Five whistleblowers will receive a whistleblower award of more than $8 million from the Commodity Futures Trading Commission (CFTC) after providing information that helped the agency resolve an enforcement action involving a fraudulent scheme, the CFTC announced June 1.
The CFTC regulates U.S. derivatives markets, including futures, swaps and options. These markets allow companies, investors and other participants to hedge against price changes in commodities and financial products, but they can also be used in schemes targeting retail investors. CFTC officials said the latest whistleblower award underscores the agency’s reliance on whistleblowers to detect fraud in the markets it oversees.
The agency did not name the whistleblowers, identify the enforcement action or disclose the exact award amounts. Under the Commodity Exchange Act, the CFTC generally does not disclose information that could reasonably be expected to reveal a whistleblower’s identity.
According to the CFTC, the five whistleblowers reported the alleged fraud soon after recognizing it and provided information and assistance that helped the agency complete the enforcement action. The case resulted in a “substantial recovery of funds for defrauded investors,” Raagnee Beri, director of the CFTC’s Whistleblower Office, said in the agency’s announcement.
David Miller, director of the CFTC’s Division of Enforcement, said retail fraud remains a priority for the agency.
“Whistleblowers like today’s awardees enable the CFTC to hold perpetrators of fraud to account and deter future wrongdoing in the markets the CFTC oversees,” Miller said in the announcement.
The CFTC Whistleblower Program was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program allows eligible whistleblowers to receive between 10 and 30 percent of the monetary sanctions collected in successful CFTC enforcement actions, as well as certain related actions brought by other regulators.
Whistleblower awards are paid from the CFTC’s Customer Protection Fund, which is financed through monetary sanctions paid by violators of the Commodity Exchange Act. The agency said no money is taken or withheld from harmed customers to fund whistleblower awards.
Since issuing its first award in 2014, the CFTC has awarded more than $430 million to whistleblowers. Those awards are connected to enforcement actions that have resulted in more than $3.7 billion in monetary sanctions, according to the agency.
CFTC General Counsel Tyler Badgley said the awards are meant to encourage people with information about potential Commodity Exchange Act violations to report them.
Individuals with information about possible violations may submit a tip to the CFTC electronically through a Form TCR, or Tip, Complaint or Referral.
