CFTC (“Dodd-Frank”) Whistleblowers
The Commodity Futures Trading Commission (CFTC) operates a Whistleblower Program to receive tips about fraud, manipulation, and abusive practices in markets within its jurisdiction—including futures markets, swap markets, and markets for derivatives and foreign currencies.
The CFTC’s program, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has strict dollar thresholds. Whistleblower rewards are only paid for tips that result in an enforcement action that leads to collection of penalties of $1 million or more.
Violations That The CFTC Wants To Hear About
The following are examples of the kinds of practices the CFTC is interested in hearing about:
- Price manipulation
- Disseminating false information
- Trading ahead of (or frontrunning) customer orders
- Hidden losses
- Wash sales
- Ponzi schemes
- Foreign currency exchange fraud (FX or forex fraud)
- False reporting
- Pool frauds
- Strobing (rapidly sending and canceling the same order many times to create the (false) appearance of liquidity)
- Spoofing (bidding or offering with the intent to cancel before execution)
- Other “disruptive” trading practices
The CFTC Whistleblower Process
CFTC (or “Dodd-Frank”) whistleblower complaints are not filed in court. They are filed with the CFTC. If the CFTC acts on the information in a whistleblower complaint, and as a result levies and collects at least $1 million in money sanctions, a whistleblower can receive between 10 and 30 percent of the money collected. However, unlike the False Claims Act, the Dodd-Frank whistleblower law does not include an “agency forcing” mechanism: if the CFTC declines to pursue the matter, that is the end of the road. Unlike whistleblowers under the False Claims Act, CFTC whistleblowers cannot file suit on their own. On the other hand, unlike claims brought under the False Claims Act, whistleblower claims submitted to the CFTC (often called “Dodd Frank” claims) do not require evidence of a fraud against the government or losses to public funds. The CFTC program covers frauds against private investors
A CFTC whistleblower can be anyone who voluntarily provides the CFTC with “original” information about a potential violation of the Commodity Exchange Act and is the first person to provide that information—subject to two principal exceptions. First, “original” information generally means independent information not already known to the CFTC or publicly available (i.e., not from an already existing or concluded court case or administrative hearing, from a government report, hearing audit, or investigation, or picked up from the news media). Second, some government employees, a person convicted of a criminal violation related to the subject of the fraud being reported, and persons who knowingly make false statements about the whistleblower matter are not eligible to act as whistleblowers.
Whistleblowers can provide reports to the CFTC anonymously. However, anonymous whistleblowers must provide some means of contact (such as a lawyer).
The CFTC’s program also includes protections against retaliation for whistleblowers, including express prohibitions against retaliatory discharge, demotion, suspension, harassment, and discrimination.
If you have knowledge and solid evidence of fraud or manipulative practices related to futures markets, swap markets, and markets for derivatives and for foreign currencies, please contact our whistleblower attorneys. Consultations are free and confidential.