Have you personally witnessed evidence to suggest that your company or organization is committing fraud? If so, then it may be difficult to know who to trust and who to approach with the information you have, especially if the alleged fraud involves a colleague or superior at your job.
The good news is that a CFTC whistleblower lawyer can bridge the gap between you and your employer. A quality qui tam attorney can listen to the evidence you discovered, inform you about your legal options and rights, and help you make a decision on how to handle the information you have learned.
If filing a whistleblower claim is in your best interests, we can help ensure that your organization does not retaliate against you and protect your eligibility for any whistleblower rewards. Learn everything you need to know about blowing the whistle on a Commodity Exchange Act violation below.
What is the CFTC?
The CFTC, or the Commodity Futures Trading Commission, was created back in 1974 when the Commodity Futures Trading Commission Act was passed. Even prior to the passage of this Act and creation of this organization, futures contracts were getting traded for decades with very little regulation.
The CFTC’s purpose is to regulate the derivatives market in the US, and it is currently made up of 13 offices. With the CFTC came more regulation for futures contracts, options, and swaps and the hope for a more competitive, efficient, and safe market.
History of the CFTC Whistleblower Program
While the CFTC has been around since 1974, the Whistleblower Program was only founded in 2010. The creation of the Whistleblower Program came after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This important program seeks to protect whistleblowers who have witnessed a wrongdoing and report it in good faith.
What Does the CFTC Regulate?
Regulating the derivatives market is complex, and it comes with a lot of different challenges. To efficiently oversee all the markets, several organizations must also be regulated. In general, the CFTC must regulate the following:
- Futures commission merchants
- Derivates clearing organizations
- Foreign currency trading markets
- Swap dealers, data repositories, and execution facilities
- Designated contract markets
Right now, new challenges are cropping up due to financial technologies like cryptocurrency. Considering new technology like distributed ledgers and cloud computing are making waves, it is clear that the CFTC will have to transform along with this technology moving forward.
What Powers Does the CFTC Have?
Regulatory bodies would be ineffective without leveraging some form of power. The CFTC operates with the full authority to:
- Monitor markets
- Regulate designated contract markets (DCM’s)
- Approve all futures and options contracts traded on regulated exchanges
- Review terms and conditions of futures or options contracts
- Regulate reporting by professionals within the swap trading, futures, and options markets
What is the Commodity Exchange Act?
The Commodity Exchange Act (CEA) provides the authority for the CFTC to exist and operate. This important law was passed in 1936 but has faced several amendments since then. In a nutshell, this Act regulates the trading of commodity futures to ensure that manipulation of the markets is not happening.
What Activities Are Considered Fraud under the Commodity Exchange Act?
A whole host of activities are considered fraudulent under the Commodity Exchange Act. From securities, commodities, and banking fraud, to price manipulation and deception, anything that ultimately manipulates the market would be considered a wrongful action. Below, we will go over two of the most common types of fraud litigated under the CEA.
Price Manipulation
Price manipulation happens when someone either directly or indirectly attempts to manipulate the price of any commodity, swap, or contract in order to generate improper profits. Unfortunately for the CFTC, there are countless methods people can use to manipulate the market. As one 1971 court case concluded, Cargill v. Sec’y of Agric. Hardin, the techniques of manipulation are “limited only by the ingenuity of man.” Manipulation schemes include, but are not limited to:
- Spoofing
- Rigging prices
- Misappropriating information
- Wash sales
- Violating bids or offers
Deception
Deception is another form of market manipulation that happens when a person either directly or indirectly attempts to manipulate the market by intentionally spreading false information.
CFTC Whistleblower Program Requirements
The CFTC’s whistleblower program helps identify and rectify violations by providing financial incentives to individuals who report the wrongful actions. To qualify for the program, a whistleblower must have witnessed a possible CEA violation and submit a claim. If the claim later leads to a successful settlement, they can then apply for an award.
CFTC Whistleblower Process
When you witness potential fraud, you may not be sure what to do. A whistleblower’s journey can be intimidating and challenging, but we will go over exactly how to file a claim.
First, a qui tam attorney can help you submit your tip to the CFTC whistleblower program. You will receive confirmation from the Whistleblower Office. From there, you will wait for the investigation and claim to proceed. You will not get many updates until the confidential investigation concludes.
CFTC Whistleblower Protections
Per the law, whistleblowers are protected from retaliation by their employers. If an employer retaliates against a whistleblower by firing, demoting, harassing, or otherwise discriminating against them, the whistleblower would have legal recourse. Whistleblowers also have the right to remain confidential when they disclose information.
