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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. A CTCF whistleblower attorney from Youman & Caputo is prepared to evaluate your case and help you determine your legal options moving forwards.

CFTC Whistleblower Resources

To immediately access the resources at any point on this page, click the corresponding links below.

What Are Violations of Commodities Laws?
What is The CFTC Whistleblower Program?
What Violations Can Result in a CFTC Whistleblower Award?
Successful Submissions for CFTC Whistleblower Program
What is “Original Information?”
Can a CFTC Whistleblower Tip Be Submitted Anonymously?
How CFTC Whistleblower Rewards Are Determined
How Are Whistleblowers Protected Against Retaliation?
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CFTC Whistleblower Attorney

What Are Violations of Commodities Laws?

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

What is The CFTC Whistleblower Program?

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.

What Violations Can Result in a CFTC Whistleblower Award?

Commodities fraud can take many forms, including violations of the Dodd-Frank Act and Commodity Exchange Act (CEA). The CEA regulates the trading of commodity futures and establishes the framework under which the CFTC operates. Anyone who manipulates the CEA or violates commodity laws in connection with trading commodity futures and options could face sanctions and other penalties.

Violations that may be brought to the attention of the CFTC and result in a whistleblower reward include:

  • Fraud or manipulation: using fraud schemes or manipulative tactics in connection with commodities, futures or swaps, such as Ponzi schemes or market manipulation.
  • Insider trading: a disruptive trading practice where someone with material non-public information about a publicly traded company uses that information to buy or sell that company’s stock.
  • Misuse of funds: violations involving the misappropriation of customer funds, such as embezzlement.
  • False reporting: knowingly providing the CFTC, other organizations, customers or market participants with false, fraudulent or misleading information.
  • Improper marketing: the false advertising of futures and options contracts to retail investors, including spoofing: a form of market manipulation where traders artificially inflate an asset’s supply and demand to increase profits.
  • Investment scams: Ponzi schemes or reporting schemes where investors’ funds are used to pay returns to earlier investors rather than making legitimate profits.
  • Benchmark rates manipulation: using illegal manipulation to attempt to increase or decrease impartial global reference rates to increase profits.
  • Recordkeeping violations: breaches of the CFTC’s bookkeeping requirements, such as failure to maintain accurate investment records.
  • Unregistered activities: any unregistered entities that are participating in trade activities or unregistered trade activities that are subject to the CFTC’s jurisdiction.
  • Illegal or corrupt practices: ethical violations such as kickbacks or bribes by officials involved in regulated activities, including trading and advising.
  • Retaliation for CFTC whistleblowers: any adverse actions or threats of retaliation by an employer against an individual who legally reports potential violations.

Any party that violates the CFTC’s laws or retaliates against those who report violations could face sanctions from the Commission. The person or party who came forward to blow the whistle on CFTC violations could receive a reward for providing original information that leads to a successful enforcement action resulting in sanctions that exceed $1 million.

Successful Submissions for CFTC Whistleblower Program

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 our experienced whistleblower attorneys to focus on your case and provide you with the dedicated attention you deserve.

What Is “Original Information” in This Type of Case?

Original information is a key part of CFTC whistleblower cases and the awards that may be available to whistleblowers. To be eligible for a whistleblower reward, an individual must voluntarily provide original information on violations of the CEA or another commodities law to the CFTC.

“Original information” refers to information that was not already known to the Commission, that is derived from a) the whistleblower’s independent knowledge (information that is not available to the public or generally known) or b) the whistleblower’s independent analysis that reveals new or unknown information.

If a tip submitted by a potential CFTC whistleblower has already been reported by another whistleblower, this will not be considered original information unless there is proof that the second whistleblower was the original source of the information.

Can a CFTC Whistleblower Tip Be Submitted Anonymously?

In an effort to encourage people to come forward with original information about commodities fraud, the Commodity Futures Trading Commission permits anonymous whistleblowing. Anonymity is possible if a whistleblower hires legal counsel for representation. The whistleblower’s attorney may submit a tip anonymously to the CFTC on behalf of the protected whistleblower.

In certain circumstances, the identity of a whistleblower can remain anonymous even to the CFTC until such a time as an award is determined. In these cases, even after a reward is granted, the whistleblower’s identity will not be made available to the public. The CFTC Whistleblower Office will actively protect the confidentiality of a whistleblower, such as by working with the Enforcement Division to remove identifying information from investigation and litigation files.

How CFTC Whistleblower Rewards Are Determined

Award determinations made by the CFTC will either grant or deny a whistleblower award based on whether he or she has met the qualifications. Rewards are mandatory for qualified whistleblowers. If a CFTC whistleblower is eligible for an award for providing original information that results in over $1 million in sanctions against an entity that violated federal commodities laws, the value of the reward is based on a percentage system.

Most CFTC whistleblower rewards fall in the percentile range of 10 to 30 percent of the proceeds or sanctions collected against a violator. The criteria for determining the amount of the award is detailed in 17 Code of Federal Regulations (C.F.R.), Section 165.9. This law lists factors that can increase or decrease the amount of a whistleblower’s award. However, the final amount is up to the discretion of the Commission.

What Could Increase a Reward?

Factors that may increase the value of an award include the significance of the information provided by the whistleblower, how much the whistleblower (or legal representative) helped in taking administrative action, the degree to which the information resulted in one or more successful claims brought by the Commission, the resources conserved as a result of the whistleblower’s assistance, the degree to which the award enhances the CFTC’s the future ability to enforce commodity laws, and any unique hardships experienced by the whistleblower as a result of coming forward.

What Could Decrease a Reward?

Factors that may decrease the value of a CFTC whistleblower reward include the whistleblower’s culpability or involvement in the violation, whether the whistleblower personally benefited from the violation, any egregious acts of wrongdoing committed by the whistleblower, any interference with the Commission’s investigation of the violation(s), unreasonable reporting delays, internal compliance and reporting violations, and any knowingly false or fraudulent statements or representations made to the CFTC.

How Are Whistleblowers Protected Against Retaliation?

CFTC whistleblowers are given substantial protection against employer retaliation. Protection is available even if the whistleblower does not qualify for a reward. Whistleblower laws specifically prohibit employers from taking any of the following actions, directly or indirectly, for lawfully reporting commodity law violations or related wrongdoing:

  • Job termination or discharge
  • Worker demotion
  • Suspension
  • Threats or intimidation
  • Worker harassment or discrimination

If proof of retaliation against a CFTC whistleblower is discovered, the law provides substantial financial relief to the victim. Compensation can include job reinstatement (if terminated) in addition to compensation for back pay, litigation costs and attorney’s fees. If you have suffered CFTC whistleblower retaliation, contact a lawyer for assistance.

Call Youman & Caputo For a Free CFTC Whistleblower Case Consultation

If you are aware of such conduct and want to learn more about the CFTC whistleblower claims and how we can help you obtain an award for exposing federal commodities fraud, please contact us to schedule a free consultation. To learn more about our team of whistleblower lawyers, click here.