The CFTC Achieved Unprecedented Whistleblower Tip Activity in Fiscal Year 2023

December 21, 2023
The CFTC Achieved Unprecedented Whistleblower Tip Activity in Fiscal Year 2023

The U.S. Commodity Futures Trading Commission (CFTC) unveiled its Annual Report for the CFTC Whistleblower Program during the 2023 Fiscal Year (FY 2023) which showed a CFTC milestone with an all-time high of 1,530 whistleblower tips in FY 2023. With the use of a CFTC whistleblower law firm, individuals who have presented the information about commodities violations in the right way have received considerable amounts of CFTC whistleblower rewards. In addition to addressing commodities, due to the properties of cryptocurrencies, the CFTC and SEC may have dueling or concurrent jurisdiction in the regulation of the crypto industry and cases addressing the Ponzi schemes, and other cryptocurrency failures may be able to be filed through the CFTC.

The CFTC Achieved Unprecedented Whistleblower Tip Activity in Fiscal Year 2023

The CFTC went on to disclose that it has authorized a total of 41 CFTC whistleblower awards, amounting to nearly $350 million that was given to whistleblowers since the inception of the program back in 2010. In the most recent fiscal year, FY 2023, the agency granted seven CFTC whistleblower awards, totaling $16 million.

Jason T. Brown, head of the whistleblower law firm Brown LLC, commended the way the CFTC is triaging and seriously looking at tips that are efficiently filed in the right manner: “The CFTC’s robust whistleblower program, which incentivizes individuals to come forward with information but potentially stay anonymous with a CFTC whistleblower attorney motivates individuals to expose misconduct, promoting market integrity and creating a culture of accountability. With hundreds of millions going to those blowing the whistle the right way, the right message is broadcast for whistleblowers to come forward and for companies to self-police their own misconduct.”

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Recent CFTC Whistleblower Awards

CFTC Whistleblower Award Exceeding $300,000

On September 27, 2023, the Commission bestowed an award exceeding $300,000 upon a whistleblower whose information played a pivotal role in the reclamation of misappropriated funds. The whistleblower provided information that triggered the initiation of an investigation by the CFTC’s Division of Enforcement (DOE), which subsequently led to a an investigation. Notably, the whistleblower’s information proved to be accurate, both in terms of factual details, legally viable. Moreover, the whistleblower efficiently conserved valuable Commission resources in both their initial submission and their subsequent communications with DOE staff throughout the investigation.  Efficiency is an important factor when one weighs the volume of Tips, Complaints & Reports (TCR) versus the number of staff to handle them.   The heavy volume leads to heavy triaging and if you have a case and try to file it yourself in a sprawling manner, according to Jason T. Brown, you may be prejudicing your own case in a manner that’s unsalvageable.

The CFTC Achieved Unprecedented Whistleblower Tip Activity in Fiscal Year 2023

$15 Million CFTC Whistleblower Award

On September 19, 2023, the CFTC awarded another whistleblower with a substantial reward of approximately $15 million. This whistleblower’s information catalyzed an investigation ultimately culminating in a significant enforcement action. Furthermore, the whistleblower went above and beyond by providing ongoing support to DOE staff. This assistance included critical tasks such as interpreting key evidence, facilitating the appearance of a key witness, and significantly aiding in the conservation of the Commission’s resources.

The whistleblower’s invaluable information prompted DOE staff to expand their analysis of the misconduct and further assess the harm suffered by customers due to the violations. Without this whistleblower’s cooperation, the violations might have gone undetected for a more extended period, potentially causing greater harm to customers.

CFTC Presents $300,000 Award to Another Whistleblower

On September 19, 2023, the CFTC granted an award of approximately $300,000 to another whistleblower. The information provided by this whistleblower was instrumental in triggering an investigation by DOE staff that ultimately led to the covered action. The whistleblower’s data pinpointed the conduct at the heart of the case and, crucially, helped save precious Commission resources. Without this whistleblower’s contribution, the violations might have remained undiscovered for a more extended period, potentially causing further harm to customers.

CFTC Acknowledges Three Whistleblowers’ Contributions

On August 11, 2023, the Commission underscored the importance of whistleblowers by issuing a Final Order that granted awards to three individuals who played pivotal and varying roles in the successful resolution of a covered action. One of these whistleblowers provided specific, credible, and timely information that prompted DOE staff to initiate the investigation that eventually led to the successful action. The conduct central to the whistleblower’s original information played a significant role in the covered action.

The other two whistleblowers contributed immensely to the case’s success. One of these whistleblowers provided critical and noteworthy evidence, making them the highest contributor in terms of assistance and cooperation. As a result, the two whistleblowers who played more central roles received higher award percentages than the third.

CFTC Grants Award to Whistleblower Assisting in Market Misconduct Case

On February 21, 2023, the Commission announced an award for a whistleblower who initially provided information to another agency concerning potential misconduct in markets regulated by the CFTC. DOE staff launched an investigation after receiving this information and began collaborating directly with the whistleblower.

The whistleblower continued to provide valuable, ongoing support to DOE staff, including participating in an interview leading to further inquiries involving the entity under investigation. Ultimately, the Commission successfully brought a covered action, partially based on the conduct initially highlighted by the whistleblower.

What Does This Mean for CFTC Whistleblower Program?

The U.S. Commodity Futures Trading Commission’s (CFTC) practice of recognizing and rewarding whistleblowers has significant implications for the future of financial regulation and market integrity. The promise of substantial financial awards encourages more whistleblowers to step up and report misconduct, potentially leading to the identification of previously undisclosed violations.

This trend also points to an era of enhanced enforcement in financial markets for the coming years. The CFTC’s commitment to acknowledging and supporting whistleblowers is likely to result in a growing number of tips and information about potential violations.