In 2010, the Dodd-Frank Act created whistleblower bounty programs in both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). While readers of this blog are familiar with the SEC’s program because of its impact on FCPA enforcement, they may not be as familiar with the CFTC’s program.
I recently sat down with Vincente Martinez, Director of the CFTC Whistleblower Office (WBO), who graciously agreed to answer some of my questions about the WBO.
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What is the purpose of the Commodity Futures Trading Commission’s (CFTC) Whistleblower Office? For readers of the FCPA Blog who are not familiar with the Commodity Exchange Act (CEA), could you describe the type of violations that are reported to your office?
Thank you for speaking with me. First, please note that any opinions I express are my own and do not necessarily reflect the views of the Commission, the Commissioners or other CFTC staff. I would also like to note that my answers often paraphrase our Whistleblower Rules (Rules), which can be found on the “Whistleblower Program” webpage on www.cftc.gov. Prospective whistleblowers and their representatives should read the Rules carefully.
The Whistleblower Office (WBO) administers the CFTC’s whistleblower program. The Dodd-Frank Act created whistleblower programs at both the CFTC and the Securities and Exchange Commission (SEC). Our program provides monetary awards to eligible persons who voluntarily provide us with original information about violations of the CEA that lead us to bring enforcement actions that result in more than $1 million in monetary sanctions. We can also pay whistleblower awards based on monetary sanctions collected by other authorities in actions that are related to CFTC enforcement actions, and are based on information provided by CFTC whistleblowers.
Examples of misconduct commonly investigated and prosecuted by the CFTC include: manipulations of the price of a commodity, such as squeezes, corners, flooding the market with orders and manipulating settlement prices; disseminating false information into the market; trading ahead of or front-running customer orders; trade practice violations, such as wash sales, accommodation trades and fictitious sales; and off-exchange frauds, such as Ponzi schemes and frauds conducted by commodity professionals such as commodity pool operators.
More specifically, our Enforcement Division has recently brought actions related to the manipulation of LIBOR, the unlawful handling of customer funds, noncompetitive trades and commodity-related Ponzi schemes. Anyone interested in learning more about our enforcement efforts should visit the Enforcement Division’s webpage and read our Enforcement Press Releases.
How many attorneys work in your office? Do you have any plans to expand?
The office is comprised of the Director, a staff attorney and a paralegal. Further staff will be added as needs dictate. We also recruit interns.
Are there any features of your program that differ from the SEC’s (other than the type of violations reported)?
The two programs are materially identical with some differences. For instance, while the SEC requires anonymous whistleblowers to file through an attorney, we do not; CFTC whistleblowers can file anonymously on their own. Also, while there are certain persons who cannot receive whistleblower awards under each program – such as persons employed by certain government agencies and self-regulatory organizations – the lists are not identical for the two agencies. Further, while the SEC allows whistleblowers to collect awards based on an aggregate of sanctions collected by the SEC and other authorities in a particular matter, the CFTC limits awards to the amount obtained either by the CFTC or another authority in a related action. There are other differences between the two programs and so prospective whistleblowers and their representatives – particularly those making dual jurisdiction allegations – should read the rules for both programs carefully.
How many complaints have resulted in your contact with the relevant companies to obtain a response? How many have resulted in an agency investigation?
I cannot comment. Both the existence of an investigation and the status of our investigative efforts is non-public and confidential information.
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Tomorrow: Part II of the interview with Vincente Martinez of the CFTC Whistleblower Program.
Jessica Tillipman is a contributing editor of the FCPA Blog. She’s the Assistant Dean for Field Placement and Professorial Lecturer in Law at The George Washington University Law School. She also teaches an Anti-Corruption seminar that focuses on corruption control issues in government procurement.