Markets and Frauds Regulated by the CFTC

• The Whistleblower Office within the CFTC oversees the program, managing the intake of tips, complaints, and referrals, as well as the reward distribution process.
• Whistleblowers who voluntarily offer original information leading to successful enforcement actions resulting in monetary sanctions over $1 million are eligible for rewards. The reward ranges from 10% to 30% of the collected sanctions.
• The program prohibits retaliation by employers against whistleblowers for reporting violations. Whistleblowers who face retaliation can seek remedies, including reinstatement and compensation.
• There are statutory limitations on the time within which enforcement actions can be brought, so potential whistleblowers are encouraged to report information promptly.

First enacted in 1936, the Commodities Exchange Act (CEA) has since undergone several amendments to adapt to the changing landscape of the commodities and futures markets. The CEA aims to ensure the fair trading of commodity futures and options, protect consumers, and prevent fraud and market manipulation. It has strong provisions to protect and incentivize whistleblowers to report potential violations of the CEA.

Markets Covered by the CFTC and the CEA:

1. Agricultural Commodities – traditional markets involving products like wheat, corn, and cotton
2. Metals and Minerals – including gold, silver, and copper
3. Energy Contracts – such as those for crude oil, heating oil, and gasoline
4. Financial Products – covering areas like interest rates, stock indexes, and foreign currencies
5. Swaps – the Dodd-Frank Wall Street Reform and Consumer Protection Act, post the 2008 financial crisis, expanded the CFTC’s jurisdiction to include the swaps market
6. Designated Contract Markets (DCMs) – formal exchanges where futures and options contracts approved by the CFTC are traded
7. Over-the-Counter (OTC) Derivatives – the CFTC’s jurisdiction expanded over these after the 2008 financial crisis
8. Forex Markets – including spot transactions, swaps, currency options, and futures contracts
9. Cryptocurrencies – certain activities and products related to cryptocurrencies like Bitcoin may fall under the CFTC’s regulatory purview, especially when they are used in derivatives contracts or if there’s potential for market manipulation

Additionally, the CFTC conducts thorough reviews of the terms and conditions of futures or options contracts. It’s essential to note that when these contracts are traded on regulated exchanges, they must obtain CFTC approval.

Beyond these regulatory duties, the CFTC actively engages in market surveillance to monitor trading activities and maintain market transparency. Furthermore, the commission oversees and receives reports from professionals engaged in the futures, options, and swaps trading markets, ensuring compliance and adherence to established standards and regulations.

The Whistleblower Office of the Commodity Futures Trading Commission (CFTC) is responsible for administering the CFTC’s whistleblower program. This office manages the intake of complaints, communicates with whistleblowers, and oversees the reward distribution process.

Whistleblowers who voluntarily offer original information that leads to a successful enforcement action yielding monetary sanctions above $1 million are entitled to a financial reward. The reward ranges between 10% and 30% of the money collected by the CFTC as a result of the enforcement action.

It’s also good to note that the CFTC prohibits employers from taking retaliatory actions against whistleblowers. Retaliation might include firing, demotion, suspension, threats, harassment, or any discrimination because of their whistleblowing. Whistleblowers subjected to retaliation can file a lawsuit in federal court against their employers. They may be entitled to reinstatement, back pay, litigation costs, and other damages.

The CFTC is committed to keeping a whistleblower’s identity confidential, though there are certain exceptions, such as when sharing information with other government entities becomes necessary for broader investigations.

Whistleblowers can report potential violations to the CFTC without revealing their identity. However, to be considered for a reward, they must disclose their identity to the CFTC. Whistleblowers choosing to report anonymously must be represented by counsel during the submission process.

If a whistleblower disagrees with the CFTC’s decision concerning their reward claim, they possess the right to appeal the decision to an appropriate court of appeals. This ensures that whistleblowers have a legal recourse if they feel their claim wasn’t handled fairly.

After evaluating the whistleblower’s submission and the outcome of the related enforcement action, the Whistleblower Office issues a preliminary determination. This outlines the proposed amount of the award or the decision to deny an award.

If a whistleblower contests the preliminary determination, the Claims Review Staff will reconsider and issue a final determination. This can either uphold, increase, or decrease the proposed award amount from the preliminary determination or reverse a preliminary denial of an award.

You have a unique opportunity to help ensure fairness, transparency, and integrity in the commodities markets. By reaching out to one of our commodities fraud attorneys, you’re taking the most informed, secure, and effective step in your whistleblowing journey. Don’t delay, there are statutory limitations on the time within which enforcement actions can be brought, so potential whistleblowers are encouraged to report information promptly.