Where Are the Whistleblower Office Awards?

Are enough funds being allocated to stop individuals who are preying on US consumers?

In 2010, in response to the economic and financial crisis of 2008, the Dodd-Frank Act was put into place to pay individuals who provided original information or materials that led to enforcement action. Whistleblower offices were opened, giving the strong message to all US companies that if they put into practice business and financial models that prey on the consumer, they would be held accountable.

Significant funds were given to both the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) to create whistleblower offices and distribute awards to whistleblowers that supplied usable and legitimate information. Eligible whistleblowers would be paid between 10-30% of the sanctions collected as a result of the enforcement to which their information led.

However, when a closer look is taken, it becomes clear that these financial awards have been given extremely infrequently, particularly by the CFTC. In fact, the CFTC has only given out two awards, amounting to only $530,000 since the Dodd-Frank Act, while the SEC has only given approximately twenty awards, amounting to $52 million.

This large discrepancy in number and amount of bounties given has caught the attention of the inspector general of the CFTC, who is currently conducting a review of this information. While there may be many reasons for this low number (and discrepancy between the number given by the CFTC and the SEC), it is clearly very important to learn more about this issue.

Several months ago, the chief of the CFTC, Chris Ehrman, indicated that the reason for the low number of awards is a result of the smaller size of the office and the “different turf” that they oversee. Regardless, he did also acknowledge that this program would be giving more awards out in the near future. He also seems to suggest that that the Office of the Chief Economist be reinstated to help support economic research related to this issue.

Currently, the CFTC and SEC are sitting on substantial budgets that can be used for payments as well as education about their offices’ priorities. Lack of funds is clearly not the sole problem behind the low numbers. One factor might be that many claims that are made can not be substantiated, as both offices have decided more claims than they have awarded bounties.

The inspector general’s investigation is still ongoing and a report will be generated when it is complete. In the meantime, the CFTC does seem to understand the urgency, so it will be interesting to see whether their funding trends increase in the coming months.

Our attorneys, led by David Chase, former Senior Counsel in the Enforcement Division of the Securities and Exchange Commission (SEC) and leading investor advocate, Scott Silver, are ready to help you. If you have information that needs to be shared, our team can help you protect yourself from any improper retaliation while maximizing your financial reward for the important information that you are able to provide.  Give our team a call at 1-844-611-2950 for more information.