year 2020. The CFTC received a record high of 1,030 whistleblower reports in fiscal year 2020, which was an annual increase of  126% from the 455 reports received in fiscal year 2019.

The CFTC has awarded approximately $123 million to whistleblowers since issuing its first award in 2014.

Whistleblowers are crucial for uncovering otherwise-hidden commodities-related fraud and save time and resources for the CFTC, particularly when tackling complex and obscure fraud.

Those who report misconduct and violations to the CFTC whistleblower program can receive between 10% and 30% of the monetary sanctions collected as a result of their information and assistance.

CFTC whistleblowers also are granted confidentiality and protection from job retaliation. Foreign citizens can qualify for whistleblower awards.

Whistleblowers are paid from the CFTC Customer Protection Fund, a distinct “pot” of funds created by Congress that is financed entirely through monetary sanctions paid to the CFTC by violators. Money owed to harmed investors is not used to fund the program or whistleblower rewards.

If you would like to provide information about violations to the CFTC, contact Phillips & Cohen for a free, confidential review of your potential case by our experienced whistleblower attorneys.

 

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