CFTC Whistleblower Program’s FY23 Report to Congress Reveals Continued Success of the Program in Protecting Markets and Customers
Tuesday, October 31, 2023

CFTC Whistleblower Office Receives the Highest Number of Whistleblower Tips and Award Applications Since the Inception of the Program

Today the CFTC’s Whistleblower Program issued its annual report to Congress for FY23.  The report reveals that the program continues to be a key enforcement tool for the CFTC.  Since the inception of the program, the CFTC has awarded approximately $350 million to whistleblowers, and whistleblower disclosures have led to more than $3 billion in enforcement sanctions.  In a statement accompanying the report, Commissioner Christy Goldsmith Romero underscored the vital role of whistleblowers in helping the CFTC to protect customers and markets:

Whistleblowers play a vital role in supporting CFTC investigations related to fraud and other illegality.  The CFTC could not fully protect customers and markets without whistleblowers.  Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time.  The faster we can stop fraud, the more we can protect customers from harm.

Given the great benefit that whistleblowers provide to the CFTC’s enforcement efforts, it is critical for the CFTC to provide both incentives for whistleblowers to come forward, and protections for working with a federal whistleblower program.  The CFTC’s Whistleblower Program recognizes that whistleblowers put themselves at considerable professional and reputational risk in order to help the government.  The Program provides confidential protection to whistleblowers.  The Program also recognizes that incentives in the forms of monetary awards increase the number of whistleblower tips.  This Report confirms that fact, with 1,530 tips this year, the highest of any year.

Highlights of the report include:

  • During FY23, the CFTC granted seven applications for whistleblower awards, totaling approximately $16 million, to individuals who voluntarily provided original information that led to successful enforcement actions. Some of the whistleblowers provided information leading the CFTC to open the relevant investigations, while others provided substantial ongoing assistance and cooperation with the CFTC as the matter progressed.
  • The CFTC’s Whistleblower Office (“WBO”) received 1,530 whistleblower tips, which represents an increase of roughly 50 percent over the number of tips the WBO received in FY 2021 and FY 2020.
  • The WBO received tips regarding a wide range of alleged violations, including market manipulation, spoofing, insider trading, corruption, illegal swap dealer business conduct, recordkeeping or registration violations, and fraud or manipulation related to digital assets, precious metals, and forex trading.
  • The WBO received 301 whistleblower award applications, a new record for the CFTC Whistleblower Program – roughly doubling the previous record established in FY22.
  • The whistleblowers that received awards during FY23 conserved substantial CFTC resources and contributed in various ways, including: (1) providing a high degree of ongoing support to Enforcement Staff, including, among other things, interpreting key evidence, facilitating the appearance of another witness; (2) helping the CFTC expand its analysis of the misconduct and further analyze the harm suffered by customers as a result of the violations; and (3) providing information that was sufficiently specific, credible, and timely to cause Enforcement Staff to open an investigation leading to a successful covered action. In one of the orders granting an award, the CFTC noted that “[w]ithout the whistleblower’s information, DOE staff might not have learned of the violations at issue until much later and more customers could have been harmed.”

CFTC Whistleblower Reward Program

Under the CFTC Whistleblower Reward Program, the CFTC will issue rewards to whistleblowers who provide original information that leads to covered judicial or administrative actions with total civil penalties in excess of $1 million (see how the CFTC calculates monetary sanctions). A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.

Original information “leads to” a successful enforcement action if either:

  1. The original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or
  2. The conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.

A covered “judicial or administrative action” is “any judicial or administrative action brought by the Commission under [the CEA] that results in monetary sanctions exceeding $1,000,000.”  7 U.S.C. § 26(a)(1).   In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.

 

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