On October 15, the U.S. Government Accountability Office (GAO) released a decision in response to inquiries by the U.S. Commodity Futures Trading Commission (CFTC) regarding its Customer Protection Fund (CPF). The GAO ruled that the CFTC “has a nondiscretionary duty to pay awards to qualifying whistleblowers” even when the award exceeds the available balance of the CPF.
The CPF was established alongside the CFTC Whistleblower Program with the passage of the Dodd-Frank Act in 2010. The CPF is financed through monetary sanctions paid by violators of the Commodity Exchange Act and is used to pay whistleblower awards, as well as fund the Whistleblower Office and the Office of Customer Education and Outreach.
Earlier this year, the CFTC contacted the GAO and requested a decision on how the CPF is to operate when the balance of the CPF is insufficient to either pay a whistleblower award or finance expenses of the relevant offices. The CFTC asked three specific questions in regard to this matter. They inquired “whether a whistleblower award that exceeds the available balance of the CPF must be recorded consistent with the recording statute, 31 U.S.C. § 1501, and if so, whether its recording would trigger an Antideficiency Act violation.” They also asked whether funding the relevant offices in amounts that exceed the CPF would violate the Antideficiency Act. Lastly, the CFTC asked, “whether either CFTC’s annual lump-sum appropriation or previously deposited miscellaneous receipt funds, would be available… in the event that the CPF had an insufficient balance.”
Most importantly, for CFTC whistleblowers, the GAO ruled that the CFTC is “required to record the amount of the award consistent with the recording statute even when the award exceeds the current value of the CPF.” Qualified CFTC whistleblowers are entitled to a monetary award of 10-30% of funds recouped by the government in the relevant case. Notably, the balance of the CPF is not a factor the CFTC may utilize when determining the exact amount of an award.
The Antideficiency Act prohibits agencies from spending in excess of available funds. However, the GAO ruled that, because of the CFTC’s nondiscretionary obligation to pay whistleblower awards, a whistleblower award which exceeds the available balance of the CPF would not trigger an Antideficiency Act violation. In contrast, because there is no statutory requirement, funding the operation of the Whistleblower Office or the Office of Customer Education and Outreach in excess of the available CPF balance would violate the Antideficiency Act. The GAO also ruled that “neither CFTC’s annual lump-sum appropriation nor previously deposited miscellaneous receipts are available to CFTC to obligate for the operation of the two offices.”