Am I Eligible for a CFTC Whistleblower Reward?
The CFTC awarded its first reward in 2014. Since then, the agency has issued $330 million to various whistleblowers.
Whistleblower rewards are not guaranteed, though. You will be eligible for a reward if the information you provide later leads to a successful enforcement action and settlement.
CFTC Whistleblower Lawyer: FAQs
Do you have more questions? The best way to get an accurate answer to your legal questions is to consult with a skilled CFTC whistleblower lawyer, like the experts at Tycko & Zavareei LLP. Selecting the right law firm is crucial to obtaining the legal advice and advocacy you need.
What is CFTC Reporting?
CFTC reporting describe the rules set in place that allow whistleblowers to report wrongdoings. In 2020, the Commission’s Whistleblower Office received a record-breaking 1,030 whistleblower submissions.
What is a CFTC Enforcement Action?
A CFTC enforcement action occurs after a whistleblower reports fraud, an investigation ensues, and the organization determines that the individual or firm is engaged in the alleged fraud.
Is a CFTC Enforcement Action Civil or Criminal?
Depending on the nature of the fraud, enforcement measures may be criminal or civil. Criminal activity could result in criminal consequences like a prison term, probation, and fines. A civil action will result in a financial settlement to be paid by the offender.
Do I Need to Live in the United States to Report Fraud or Receive an Award from the CFTC?
The short answer is no. The CFTC will issue whistleblower awards to foreign regulators or actors when certain conditions are met and the information ultimately leads to an enforcement action.
What Should I Do if I Experience CFTC Whistleblower Retaliation?
The Dodd-Frank Act prohibits employer retaliation against a CFTC whistleblower. If you do experience a retaliation action, the law allows you to bring a private action against your employer in federal court. If successful, you might be able to recover costs associated with back pay and legal fees.
Can I Remain Anonymous as a CFTC Whistleblower?
CFTC whistleblowers have a right to remain confidential, but there are limits when it comes to their ability to remain anonymous. For instance, if the disclosure of your identity is necessary to proceed with the investigation, the CFTC commission could not reasonably protect your anonymity.
What is the Largest CFTC Whistleblower Reward to Date?
Throughout the years, millions of dollars have been awarded to whistleblowers. The largest CFTC whistleblower reward to date was in October 2021, when one whistleblower was provided with a whopping $200 million.
This specific whistleblower’s information aided an already open investigation and led to a successful enforcement action.
Does the CFTC Prohibit Insider Trading?
Yes. Per the CFTC rules, it is against the law to trade based on material nonpublic information or the misappropriation of confidential information. In the past, the SEC debated over whether the CFTC had the authority to pursue enforcement actions based on claims of insider trading, but the agency (and courts) have taken a broad view and allowed for the CFTC to take charge over such matters.
Is Bitcoin Regulated by the CFTC?
Yes. The CFTC regulates futures contracts for both Bitcoin and Ethereum, which are the two most popular cryptocurrencies. In the US, Bitcoin is considered a commodity or digital asset, so the CFTC has the full authority to regulate and supervise any futures trading, derivatives transactions, and more.
What Factors Determine the Amount of My CFTC Whistleblower Reward?
Whistleblower success stories are the result of a bold claim, investigation, and ultimate enforcement action. When all these factors fall into place, a whistleblower has the right to seek out an award of up to 30 percent of the overall settlement amount. To determine the exact award amount, the CFTC will consider the following factors:
- The significance of the whistleblower’s information
- Whether the information was “original”
- The extent of the whistleblower’s assistance in the investigation and claim
- Whether the whistleblower participated in the company’s internal compliance systems
- Whether the whistleblower was involved in the conduct they reported
- Whether the whistleblower delayed in reporting the violation
Blow the Whistle on Commodities or Futures Fraud: Talk to a CFTC Whistleblower Attorney
If you witnessed fraud or another type of wrongdoing within your organization, consult with a CFTC whistleblower lawyer who can help you make an informed choice on how to move forward.
Depending on the circumstances surrounding the wrongdoing and what happened, you may find that pursuing a whistleblower claim is a good choice. If you make that decision, you will want to have a strong legal team by your side to ensure that your rights are protected throughout the process.
Here at Tycko & Zavareei LLP, our legal team is prepared to assist you in handling whatever complex challenges you are facing. Schedule a confidential case evaluation now to learn more about your legal rights, responsibilities, and options.