On February 24, Senators Charles Grassley (R-IA), Maggie Hassan (D-NH), Joni Ernst (R-IA), and Tammy Baldwin (D-WI) introduced the Commodity Futures Trading Commission (CFTC) Fund Management Act to expand the whistleblower reward fund of the CFTC. The CFTC whistleblower reward fund is currently in danger of being depleted due to the success of the agency’s whistleblower program. The bipartisan bill would allow the CFTC to set aside more money from sanctions in order to pay whistleblower awards, ensuring the continued success of the program without spending taxpayer money.
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.”
Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information about commodities fraud that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. Whistleblower rewards are paid out of the CFTC’s Customer Protection Fund, which is entirely financed by sanctions paid by fraudsters.
Under current legislation, the Customer Protection Fund is capped at $100 million. However, the increasing size of whistleblower rewards in recent years threatens to deplete the fund before it can be replenished. Therefore, the CFTC Fund Management Act raises the fund’s cap to $150 million and temporarily establishes a separate fund for money used to pay the program’s operating costs.
“The CFTC whistleblower program has become far more successful than Congress imagined when we set it up back in 2010,” said Senator Grassley in a press release. “The risk of a cash shortage is so great, the commission recently told my office it’s temporarily paused review of some cases that could wipe out the Customer Protection Fund used to pay whistleblowers.”
“I’ve been raising concerns about this issue for months and introduced legislation last year to address this problem, but Congress dragged its feet,” Grassley continued. “Now whistleblowers are being asked to pay the price by waiting until the government can afford to review their claims. We can’t allow this program to become a victim of its own success. Congress has to pass this bill now to ensure that the CFTC whistleblower program remains solvent and can continue to grow.”
“Rooting out waste, fraud, and abuse is essential to protecting taxpayer dollars, and I am glad to partner with Senator Grassley to help ensure that the incentives for whistleblowers to call out this type of wrongdoing remain in place,” Senator Hassan added. “By raising the cap on the whistleblower reward fund we will help prevent this successful program from becoming depleted. This is an important bipartisan bill and I urge my colleagues on both sides of the aisle to join us in supporting its swift passage.”
Since the CFTC Whistleblower Program was established in 2010 with 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. In the 2020 fiscal year, the CFTC granted 16 whistleblower awards totaling $20 million. Whistleblowers have proven to be an extremely effective tool in the CFTC’S enforcement efforts. If passed, the CFTC Fund Management Act will ensure that the CFTC has the proper resources to continue utilizing whistleblowers to root out fraud.
Grassley, Hassan, Ernst, Baldwin Introduce Bill to Save CFTC Whistleblower Program from Potential Financial Shortfall