On November 2, the U.S. Commodity Futures Trading Commission (CFTC) released its 2020 Annual Report on the Whistleblower Program and Customer Education Initiatives. The report covers the previous fiscal year of the CFTC Whistleblower Program and includes details on whistleblower awards, whistleblower tips, and whistleblower education and outreach efforts. The 2020 fiscal year saw a record number of whistleblower tips and whistleblower award claims for the CFTC Whistleblower Program.
According to the report, the CFTC granted 16 whistleblower awards totaling $20 million during the 2020 fiscal year. The report adds that “the 11 Final Orders granting those awards include three orders involving multiple whistleblower awardees, two orders granting awards to whistleblowers located outside the United States, and one award based in part on related actions brought by another regulator.”
“The Commodity Exchange Act’s whistleblower program continues to protect investors and the markets,” said whistleblower attorney Stephen M. Kohn, partner at Kohn, Kohn, & Colapinto and Chairman of the Board of the National Whistleblower Center. “Today’s report confirms that since the passage of the Dodd-Frank Act whistleblowers have disclosed frauds that have resulted in over $1 billion in sanctions, and whistleblowers have been paid over $120 million in awards. A great day for whistleblowers, accountability, and investor protection.”
In the 2020 fiscal year, the CFTC Whistleblower Office received a record 1,030 whistleblower tips and complaints on Form TCR, the official whistleblower disclosure form. This is a 126% increase compared to last fiscal year (in which there were 455 official disclosures) and a 36% increase over the previous record of 760 disclosures in the 2018 fiscal year. According to the report, the CFTC “received tips and complaints regarding activities such as failures to supervise; record keeping or registration violations; swap dealer business conduct; wash trading; solicitation, misappropriation, and other types of fraud; use of deceptive or manipulative devices in trading; as well as spoofing and other forms of disruptive trading or market manipulation.”
The CFTC Whistleblower Office received a record-setting 140 whistleblower award applications in the 2020 fiscal year. These applications were in response to the 35 Notices of Covered Actions posted by the CFTC in the period. The 140 award applications is a 20% increase over the previous fiscal year.
In the 2020 fiscal year, the CFTC also continued its education and outreach programs to “inform various constituencies about the existence, benefits, and parameters of the program.” The report details industry conferences and public events at which the CFTC Whistleblower Office presented information about the program but notes that the number of these events is down this year due to the COVID-19 pandemic. However, the report states that “as of September 30, 2020, more than 58,000 individuals had registered to receive emails alerting them to updates on the Whistleblower Program website, such as the posting of new NCAs.”
The CFTC Whistleblower Program was established in 2010 with the passage of the Dodd-Frank Act. Through the program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action are entitled to a monetary award of 10-30% of funds recovered by the government. Additionally, the CFTC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality.
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