CFTC Violations and Enforcement
The CFTC prosecutes violations of the Commodity Exchange Act (CEA). The CEA prohibits deceptive schemes in connection with commodities, futures, or swaps—for example, Ponzi schemes, improper marketing of futures and options contracts, and disruptive trading practices.
Some common areas of CFTC enforcement are listed below:
- Insider trading
- Insider trading includes any trading on the basis of material nonpublic information. Whistleblowers should look for violators trading on information they obtained by fraud or deception, or information they obtained as a result of their employment.
- Spoofing occurs when a trader places an order in a futures market with the intention of canceling the order prior to execution, as a scheme to misrepresent supply or demand. Whistleblowers should look for any scheme designed to artificially move futures prices. Common signs of fraud include placing repeat orders of the same size and then canceling the orders, or placing and quickly canceling orders at or near the best bid or offer.
- Foreign Corrupt Practices
- Foreign corrupt practices occur when people use bribes to influence foreign officials. Whistleblowers should look for violators using bribes to obtain business in connection with regulated activities such as trading, advising, or dealing in swaps.
CFTC Whistleblower Awards
The CFTC relies on whistleblower submissions in order to pursue violations that would otherwise have been undetected. Whistleblowers who provide original information about CEA violations are eligible to receive an award of 10%-30% of any monetary sanctions over $1 million. CFTC whistleblower awards are paid from the CFTC Customer Protection Fund, financed entirely by monetary sanctions imposed on violators.
Recent significant awards include:
- $45 million (2018) – Multiple whistleblowers shared this award for substantially assisting with an investigation revealing that traders at various major financial institutions manipulated or attempted to manipulate the London Interbank Offered Rates, or LIBOR.
- $30 million (2018) – This is the largest-ever award given to a single CFTC whistleblower, which resulted from information that helped the CFTC sanction JPMorgan Chase for failing to properly inform some wealthy clients about conflicts of interest behind its investment recommendations.
What You Need to Know About Becoming a CFTC Whistleblower
The CFTC receives hundreds of whistleblower tips each year. Whistleblowers need to submit high-quality tips to the CFTC in order to be considered for an award. Tips to the CFTC must be voluntary and include original information about violations of the CEA. The information must include the whistleblower’s independent knowledge that is not generally known to the public. Whistleblower tips should be as detailed as possible, including relevant documents and other evidence.
Why Whistleblowers Need an Attorney
Whistleblowers can protect the public and earn financial awards for making the decision to come forward with information about illegal activity. The CFTC Whistleblower Program affords whistleblowers confidentiality and anti-retaliation protections, but whistleblowers can maximize their protection only by hiring an attorney.
With the assistance of an attorney, whistleblowers can submit their tip to the CFTC anonymously. In addition, an attorney can help whistleblowers prepare a strong submission that is clear, concise, and more likely to be investigated by the CFTC. An attorney can help a whistleblower maintain his or her confidentiality and protection the whistleblower in case of retaliation.
With more than 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $5.4 billion to federal and state agencies, with whistleblower recovery shares as high as 49%. They are ready to help if you have evidence of Commodity Exchange Act violations.
Please call (866) 401-5971 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower. Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.