The number of tips to—and awards given out by—the Commodity Futures Trading Commission’s whistleblower program have fallen from records set last year, according to the regulator’s annual report to Congress.
The U.S. regulator for derivatives and commodities markets issued five whistleblower awards totaling about $15 million during the fiscal year 2019 ending in September, the report said. The total represents a decline from the full-year record total of about $75 million issued by the commission during the previous fiscal year, when five awards went to tipsters, including the largest award of $30 million, according to the commission.
The CFTC, meanwhile, received 455 whistleblower tips in 2019—40% less than during 2018, when tips surged in part because of efforts to increase awareness of virtual currency fraud enforcement through the whistleblower program, according to the regulator.
The decline in the number of tips could be attributable to waning interest in digital currencies from the public in 2019, according to a CFTC spokeswoman.
The 2019 tip total represented the first annual decline since the program started in 2011, but it was still above the annual average of 308 tips between 2012 and 2018, according to a Wall Street Journal analysis of the data.
The CFTC—which has issued 14 awards, totaling more than $100 million, to tipsters since 2011—in recent years has focused more on marketing and outreach efforts to raise awareness of its whistleblower program.
Matthew Stock, director of the whistleblower rewards practice at Zuckerman Law, pointed to regular advisories issued by the agency, warning investors about types of fraud. “These investor alerts are helping people understand certain areas,” he said.
For instance, the regulator recently encouraged people to blow the whistle on suspected foreign bribery practices and potential violations of anti-money-laundering rules in the commodities and derivatives markets, said Erika Kelton, a lawyer representing whistleblowers at Phillips & Cohen LLP.
Under the rules of the CFTC’s whistleblower program, tipsters who voluntarily provide original information or analyses of a potential violation of the commodities and derivatives markets’ regulations are entitled to 10% to 30% of monetary penalties when their information results in a successful enforcement action and when the monetary penalties are more than $1 million.
Write to Mengqi Sun at [email protected]
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8