On August 31, the Commodity Futures Trading Commission (CFTC) Whistleblower Office posted a Notice of Covered Action (NCA) for a recent enforcement action taken against Goldman Sachs over allegations that the company committed recordkeeping violations.
A NCA signals that the CFTC is now accepting whistleblower award claims for the case. Through the CFTC Whistleblower Program, qualified whistleblowers are entitled to monetary awards of 10-30% of the funds collected in the enforcement action connected to their whistleblowing.
The NCA covers an enforcement action announced on August 29, in which the CFTC charged Goldman Sachs with violating the terms of a previous cease-and-desist provision and with violating CFTC recordkeeping provisions. Goldman Sachs agreed to pay $5.5 million to settle the charges.
“As this case demonstrates, the CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties,” said Director of Enforcement Ian McGinley. “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
In 2019, Goldman Sachs settled CFTC charges that it had failed to record the phone lines of a trading and sales desk for 20 days. Goldman Sachs agreed to pay $1 million and to cease and desist from further violations of CFTC recordkeeping provisions.
According to the CFTC, “following the issuance of the November 2019 order, Goldman had additional recordkeeping failures, in violation of the cease-and-desist provision of the earlier order. Specifically, Goldman used a vendor service to record calls made on mobile devices. Beginning in March 2020, increased use of the vendor’s recording service during the pandemic led to increased failures in the vendor’s hardware. As a result, Goldman failed to fully record and retain thousands of mobile device calls.”
Since it was established in 2010, the CFTC Whistleblower Program has allowed the agency to recover over $3 billion from fraudsters. It has correspondingly awarded over $330 million to qualified whistleblowers. In July, in honor of National Whistleblower Day, Acting Director of the CFTC’s Whistleblower Office Christina McGlosson told WNN: “The Commodity Futures Trading Commission recognizes the critical role whistleblowers play in our enforcement program every day.”
The CFTC Whistleblower Program is in danger of being a victim of its own success, however, as a funding crisis threatens to undermine the program. On July 26, Senator Chuck Grassley (R-IA), Senator Maggie Hassan (D-NH), and Representative Zach Nunn (R-IA) introduced the CFTC Whistleblower Fund Improvement Act to address the funding crisis and provide the “long-term fix” which the Chair of the CFTC has said the problem requires.
“The bipartisan Whistleblower Fund Improvement Act will ensure that the CFTC whistleblower program will not be a victim of its own success and can continue to help root out fraud in the U.S. derivatives markets,” wrote leading whistleblower attorney Stephen M. Kohn in a recent article calling for the bill’s passage.
Further Reading
Notice of Covered Action No. 2023-023 – Goldman Sachs & Co. LLC
Congress Must Pass CFTC Whistleblower Funding Law
“Urgently Needed” CFTC Whistleblower Funding Bill Introduced