2017 CFTC Whistleblower Report
The CFTC has also issued its annual report to Congress on the Dodd-Frank Act whistleblower program during Fiscal Year 2017. The CFTC did not issue any whistleblower awards last year. However, it did amend the whistleblower rules and regulations through a period of public notice and comment rulemaking.
The CFTC Whistleblower Office (referred to in the report as WBO) received 465 whistleblower tips and complaints on a Form TCR during Fiscal Year 2017, a 70% increase over the last year. The annual report detailed generally some of the activities reported in them, including virtual currency trading, spoofing and other forms of disruptive trading, market manipulation, false reporting, misrepresentations to customers regarding the handling of their accounts, forex fraud, Ponzi schemes and other off-exchange futures investment scams. It did not provide detailed information about the number of tips within each category.
The WBO posted 30 Notices of Covered Actions in FY2017. These notices are a precursor to a whistleblower submission of an award application. The CFTC Whistleblower Office received 74 award claims during the last fiscal year. The number of award applications has been steadily increasing since FY 2014.
The new CFTC whistleblower rules went into effect July 31, 2017. In general, they provided additional transparency on the program rules and offered whistleblowers additional protections against retaliation. The program rules were brought more into line with the SEC rules and allowed for CFTC enforcement actions where a person impedes communication with a whistleblower.
The CFTC continues to receive about 1/10th of the number of tips that the SEC receives every year. Given the limited jurisdiction of the CFTC in the regulation of commodities, futures, swaps and other derivatives, this is no surprise. The CFTC also received a number of tips passed along from the SEC as well.
As the number of award applications have increased, it seems like only a matter of time until the CFTC starts making more award announcements. It has issued four to date, including one for a $10 million reward.
Update: At a conference last month, the director of the CFTC program said that this year would be huge for the office. In the financial report released with the annual report, the Commission expects to pay approximately $45.5 million to whistleblowers as a result of CFTC sanctions that have already been collected. That amount would be more than the CFTC whistleblower program has paid since its creation by Congress in the Dodd-Frank Act.