CFTC Whistleblowers: An Underfunded Program For an Underfunded Agency
The Commodity Futures Trading Commission (CFTC) is fifty years old this year. Its whistleblower awards program is fourteen years old. But this long-established agency and its whistleblower program remain perennially underfunded.
The CFTC’s jurisdiction is broad and expanding with the advent of cryptocurrencies. The CFTC regulates the derivatives markets, including futures contracts, options, and swaps, in the United States, and enforces the Commodities Exchange Act. The U.S. Commodities market alone has a value of over $53 trillion, which is about 40% of the total global Commodities market.[1] However, the CFTC’s budget for FY2025 is only $399 million, which is actually a decrease from FY2024.[2] By contrast, the Securities and Exchange Commission’s FY2025 budget is $2.6 billion.[3] Fundamentally, the CFTC’s broad jurisdiction and regulated market size dwarf the agency’s regulatory budget.
In a perfect world, whistleblowers could fill this gap in enforcement funding by filling in for missing investigators. The Dodd-Frank Act’s whistleblower award programs, of which the CFTC program is one, were created for exactly this purpose – helping underfunded government agencies track down fraudsters. Unfortunately, the CFTC’s program is more underfunded than the agency itself.
According to the CFTC, 30% of its enforcement actions involve whistleblowers and the whistleblower program has led to over $3.2 billion in sanctions, with whistleblowers receiving 10-30% of such amounts.[4] However, Congress has capped the amount of money that can be placed in the CFTC’s fund from which whistleblower awards are to be paid at $100 million.[5] Consequently, the CFTC program is artificially restricted by an unreasonable and disproportionate limit on the fund from which awards are paid.
This unfortunate situation has led to an underfunded agency with an underfunded whistleblower program. Congress has attempted to address this problem in the past by enacting a short-term emergency fix that created a separate whistleblower award fund, but this fund is set to expire at the end of September 2024. The CFTC deserves a long-term solution that will adequately support the awards program and thus incentivize whistleblowers to fill the gap that exists in the CFTC’s enforcement budget.
Clayton Wire is a Partner at Ogborn Mihm
[1] See Statista, https://www.statista.com/outlook/fmo/commodities/united-states
[2] See CFTC President’s Budget, https://www.cftc.gov/sites/default/files/CFTC%20FY%202025%20President’s%20Budget_Final_for%20Posting.pdf
[3] https://www.sec.gov/files/fy-2025-congressional-budget-justification.pdf
[4] Geoff Schweller, Emergency Congressional Action Needed to Save CFTC Whistleblower Program, Sept. 16, 2024, available at https://www.jdsupra.com/legalnews/emergency-congressional-action-needed-7082223/
[5] Id.
