On April 30, a group of several whistleblower advocacy groups led by the National Whistleblower Center (NWC) sent a letter to the U.S. Senate Committee on Agriculture, Nutrition and Forestry urging the members to support the passage of the Commodity Futures Trading Commission (CFTC) Fund Management Act. According to the letter, the CFTC Fund Management Act is needed to save the successful CFTC Whistleblower Program from a funding crisis.
According to whistleblower advocates, the CFTC Whistleblower Program is in crisis because of its success. The program offers monetary awards to individuals who voluntarily provide the agency with original information that aids in a successful enforcement action. However, due to the recent significant increases of both the number of whistleblower complaints filed with the CFTC and the number of whistleblower awards issued by the agency, the exclusive fund used to pay CFTC whistleblower awards is nearly depleted.
According to the whistleblower groups’ letter, the Consumer Protection Fund is so depleted that “the CFTC has started delaying the processing of whistleblower cases due to a lack of funds and the CFTC Office of the Whistleblower might be forced to furlough staff.” The CFTC Fund Management Act addresses the crisis by increasing the limit on funds that can be deposited into the Consumer Protection Fund.
The Fund is currently entirely financed by sanctions paid to the CFTC by fraudsters. The CFTC Fund Management Act would not change this and does not require outside funding. It simply raises the cap on the amount of money that can be in the Fund from $100 million to $150 million.
According to the letter, the current $100 million cap “is arbitrary and was set at a time when the incredible success of the CFTC program was unforeseen. These low expectations should not hinder the success of the program or dissuade whistleblowers from providing critical information that enables the CFTC to protect investors and promote the integrity, resilience, and vibrancy of the derivatives markets.”
The current cap was set in 2010 with the creation of the CFTC Whistleblower Program. Over the past decade, the program has grown significantly, and last year was a record year for the program. In fiscal year 2020 the CFTC received over 1,000 formal whistleblower complaints, dwarfing the 58 complaints received in the program’s first full year. Furthermore, “[c]urrently, between 30-40% of the CFTC’s anti-fraud enforcement’s ongoing investigations involve whistleblowers,” according to the letter. Overall, the CFTC has recovered over $1 billion in sanctions caused by whistleblower tips and has issued over $120 million in whistleblower awards.
“Some may consider the passage of the CFTC Fund Management Act as a bandage solution for problems that would be addressed by the much-needed CFTC Reauthorization,” the letter states. “But this bandage solution is critical to address an urgent need that cannot wait until the enactment of the CFTC Reauthorization. Whistleblowers often face serious hardship after taking the brave step to report wrongdoing, including blacklisting. These individuals find comfort in the possibility that this hardship will be remedied by an award, but now face strife due to award processing delays and insufficient authorization to use sanctions from enforcement actions to reward whistleblowers.”
The letter is addressed to the members and Chair of the U.S. Senate Committee on Agriculture, Nutrition and Forestry because the bill currently stands before that Committee. Senator Debbie Stabenow (D-MI) is the Chairwoman of the Committee and Senator John Boozman (R-AR) is the Ranking Member.
The current version of the CFTC Fund Management Act was introduced on February 24 by Senators Charles Grassley (R-IA), Maggie Hassan (D-NH), Joni Ernst (R-IA), and Tammy Baldwin (D-WI).
Senator Grassley introduced an earlier version of the bill during the last session of Congress. At that time, Whistleblower Network News published an editorial supporting the legislation and demanding Congress prioritize passing the bill. The editorial states that without the bill, “delays and an inability to pay awards will cause severe harm to the whistleblowers and threaten the future of the entire [CFTC whistleblower] program.”
In addition to NWC, the letter supporting the bill was signed by National Whistleblower Legal Defense and Education Fund, Transparency International – U.S. Office, Public Citizen, Government Accountability Project, Project On Government Oversight, Whistleblowers of America and ACORN 8.
The same coalition of whistleblower groups also sent a letter to Congress arguing for fixes to the whistleblower provisions of the Anti-Money Laundering Act of 2020.
NWC Interim Executive Director, Mary Jane Wilmoth, said: “These critical initiatives will improve upon the whistleblower protections and reward structures contained in the AML Act of 2020 and at the CFTC. Congress has reaffirmed its commitment to whistleblowers time and time again, and we, alongside a coalition of whistleblower advocates, call on them to do so again.”