What Kinds of Commodity Futures, Options and Swaps Fraud Can Whistleblowers Report?

The short answer is: All types of fraud in these areas of finance are covered by the CFTC Whistleblower Program. The CFTC’s Division of Enforcement investigates and prosecutes violations of the Commodities Exchange Act and CFTC Regulations. These violations include, for example, fraud in commodity futures or option trading on domestic commodity exchanges and the marketing and handling of commodity investments. Foreign currency trading (or “Forex” trading), for example, has become the “fraud du jour,” according to Michael Dunn of the U.S. Commodity Futures Trading Commission.

Other fraud includes various methods of market manipulation, from wash trades and “spoofing” behavior in trading markets, to manipulation of customer accounts for the purpose of generating excess commissions, false advertising of the benefits and risks of various investments and complex Ponzi schemes.

Read more about the types of CFTC fraud.

Who Can Become a CFTC Fraud Whistleblower?

A whistleblower under the CFTC whistleblower program is any person (including persons living outside the United States and non-U.S. citizens) who voluntarily provides original information about a possible violation of the Commodities Exchange Act or CFTC regulation that has occurred, is ongoing or is about to occur. Information provided by whistleblowers must lead to a successful CFTC action resulting in an order of monetary sanctions exceeding $1 million. Whistleblowers are not required to be employees of the company to submit information about that company, or to have been harmed by the fraud in question.

What Types of Protections Exist for Those Who Report CFTC Fraud?

Because reporting fraud and becoming a CFTC whistleblower is such a powerful and impactful decision, the CFTC whistleblower program includes an anti-retaliation provision that protects whistleblower employees and allows for complete anonymity with the help of experienced counsel. Read more about these provisions.

Why Should I Become a CFTC Whistleblower?

The Dodd-Frank CFTC Whistleblower Program has quickly become an important tool for the CFTC to investigate and punish those who commit fraud in the markets subject to CFTC regulation. In addition, the financial rewards offered to whistleblowers are substantial, potentially numbering in the tens of millions. A whistleblower receives between 10 and 30 percent of amounts recovered as a result of the whistleblower’s information if more than $1 million is recovered.

How Can Whistleblowers Remain Anonymous?

If an experienced CFTC whistleblower attorney properly submits your information to the CFTC, you need not disclose your identity to the CFTC at all. You will maintain complete anonymity. Your attorney will act with the CFTC on your behalf. You must only provide the attorney with a completed Form TCR signed under penalty of perjury at the time you make your anonymous submission.

What Monetary Awards are Available to CFTC Fraud Whistleblowers?

A person who supplies original information that leads to a successful enforcement action by the CFTC can receive a whistleblower award of between 10 and 30 percent of monetary sanctions if exceeding $1 million. If you are awarded a smaller percentage of the recovery than you believe is proper, as a whistleblower, your attorney may challenge the award first with the CFTC and in federal court if necessary.

What Factors Does the CFTC Consider in Determining the Amount of the Award?

The CFTC is required to consider many factors when determining the amount of an award based on the unique facts and circumstances of each whistleblower case.

The CFTC may increase the award percentage based on the following factors:

  • The significance of the information provided by the whistleblower, and its contribution to the success of any proceeding brought against wrongdoers.
  • The extent of the assistance the whistleblower provides the CFTC in an investigation and any successful proceeding.
  • Whether, and the extent to which, the whistleblower participated in internal compliance systems, such as reporting the possible commodity futures, options and swaps violations through internal whistleblower, legal or compliance procedures before, or at the same time, you reported them to the CFTC through your legal team.

Your potential whistleblower reward could be decreased due to the following factors:

  • Whether the whistleblower participated in, or is guilty of the violation(s) reported.
  • If the whistleblower unreasonably delayed reporting of fraud.
  • If the whistleblower interfered with the company’s internal compliance and reporting systems, such as making false statements that hindered efforts to investigate possible wrongdoing.
Where Can I Read CFTC Whistleblower Laws, in Full?

Visit the CFTC’s Dodd-Frank Whistleblower Law page.

How Does a Whistleblower Lawyer Affect My Case?

In order to properly present a claim to the CFTC, a whistleblower needs to select a law firm that understands the complexities of fraud in the markets subject to CFTC jurisdiction, and understands this area of law based on experience with it. A whistleblower needs a law firm with a national reputation as a leader in this area of financial fraud, and one that will assist in presenting the most comprehensive, well-researched complaint to an already overworked agency.

Many whistleblower lawyers and law firms have virtually no experience in CFTC whistleblower litigation or CFTC law whatsoever. Hagens Berman, one of the nation’s leading plaintiff firms, has years of experience in whistleblower law, antitrust, securities, accounting fraud and other areas of financial fraud. Hagens Berman is well-positioned to best present a CFTC whistleblower complaint on your behalf.

In addition to the firm’s expertise in this area, Hagens Berman has worked alongside government officials and regulators for more than 20 years, often retained by those governments, helping our firm establish the credibility necessary to bring important cases to the CFTC. Because we set a high standard for ourselves, our clients benefit from our reputation. When Hagens Berman brings a claim, it gets attention.