Save the CFTC Whistleblower Program from a Funding Crisis
The CFTC Whistleblower Program is in danger of being a victim of its own success. In recent years, the little-known regulatory agency has stepped up enforcement in a range of areas from spoofing to crypto fraud to carbon market manipulation to foreign bribery. However, a funding issue threatens to undermine the whistleblower program which plays a “critical role” in these enforcement efforts. Passage of the bipartisan CFTC Whistleblower Fund Improvement Act is needed to save the program.
The CFTC reports that roughly 30 percent of all CFTC enforcement investigations stem from whistleblowers and that over $3 billion in sanctions have been collected thanks to whistleblowers. The agency has correspondingly awarded almost $350 million to qualified whistleblowers since the program was established in 2010.
In recent years, the program has seen remarkable growth. In its first 18-months in existence, the CFTC Whistleblower Program received only 58 whistleblower tips. In the 2023 Fiscal Year by comparison, the program received a record 1,530 tips.
However, the growth and success of the program has resulted in a funding crisis in recent years as a Congressionally-set cap on the fund used to finance the program cannot accommodate the amount of whistleblower awards being paid out. The amount of money which can be placed in the Consumer Protection Fund, which is entirely financed by sanctions paid by wrongdoers – not by taxpayers, is capped at $100 million.
While the cap on the CFTC whistleblower fund was appropriate back in 2010, it does not match the current size of the CFTC Whistleblower Program. In recent years, the program has had to delay the issuance of whistleblower awards and has raised the possibility of needing to furlough staff. While a 2021 emergency bill saved the program from collapse, a “long-term” fix is still desperately needed.
Introduced in July by a bipartisan group of members of Congress, the CFTC
Whistleblower Fund Improvement Act of 2023 provides the long-term fix needed. It offers a simple fix that bears no costs on taxpayers: it raises the cap on the Consumer Protection Fund to $300 million.
NWC’s Chairman of the Board Stephen M. Kohn recently wrote an article calling for the passage of the CFTC Whistleblower Fund Improvement Act:
The CFTC whistleblower program has been a remarkable success story. It demonstrates the transformative effect a well-run modern whistleblower award program can have on the enforcement efforts of a regulatory agency. The bipartisan Whistleblower Fund Improvement Act will ensure that the CFTC whistleblower program will not be a victim of its own success and can continue to help root out fraud in the U.S. derivatives markets.”
