Senators Introduce Bill to Rescue CFTC Whistleblower Program
Yesterday, Sens. Chuck Grassley (R-Iowa), Maggie Hassan (D-N.H.), Joni Ernst (R-Iowa), and Tammy Baldwin (D-Wis.) introduced the CFTC Fund Management Act. The purpose of this bipartisan legislation is to increase the whistleblower reward fund used to pay rewards to those that report commodities fraud. The fund is in danger of depletion due to the increasing success of the program. The bill would allow the commission to set aside more money from fines collected to pay whistleblower awards.
The Commodities Futures Trading Commission (CFTC) relies on whistleblower to uncover fraud and other illegal activities. Its Customer Protection Fund, established by Congress in 2010, hold funds that are used to reward whistleblowers for their disclosures. However, it is also used to pay for operating expenses and educational initiatives associated with the CFTC whistleblower office.
Under current law, the Customer Protection Fund is capped at $100 million. Any fines collected after the account reaches the cap are remitted to the Treasury’s general fund. In recent years, the increasing size and quantity of fines stemming from successful whistleblower disclosures have led to larger reward disbursements. This increase in rewards risks depleting the fund before it can be replenished.
Since it was established, the CFTC Whistleblower Program has issued over $120 million to whistleblowers and collected sanctions totaling nearly $1 billion for the United States Government.
“The CFTC whistleblower program has become far more successful than Congress imagined when we set it up back in 2010. The risk of a cash shortage is so great, the commission recently told my office it’s temporarily paused review of some cases that could wipe out the Customer Protection Fund used to pay whistleblowers. I’ve been raising concerns about this issue for months and introduced legislation last year to address this problem, but Congress dragged its feet.”
“Now whistleblowers are being asked to pay the price by waiting until the government can afford to review their claims. We can’t allow this program to become a victim of its own success. Congress has to pass this bill now to ensure that the CFTC whistleblower program remains solvent and can continue to grow,” Grassley said.
If passed, the bill would raise the fund cap to $150 million and temporarily establish a separate account to house funds used to pay for the CFTC Whistleblower Office’s operating expenses. The proposed legislation will ensure CFTC whistleblowers who report frauds will be effectively protected and fully compensated for their disclosures.
“Allowing the fund to become fully depleted would undermine public confidence in this highly successful whistleblower program,” said CFTC whistleblower attorney Stephen M. Kohn. “Congress should make passing the CFTC Fund Management Act one of its highest priorities. Commodities fraud whistleblowers must be fully rewarded for risking their careers to protect the public from fraudsters,” urged Kohn.