CFTC’s 2020 Annual Whistleblower Report

Wednesday, November 25, 2020

The Commodity Futures Buying and selling Fee (“CFTC”) not too long ago launched its 2020 Annual Report on the standing of its whistleblower program for the fiscal yr ending on September 30, 2020.

The report, ready by the CFTC’s Whistleblower Workplace (“WBO”), incorporates statistics on the information acquired and awards granted in the course of the earlier fiscal yr, describes the WBO’s current outreach and training initiatives, and gives an replace on the CFTC Buyer Safety Fund, which funds these efforts.

Beneath the CFTC’s whistleblower program, whistleblowers who voluntarily present unique details about violations of the Commodity Alternate Act are eligible to obtain between 10 and 30 % of ensuing sanctions that exceed $1 million. Eligible sanctions might be collected through CFTC enforcement actions or associated actions by different federal regulators.

Whistleblower Ideas Acquired

In FY 2020, the WBO acquired a file excessive of 1,030 whistleblower ideas and complaints, which represents a rise of 126% over the 455 ideas acquired in FY 2019, in addition to a rise of 36% over the earlier file of 760 ideas in FY 2018. The following pointers and complaints involved actions reminiscent of failures to oversee; file maintaining or registration violations; swap vendor enterprise conduct; wash buying and selling; solicitation, misappropriation, and different sorts of fraud; use of misleading or manipulative units in buying and selling; in addition to spoofing and different types of disruptive buying and selling or market manipulation.

The WBO additionally acquired 191 non-whistleblower ideas, together with 64 referrals from the Securities and Alternate Fee.

Whistleblower Awards Granted

Throughout FY 2020, the CFTC issued 11 whistleblower awards to 16 people, a number of of whom contributed to the identical enforcement motion. The CFTC additionally denied 80 award purposes, primarily as a result of they didn’t relate to a qualifying sanction obtained by the CFTC or one other regulatory company.

The 11 awards mixed for a complete of roughly $20 million, down from the $75 million issued final yr in simply 5 whistleblower awards. For the reason that inception of the Whistleblower Program in FY 2012, the CFTC has issued 25 whistleblower awards for a complete of greater than $120 million. The actions related to these awards have resulted in almost $1 billion in sanctions.

The awards issued throughout FY 2020 illustrate that the award quantity is decided not simply by the dimensions of the sanction collected, but in addition by a number of further issues. One award was decreased as a result of the whistleblower declined to supply a declaration in assist of the CFTC’s enforcement motion; one other award of $250,000 was decreased as a result of the whistleblower didn’t promptly report the violations. A number of whistleblowers can report the identical criminality: an award of greater than $2 million was shared between 4 whistleblowers, who had collectively submitted a tip to the CFTC and “individually offered vital, ongoing help” to the investigation. One other award was shared by two whistleblowers, one primarily based within the US, who first alerted the CFTC to the fraudulent exercise, and the opposite primarily based abroad, who offered further data, together with about efforts by the perpetrators to keep away from detection.