The FY20 reports of the CFTC Whistleblower Program and CFTC Division of Enforcement reveal that the CFTC Whistleblower Program continues to grow and is helping to drive record-level enforcement activity. The Division of Enforcement reported a total of $1,327,869,760 in monetary relief ordered—the fourth-highest total in CFTC history, the third straight year-over-year increase, and the second straight year in excess of $1 billion. Approximately 30 to 40% of the CFTC’s ongoing investigations now involve some whistleblower component. Since the inception of the CFTC Whistleblower Program, CFTC enforcement actions associated with whistleblower awards have resulted in sanctions orders totaling nearly $1 billion.
Highlights of the annual report on CFTC Enforcement include:
- The largest monetary relief ordered in CFTC history ($920 million), which included the highest restitution ($311,737,008), disgorgement ($172,034,790) and civil monetary penalty ($436,431,811) amounts in a spoofing case.
- The most enforcement actions filed in CFTC history (113)—an increase over the previous high (102) and significantly higher than the 30-year average (58).
- The most retail fraud actions (56) in a single fiscal year in CFTC history, including a record number of actions involving digital assets (7) and a total of 28 actions since the COVID-19 national emergency was declared on March 13, 2020.
During FY 2020, the CFTC paid whistleblowers $20 million and received 1,030 whistleblower tips and complaints, a jump of 126% over the 455 whistleblower tips received in FY 2019. Since the inception of the CFTC Whistleblower Program, the CFTC has issued 25 orders granting a total of more than $120 million in awards. The CFTC’s Whistleblower Office received tips and complaints regarding a wide range of violations, including:
- failures to supervise;
- record-keeping or registration violations;
- swap dealer business conduct;
- wash trading;
- solicitation, misappropriation, and other types of fraud;
- use of deceptive or manipulative devices in trading; and
- spoofing and other forms of disruptive trading or market manipulation.
Under the CFTC Whistleblower Reward Program, the CFTC will issue rewards to whistleblowers who provide original information that leads to CFTC enforcement actions with total civil penalties in excess of $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected.
Original information “leads to” a successful enforcement action if either:
- The original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or
- The conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.
In determining a reward percentage, the CFTC considers the particular facts and circumstances of each case. For example, positive factors may include the significance of the information, the level of assistance provided by the whistleblower and the whistleblower’s attorney, and the law enforcement interests at stake.
