CFTC Whistleblower Lawyers

The Commodity Futures Trading Commission (CFTC) was created in 1974 through enactment of the Commodity Futures Trading Commission Act. At that time, most futures trades involved products produced in the agricultural sector. The futures industry has since become much more varied and complex.

The Commodity Exchange Act (CEA) was enacted in 1936. It provides the statutory framework for the operation of the CFTC. The CEA broadly defines a “commodity” to include:

 

  • A physical commodity, such as wheat or cotton;

 

 

  • A natural resource, such as gold or oil;

 

 

  • A currency or interest rate; and

 

 

  • “All services, rights, and interests . . . in which contracts for future delivery are presently or in the future dealt in.”

 

The CFTC Whistleblower Program

The CFTC whistleblower program was created in 2010 following enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act. It offers rewards of 10% to 30% to eligible whistleblowers who voluntarily provide original information or analysis that leads to the recovery of monetary sanctions in excess of $1 million or more.

The CFTC’s whistleblower claim review process is, in most respects, very similar to that of the SEC. For example, both commissions have a claims review staff responsible for issuing Preliminary Determinations and performing initial assessments as to the grant or denial of awards. Both the SEC and CFTC programs also allow the whistleblower to request to view the record in his or her case and object to the Preliminary Determination prior to the issuance of a Final Determination.

During Fiscal Year 2019, the CFTC issued whistleblower awards totaling more than $15 million. The Commission issued 106 Final Orders that involved 134 whistleblower award applications during the same period. Of the 134 applications, monetary awards were issued to five whistleblowers while the remaining 129 applications were denied.
Our experienced whistleblower attorneys can provide additional details about the CFTC whistleblower program and help you to evaluate your options prior to submitting your information. Eric Young, the managing partner of McEldrew Young Purtell Merritt’s whistleblower department, was one of only seven commenters on the proposed regulation changes governing the CFTC whistleblower program. Eric also served as a speaker at the Knowledge Congress live webinar on CFTC Financial Market Reforms.

CFTC Whistleblower Investigations and Enforcement Actions

The CFTC actively engages in complex investigations that often involve multiple companies within in a specific industry. These investigations sometimes continue for several years before a decision is made to pursue an enforcement action or close an investigation. Since this can be such a lengthy process, the CFTC will accept information from a whistleblower even after an investigation has started.

The identity of a whistleblower, as well as any information provided by the whistleblower, is kept confidential unless disclosure is required as part of a judicial or administrative action. Unlike the False Claims Act where the Department of Justice can decline to intervene in a qui tam action, the CFTC must prosecute an enforcement action once it files charges against a company.

The CFTC Whistleblower Office started an outreach campaign in 2019 to educate and encourage potential whistleblowers to report suspected fraud in commodities markets. The Commission promotes its whistleblower program through speeches, website posts, and appearances at events such as seminars, conferences and industry trade shows. Its publicity campaign also includes publication of “CFTC Whistleblower Alerts” that highlight trending topics and issues involving areas of current concern, recent investigations and enforcement actions.

For every case in which more than $1 million in sanctions is recovered, the CFTC posts Notices of Covered Actions on its website. These postings identify the subjects that have been the focus of the Commission’s recent enforcement actions. Some of the more prevalent types of misconduct include:

 

  • Noncompetitive trades;

 

 

  • Fraudulent misrepresentation;

 

 

  • Misappropriation;

 

 

  • Price manipulation;

 

 

  • Embezzlement;

 

 

  • Failure to maintain minimum capital requirements;

 

 

  • Fraudulent recordkeeping;

 

 

  • Failure to segregate customer funds; and

 

 

  • Failure to properly supervise employees in operations or trade processing.

 

The CFTC is proactive in identifying and prosecuting misconduct in new and developing areas. If you have evidence of possible violations of the Commodities Exchange Act or any fraud involving futures trading or the commodities market, call McEldrew Young Purtell Merritt for a free, no-obligation consultation. Our attorneys will investigate your claim and determine whether there is sufficient evidence to submit a claim to the CFTC whistleblower program.

Cryptocurrency Scams

The Commodity Futures Trading Commission (CFTC) regulates and oversees futures transactions involving digital currencies and Initial Coin Offerings. The CFTC and the Department of Justice actively investigate illegal practices that can influence the price of a cryptocurrency. One long running scam is a practice known as spoofing where fraudsters flood the market with fake orders in order to induce other traders to buy or sell.

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ICE Swap Rate – ISDAfix

The Intercontinental Exchange (ICE) Swap Rate, formerly known as ISDAfix, is the worldwide common reference rate value for fixed interest rate swap rates. ICE is the parent company of the New York Stock Exchange and various other exchanges and markets around the world. ICE’s futures exchanges and clearinghouses provide risk management and capital efficiency for global commodity and financial markets.

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Off-Exchange Precious Metals

In 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act effectively banned most over-the-counter retail contracts involving gold, silver, and other precious metals. Unless exempt, commercial entities are prohibited from entering into off-exchange commodity transactions using loans or margin. The CFTC has brought enforcement actions against a individuals and companies for violations of the law since it went into effect. If you have evidence of illegal, off-exchange transactions in gold, silver, platinum, or palladium, McEldrew Young Purtell Merritt attorneys can assist you in reporting to the CFTC whistleblower office.

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Commodity Pool Fraud

A commodity pool is a private investment vehicle that combines the contributions of multiple investors into a large “pool” used for trading in the futures and commodities markets. By amassing contributions into a single fund, pool operators gain leverage in trading to maximize profit potential. Commodity pools are regulated in the United States by the CFTC and the National Futures Association. The CFTC actively investigates whistleblower claims involving commodity pool fraud.

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Position Limit Violations

The Commodity Exchange Act authorizes the CFTC to impose limits on the size of speculative positions in futures markets. These limits prevent excessive speculation that can result in unreasonable or unwarranted price fluctuations. If you have credible evidence of position limit violations, the CFTC may pursue an enforcement action based on your information. The attorneys at McEldrew Young Purtell Merritt represent individuals who report allegations of misconduct in the commodities and derivatives market.

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Commodity Price Manipulation

The CFTC actively investigates price manipulation in commodities markets. The Chairman of the CFTC said that the Commission “will carefully consider all available actions to help ensure market integrity and combat manipulation or fraud.” If you have information about a company or group of traders engaged in price fixing or manipulation, the whistleblower attorneys at McEldrew Young Purtell Merritt can assist you at every stage of the CFTC’s whistleblower program, from the filing of a claim to the collection of an award.

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In the News

Whistleblower awarded $700,000 after prompting SEC investigation, International Investment, June 22, 2020.

CFTC whistleblower awarded payout of more than $6M, Fox Business, June 9, 2020.

Agricultural Price Manipulation and the CFTC Whistleblower Program, The National Law Review, May 27, 2020.

CFTC Whistleblower Program Awards Whistleblower who was “Heavily Relied” on During Investigation, The National Law Review, April 22, 2020.

Customer Advisory: Be on Alert for Frauds Seeking to Profit from Market Volatility Related to COVID-19, CFTC Office of Customer Education and Outreach, March 26, 2020.

Cryptocurrency Scams Took in More Than $4 Billion in 2019, The Wall Street Journal, February 8, 2020.

Tipster gets $1 million payout from CFTC, Investment Executive, December 20, 2019.

SEC, CFTC, IRS, DOJ Whistleblower Programs Game Changers: Pensions and Trusts Now Must Report Crimes, Forbes, October 24, 2019.

CFTC Whistleblower Program Awards Another Tipster $1.5 Million, Finance Magnates, June 5, 2019.

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