Included in the Continuing Resolution bill signed into law on March 15 is a provision extending an emergency fix to the funding issue threatening the Commodity Futures Trading Commission (CFTC) Whistleblower Program.
A funding crisis has threatened the program for years and the emergency fix which was originally passed in 2021 expired on March 14, threatening the CFTC Whistleblower Program from collapse.
“This step by Congress has saved the CFTC Whistleblower Program, which was in danger of becoming a victim of its own success,” says Kohn, Kohn & Colapinto (KKC) founding partner Stephen M. Kohn, who has advocated for funding fixes to the CFTC Whistleblower Program. “42% of the CFTC’s enforcement actions involve whistleblowers, thus the whistleblower program is absolutely crucial to the ability of the CFTC to carry out its mission of rooting out fraud, manipulation and abuse in the commodities markets.”
“While this action by Congress is an important step, longer-term funding solutions are needed to ensure the CFTC Whistleblower Program can continue to thrive moving forward,” Kohn, who also serves as Chairman of the Board of National Whistleblower Center, added. “The cap placed on the CFTC Whistleblower Program’s fund is not compatible with the growth of the program over the years and must be addressed.”
The CFTC Whistleblower Program, which offers monetary awards and anti-retaliation protections to whistleblowers, has allowed the CFTC to recover over $3.2 billion from fraudsters since it was established in 2010. It has correspondingly awarded over $390 million to qualified whistleblowers. According to the CFTC, approximately 42% of all the agency’s enforcement actions involve whistleblowers.
The program has been in danger of being a victim of its own success, however. When it established the program, Congress placed a $100 million cap on the fund used to finance the CFTC Whistleblower Office and pay out whistleblower awards. This fund is entirely financed by sanctions collected through the program, but any sanctions that would exceed the cap are instead placed into the U.S. Department of the Treasury’s general fund.
Thus, while the program has collected billions of sanctions, only a small percentage of that is placed into the fund. And large sanctions also mean large awards (whistleblowers are eligible for awards of 10-30% of the sanctions collected in the action aided by the disclosure). Due to the cap on the fund, large awards therefore threaten to completely deplete the fund.
In 2021, Congress passed an emergency short-term fix to save the program from collapse by creating a separate fund to finance the CFTC Whistleblower Office. This ensured that even if large awards depleted the fund, the Office could continue to function.
In January, Congress included a provision in the stopgap funding package which extended this short-term fix through March 14, 2025. The newly passed extension goes through September 30, 2025.
Advocates, members of Congress and CFTC officials have all called for a long-term solution to the CFTC Whistleblower Program’s funding issue. The bipartisan CFTC Whistleblower Fund Improvement Act of 2023 would provide a sustainable solution by raising the cap on the fund to $300 million and making permanent the separate fund for the Whistleblower Office.
National Whistleblower Center has issued an Action Alert allowing individuals to write to their members of Congress calling for the passage of the CFTC Whistleblower Fund Improvement Act to permanently solve the CFTC Whistleblower Program’s funding crisis.
Join NWC in Taking Action
Further Reading:
CFTC Whistleblower Program Doomed Without Congressional Intervention
