CFTC Whistleblower Program Expected to Attract More Whistleblowers in 2014Banker Resource
February 28, 2014 — 1,172 views
The authorities at the Commodity Futures Trading Commission (CFTC) expect 2014 to be a windfall year for an excellent reason: whistleblowers. The Dodd-Frank Act has increased the demand for CFTC enforcement. It presently has legal power over the swaps market, which witnesses $400 trillion worth of trading per year. This is an added responsibility to its original futures portfolio.
Budgetary and personnel constrictions
The CFTC has admitted that it is underfunded and understaffed. It expects the budget to increase a little to about $215 million for the 2014 fiscal year, which is a $10 million increase compared to 2013 but $100 million short of what the commission had requested.
The CFTC's budget, while partly addressing its enforcement obligations, has overlooked the CFTC Whistleblower reward program made by Dodd-Frank. Even as the Securities and Exchange Commission (SEC) has received more attention due to its own whistleblower program, the whistleblowers have made contact with the CFTC to turn in a diverse bouquet of fraudulent practices- ranging from simple manipulation of prices to Ponzi schemes.
The importance of whistleblowers
Whistleblowers are regarded as priceless contributors to the enforcement efforts by the government. The CFTC, like SEC, recognize that the whistleblowers can offer evidence and inside information which save investigators valuable time and scarce critical resources. This is a huge bonus for an agency which has seen its responsibilities increase at a time when a number of key figures have left the agency.
CFTC has seen whistleblower claims filed with it increase from 58 in the 2012 fiscal year to 138 in the 2013 fiscal. Although it appears much less compared to the whistleblower program run by the SEC, it is natural that for an agency which deals with a smaller financial market segment will also receive a smaller number of whistleblower claims. The program run by the SEC has also been helped by publicity garnered from earlier rewards.
It is expected that CFTC Whistleblower Office will make efforts to surpass the SEC targets when it will make the first whistleblower award in 2014. This award will help to attract a greater number of whistleblowers to report any wrongdoing and therefore strengthen the CFTC enforcement framework. The CFTC has set aside a special fund of $300 million to utilize for the whistleblower rewards.
According to the provisions of Dodd-Frank Act, it is possible for private individuals to file whistleblower claims with CFTC and if CFTC recovers $1 million or more from the information, they can collect a reward. This could range from 10 percent to 30 percent of the amount recovered.