CFTC Whistleblower Program Awards Another Tipster $1.5 Million

The US Commodities Futures Trading Commission, or CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term, on Monday, awarded an anonymous Whistleblower Whistleblower A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior Read this Term who had come forward with information leading to an enforcement action with a $1.5 million bounty.

This is also the seventh award that the CFTC has made to a whistleblower since it began making awards five years ago.

Committed to protecting the anonymity of informants, few details are available regarding the nature of the underlying facts or enforcement action or the identity of the whistleblower. The US regulator protects the anonymity of the whistleblowers and discloses no information that could directly or indirectly reveal their identity. However, the CFTC acknowledged that the whistleblower’s original information alerted the agency to a case of fraud.

The head of the CFTC’s division of enforcement, commented: “Today’s award illustrates two key aspects of our Whistleblower Program — that an individual doesn’t have to be an insider to receive a whistleblower award and the Commission can pay awards based on related actions brought by other regulators. I expect more awards to be issued to whistleblowers who provide our Enforcement Division with information based on their expert analysis of market data and to whistleblowers based on related actions.”

Background

Whistleblowing has become a staple of multiple US regulatory regimes, namely those of the US Commodity Futures Trading Commission (CFTC) and the SEC. Both entities have deployed a system of programs and rewards in a bid to help support and streamline investigations.

Whistleblowers who voluntarily provide information to the commission leading to a successful enforcement action of $1 million or more are entitled to between 10 and 30 percent of the money that the SEC recovers from those sanctions.

When the Congress passed the legislation seven years ago, it was faced with considerable opposition from big firms as they argued that it would hurt their compliance programs and create financial incentives for their staff to identify misconducts instead of reporting the issues to their management. Nonetheless, the whistleblower-reward scheme has proved to be a huge success in enabling the nation’s regulators to discover fraud cases and protect investors.