Finance, Securities & Commodities

Overview of the SEC & CFTC Whistleblower Programs

Like the False Claims Act, the whistleblower programs administered by the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) provide financial rewards and protections against retaliation for individuals reporting violations of the federal securities laws. SEC and CFTC whistleblowers are eligible to receive between 10 to 30 percent of any monies collected by the relevant agency so long as that agency recovered more than $1 million.

Reporting Mechanism

Unlike the FCA, securities and commodities fraud whistleblowers do not file qui tam lawsuits in federal court—they submit their information by way of a Form TCR (Tip, Complaint, or Referral) filed with the SEC or CFTC. And they may do so anonymously.

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Violations Covered by the SEC

Given the diverse array of regulatory violations that the SEC and CFTC police, it is safe to say that the scope of the misconduct that may give rise to a whistleblower tip (and award) is wide-ranging. Examples of securities law violations governed by the SEC include:

Fraud in connection with securities and initial public offerings (IPOs)
False or fraudulent disclosures made by publicly traded companies, including disclosures relating to environmental, social, and governance (ESG) and climate-related issues
Insider trading
Bribery of foreign officials
Misconduct relating to municipal securities or public pension plans
Market manipulation
Investment advisor or broker-dealer fraud
Fraud relating to special purpose acquisition companies (SPACs)
Cryptocurrency fraud, including fraudulent initial coin offerings (ICOs)
Ponzi and pyramid schemes

Violations Covered by the CFTC

On the other hand, the CFTC governs commodities and derivative-related frauds that involve traditional commodities (e.g., corn, soybeans, etc.) and also financial products, such as futures, swaps, options, and currency-based instruments. Examples include:

Fraud schemes
Market manipulation, including attempted market manipulation and disruptive trading practices, such as fictitious and non-competitive transactions, price-fixing, and spoofing
Trade practice violations, including wash sales; fictitious sales; noncompetitive transactions; violation of position limits; noncompetitive exchange of futures for physical transactions opposite each other; illegal, off-exchange precious metals transactions; unauthorized swap transactions; inadequate oversight of traders; undercapitalization; improper controls and supervision; improper handling and/or segregation of customer funds; failing to comply with applicable record-keeping and audit trail rules; and creating after-the-fact trading records containing fictitious information that were submitted for clearing

Learn More

To learn more about filing a tip under the SEC and CFTC Whistleblower Program, please see the following resources offered by our firm:

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Other Whistleblower Programs

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