By Brad Rosen, J.D.
The U.S. Senate recently voted unanimously to pass the CFTC Fund Management Act (S. 409), a bill described by Senator Chuck Grassley (R-Iowa) as a means to preserve the CFTC’s whistleblower program which is in danger of collapsing under the weight its own success. The legislation temporarily establishes a separate account at the U.S. Treasury to house funds used to pay operating and programming expenses. The creation of a separate account guarantees that the Whistleblower Office will be able to continue operations should the overall amount held in its Customer Protection Fund drop to a critical level.
Bipartisan legislation seeks to avoid obliteration of whistleblower fund. The bill which is cosponsored by Senators Maggie Hassan (D-N.H.), Joni Ernst (R-Iowa), Tammy Baldwin (D-Wis.), and Susan Collins (R-Maine), carries no cost to taxpayers. In a press release accompanying the measure’s passage, Grassley observed, "The CFTC whistleblower program has become far more successful than Congress imagined when we set it up back in 2010. Some awards distributed to whistleblowers have grown to the point that they risk wiping out the award fund before it can be replenished, sidelining program staff and operations in the process." Grassley cautioned, "We can’t allow this program to become a victim of its own success."
Current law and slow-walking applications. The CFTC relies on whistleblower disclosures to identify cases of fraud and other illegal activities and collect fines on behalf of the American people as noted in the Senate press release. The CFTC’s Customer Protection Fund, which was established by Congress in 2010, is funded through those fines, and used to reward whistleblowers for their disclosures. That fund is also used to pay for operating expenses and educational initiatives associated with the whistleblower office.
Under current law, the Customer Protection Fund is capped at $100 million, and any fines collected after the account reaches the cap are remitted to the Treasury’s general fund. However, in recent years, the increasing size and quantity of fines stemming from successful whistleblower disclosures have led to larger reward disbursements, which risk depleting the fund before it can be replenished. As recently reported, the CFTC has been slow-walking applications in order to avoid depleting the whistleblower fund.
Legislation now rests with the House of Representatives. According to Stephen M. Kohn, a whistleblower attorney and the Chairman of the Board of Directors of the National Whistleblower Center, "This bill prevents the CFTC Whistleblower Office from shutting down," Kohn, added, "It is now imperative that the House of Representatives does its job and immediately pass this critical anti-corruption law. The staff of the CFTC have been highly professional, and the agency is involved in investigating worldwide corruption in the commodities markets, including corruption in the oil industries." Grassley himself underscored these comments noting, "Now that the Senate has passed this bill, the House must act quickly to preserve the program."