Senate Passes Bill to Fund CFTC Whistleblower Program

The bill was passed unanimously on Friday; a similar bill may be considered by the House of Representatives

Sen. Chuck Grassley (R., Iowa) wrote the CFTC Fund Management Act.

Photo: Michael Brochstein/CNP/Zuma Press

香蕉视频苹果下载A newly passed Senate bill would temporarily create a separate account to pay for the operation of the Commodity Futures Trading Commission’s whistleblower program as the agency confronts a funding crisis over a large potential payout.

香蕉视频苹果下载Currently, the CFTC’s Customer Protection Fund, which is funded by money the agency collects in enforcement penalties, is used to pay successful whistleblowers as well as for operating expenses and educational initiatives associated with the whistleblower office. The bipartisan legislation proposes the establishment of a separate account at the U.S. Treasury Department until Oct. 1, 2022, to ensure that the CFTC’s whistleblower office will be able to continue operations even if the amount in the fund drops to a critical level.

The CFTC Fund Management Act was passed unanimously by the U.S. Senate on Friday. A similar bill may be considered by the U.S. House of Representatives.

“We continue to work with Congress to ensure the program’s success,” a CFTC spokeswoman said in an email.

The CFTC, which regulates the U.S. futures and derivatives markets, has been in turmoil香蕉视频苹果下载 in recent months over a potential whistleblower payout of more than $100 million to a former Deutsche Bank AG executive, The Wall Street Journal previously reported. CFTC leaders contended there was no mechanism to pay the bank executive and other applicants and keep funding the whistleblower program.

香蕉视频苹果下载The Customer Protection Fund, created by the 2010 Dodd-Frank Act, can be replenished only when it falls below its cap of $100 million. Any fines collected after the account reaches the cap typically go into the U.S. Treasury. If the fund is depleted, the CFTC whistleblower office could end up furloughed.

The bill would allow the CFTC to transfer up to $10 million from the fund into a separate account and use the account to pay for operating and programming expenses when the balance in the protection fund is insufficient. After Oct. 1, 2022, the remaining money in this account would be returned to the fund.

香蕉视频苹果下载Under the program rules, eligible tipsters are entitled to between 10% and 30% of monetary penalties collected. The CFTC has awarded roughly $123 million to whistleblowers, according to the agency website.

The increasing size of the whistleblower awards in recent years would risk depleting the fund before it could be replenished, according to a statement for the bill from the office of Sen. Chuck Grassley (R., Iowa), who wrote the bill. The bill would carry no cost to taxpayers, according to the statement.

“The CFTC whistleblower program has become far more successful than Congress imagined when we set it up back in 2010,” Sen. Grassley said in the statement. “We can’t allow this program to become a victim of its own success. Now that the Senate has passed this bill, the House must act quickly to preserve the program.”

香蕉视频苹果下载Without congressional action, Sen. Grassley’s office said they have been told the whistleblower office staff could be furloughed as soon as mid-June, said Taylor Foy, the communications director for Sen. Grassley. “We’re trying to get it done as soon as we can,” Mr. Foy said.

Attorneys representing whistleblowers said the legislation is an important step to help keep the CFTC program operating.

“Without the legislation, we would lose the whistleblower office during a time of heightened fraud concerns,” said Jeb White, chief executive of Taxpayers Against Fraud, an organization that represents whistleblower attorneys.

“This program has worked really well and any action that would allow it to keep operating is a big win,” said Jason Zuckerman, a lawyer at Zuckerman Law who represents whistleblowers. He noted that without the legislation, tipsters might be deterred from making further disclosures to the CFTC.

Some attorneys worry the temporary fix might not be enough to address the problem long-term.

“What I fear about this is they are just kicking the can down the road and we’ll be encountering this again,” said Erika Kelton, a partner at law firm Phillips & Cohen LLP who represents whistleblowers.

Write to Mengqi Sun at mengqi.sun@wsj.com

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