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;
- Price manipulation;
- 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.