CFTC Whistleblower Claims
In the wake of Great Recession, Congress increased federal oversight on the financial industry by enacting the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act included a directive that led to the creation of the Commodity Futures Trading Commission (CFTC) Whistleblower Program, which provides monetary incentives and protection from retaliation for individuals who report fraud relating to commodities.
Violations of the commodities laws may arise with respect to traditional commodities—cotton, wheat, etc.—and in context such as oil and gas, treasury futures, currencies, and alternative investment products.
The CFTC is the government agency responsible for regulating the United States derivative markets, including futures, options, and swaps; thus, information about potential Commodity Exchange Act violations often concerns misconduct related to trading activity, including:
- Fraud, including fraudulent solicitation, misappropriation of customer funds, issuing false customer account statements, mishandling customer funds, Ponzi schemes, and affinity schemes
- Market manipulation, including disruptive trading practices such as fictitious and noncompetitive transactions, illicit trading strategies designed to manipulate or attempt to manipulate prices, and spoofing
- Trade practice violations, including wash sales, fictitious sales, noncompetitive transactions, violation of position limits, noncompetitive exchange of futures for physical transactions opposite each other, unauthorized swap transactions, inadequate oversight of traders, under-capitalization, improper controls and supervision, improper handling and/or segregation of customer funds, failing to comply with applicable record keeping and audit trail rules, and creating after-the-fact trading records containing fictitious information that were submitted for clearing
The CFTC Whistleblower Program provides a financial incentive to individuals to report significant commodities-related fraud schemes.
Though the CFTC has agents, accountants, and lawyers whose job is to uncover fraud and violations of the commodities laws, there is more unlawful conduct than they can track.
That is why the CFTC provides private citizens with financial incentives to report significant cases of commodities fraud to the government.
The CFTC has the authority to award a whistleblower from 10 percent to 30 percent of what the agency collects. In a case where an agency issues an award to multiple whistleblowers in the same action, it cannot award the whistleblowers a total award of less than 10 percent or more than a total of 30 percent of the sanctions imposed.
To submit a successful tip under the CFTC whistleblower program, an individual must voluntarily provide original information about a violation of the federal commodities laws that has occurred, is ongoing, or is about to occur.
The information provided must lead to a successful CFTC action resulting in an order of monetary sanctions over $1 million.
Though such individuals are often employees of the companies about which they are submitting information, an employment relationship is not required to submit a successful tip.
At Youman & Caputo, we are highly selective about the CFTC Whistleblower cases that we accept.
We generally will not handle an CFTC Whistleblower claim unless the federal commodities law violations at issue are likely to a government recovery of at least $10 million.
We then invest significant time and resources in those cases that we accept to maximize the chance of obtaining an award for our client.
This allows us to focus on your case and provide you with the dedicated attention you deserve.
Call Youman & Caputo today for a free CFTC Whistleblower case consultation.
If you are aware of such conduct and want to learn more about the CFTC Whistleblower Program and how we can help you obtain an award for exposing federal commodities fraud, please contact us to schedule a free consultation.
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