WSJ Criticizes CFTC Whistleblower Program

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The Wall Street Journal took aim at the CFTC whistleblower program this weekend, claiming that the agency has spent more than it has paid out since launching in 2011 and has not been able to get tips in the futures and swaps markets.

While technically accurate, the criticism fails to consider the length of the entire process, from government investigations, enforcement actions and the subsequent award determinations. Although the SEC has had roughly two dozen payouts, the SEC also has a broader scope of enforcement power and a budget of more than $1 billion in additional funds. It receives roughly ten times as many tips each year.

The CFTC has paid out just over $500,000 to two individuals so far while administrative costs related to the eight-employee whistleblower staff and its consumer outreach office have totaled $4 million. Last year, a Law360 article suggested that big payouts were coming for CFTC whistleblowers.

Five years have now passed since Dodd-Frank authorized the SEC and CFTC to pay monetary incentives to individuals for reporting violations of the securities and commodities laws.

The early years have not been without some growing pains. In addition to the criticism of the CFTC, the Wall Street Journal also reported last year that the SEC program was backlogged in the determination of awards. According to its calculations roughly 83% of the whistleblowers who applied for an award after the program opened in 2011 were still waiting for a decision. Several months after this report, an SEC whistleblower filed a lawsuit in order to seek a court order for a determination on his eligibility for a reward.

Other government programs for whistleblowers have also been criticized over the past few years. When Senator Grassley issued concerns about the lack of communication coming out of the IRS whistleblower program, there were multiple news articles expressing concerns that the program providing incentives for reporting tax evasion was ineffective.