In financial industry, two of the principal agencies tasked with ensuring the U.S. financial markets’ stability and integrity are the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). The CFTC ensures that commodity futures and options exchanges have policies that protect investors in the market and ensure fair trading free from fraud and manipulation.
CFTC & SEC Whistleblower Programs
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established whistleblower programs for the SEC and the CFTC. Whistleblowers that report securities violations to the SEC or CFTC can receive a percentage of any recovery the government collects over $1 million in enforcement actions. Collections can include fines, disgorgement of ill-gotten gains, and restitution.
The percentage of a whistleblower award can be anywhere from 10% to 30% depending on the information and assistance the whistleblower provides, the significance of the information, and whether the award will deter future fraud or violations.
Anonymous whistleblowers are an essential tool in the CFTC’s and SEC’s ability to catch fraud, often providing inside information that would be difficult for the agency to find on its own. The SEC’s whistleblower awards exceeded $500 million in the past ten years, and the CFTC whistleblower awards totaled about $120 million.
Wall Street agencies often make a big media splash over large whistleblower awards to encourage other whistleblowers to come forward with information about securities violations. But because the CFTC makes fewer awards, it can be easier for people to figure out the whistleblower’s identity.
Protecting CFTC Whistleblower Identities
On September 4, 2020, the CFTC strengthened whistleblower protections and anonymity by announcing a whistleblower award that contained no information about the amount or percentage awarded. The CFTC press release stated that “[t]he whistleblower’s tip helped stop fraudulent activity that harmed main street investors.” Division of Enforcement Director James McDonald also indicated that “[t]he violations would have been difficult to detect without the whistleblower’s information and assistance,” highlighting the importance of the whistleblower program to the agency’s enforcement efforts.
Protecting Whistleblower’s Interests
Whistleblowers are essential to maintaining the integrity and fairness of U.S. financial markets. If you have concerns about illegal activity based on your work on Wall Street, we can help. At Silver Law Group, we focus our practice exclusively on securities fraud and financial wrongdoing. Our attorneys have represented CFTC Whistleblowers as well as investors who have been defrauded by commodities firms. If you have been a victim of commodities fraud, our attorneys can help determine whether you have a viable CFTC Whistleblower claim or may be able to pursue your damages through NFA arbitration.
Attorney Scott Silver, Silver Law Group’s managing partner, is the co-chairman of the Securities and Investment Fraud Group of the American Trial Lawyers Association and has written a whistleblower primer. Contact us at 800- 975-4345 to schedule a free, confidential meeting to discuss your concerns, or send us a message online.