Is it Time to Reconsider the CFTC Whistleblower Program?

Is it Time to Reconsider the CFTC Whistleblower Program?

A recent Wall Street Journal article, “CFTC Can’t Give Whistleblower Money Away,” notes that five years and more than 650 tips later, the CFTC Whistleblower Program has paid out just two awards totaling $530,000.

According to the Journal, the CFTC has spent more on administrative costs of the program than it has paid out in awards.

Does that mean the program is a failure?

“No,” says Patrick Burns, Director of Taxpayer Against Fraud, a non-profit organization dedicated to promoting and strengthening federal and state whistleblower laws.

“Just as it takes eight years for the first apple to form on a tree, so it takes some time for new whistleblower programs to take off.

“If you go back and look at the first five years of the False Claims Act after the 1986 amendments, you find fewer than 100 whistleblower lawsuits filed each year and the high water mark, in terms of annual recoveries, was just $40 million. Today we recover more than that every week.”

The CFTC launched a new website in January 2016.

But is that enough?

Burns thinks the CFTC should be more proactive about the potential scope and type of fraud to be found in the commodities world.

“The SEC whistleblower program had the benefit of the Madoff scandal to publicize it,” says Burns. “The CFTC didn’t.

“Even when the massive fraud at the Peregrine Financial Group hit, it got very little publicity.

“In the era of emails and Twitter, Facebook and YouTube, the federal government, across the board, should be doing more to illuminate incentivized integrity programs.”

Burns notes that publicity works. After the Deficit Reduction Act required health care companies, beginning in 2007, to tell their employees about the federal False Claims Act, recoveries in that arena more than doubled.

“The first step in a real war on fraud is for the federal government to declare war,” says Burns. “The new CTFC whistleblower web site is a very good step in the right direction, but it can’t be the last.”