Commodity futures Trading CommWion 

U.S. 	 COMMODITY FUTURES TRADING COMMISSION 

Office of Inspector General 

Three Lafayette Centre 
 

1155 21st Street, NW, Washington, DC 20581 
 

Telephone: (202) 418-5110 
 

Facsimile: (202) 418-5522 
 

September 29, 2016 

TO: Chairman Timothy G. Massad 

Commissioner Sharon Y. Bowen 

Commissioner J. Christopher Giancarlo 

FROM: A. Roy Lavik 

Inspector General

Q_ (( ~ 

SUBJECT: Progress of CFTC's Whistleblower Office 

The Office ofthe Inspector General (OIG) for the Commodity Futures Trading 

Commission (CFTC) has reviewed the CFTC Whistleblower program. 1 We examined the 

relevant statutes and regulations, as well as official reports and selected files ofwhistleblower 

claims and determinations. In addition, we conducted interviews with 32 current and fonner 

CFTC employees at various staff and management levels who are or have been involved with the 

Whistleblower program. Other than lengthy processing times, we encountered no irregularities in 

Whistleblower Office (WBP) processes, and the orders we reviewed appeared adequately 

supported by the record. 

According to interviews with staff, early on in the program attorneys in the WBO 

grappled with issues offirst impression, as well as staff and management turnover, causing 

delays in processing time. Although the WBO has experienced some targeted improvement in 

processing times over the past fiscal year, we believe further improvement is possible.2 

As a result of Whistleblower awards made during this fiscal year,3 Whistleblower 

program administrative expenses no longer exceed award amounts.4 Additionally, the Director of 

1 Congress established the CFTC Whistleblower program and Customer Protection Fund (CPF) at section 748 ofthe 

Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 11 1-203, 124 Stat. 1376 (2010), which 


added new section 23 to the Commodity Exchange Act (CEA), 7 U.S.C. § 26. The CPF is used to pay 


Whistleblower awards and related adminish·ative expenses, and to fund customer education initiatives designed to 


help customers protect themselves against fraud or other violations. OIG audits the CPF ' and audited CFTC's 


consumer outreach program in 20 14. 
 2 The WBO represents average processing times for Whistleblower orders as fo llows: FY2013--396 days; FY2014-­


293 days; FY2015--84 days; and FY20 16--374 days (through September 20, 20 16). 
 3 CFTC has issued two whistleblower awards in FY 2016. On March 28, 20 16, CFTC made its third whistleblower 


award and on April 4, 20 16, issued a press release revealing the award was in excess of $ 10 million. On July 19, 


2016, CFTC issued its fourth whistleblower award and on July 26, 2016, issued a press release revealing the award 


was approximately $50,000. These additional awards lifted the total amount awarded to approximately $10.3 million 


since inception ofthe CFTC whistleblower program, with a new average award amount of$3.5 million. 

the WBO has informed us that whistleblower tips have gone up 15% over the past year, mostly 

as a consequence ofrecent whistleblower awards and increased exposure of the office. 

The CFTC recently proposed new amendments to the Whistl eblower rules.5 The 

proposals include amendment to the Award Claims Review process, expansion ofthe universe of 

records that may be examined in an award determination, amendment to the confidentiality 

protection provision under CEA section 23(h)(2),6 and establishment of a public anti-retaliation 

protection for prospective whistleblowers. We are pleased the WBO is seeking to improve its 

rules and broaden awareness ofthe program to the public. Given the significant changes the 

CFTC has submitted for public comment, we will refrain at this time from detailed commentary 

about the office/program or the proposed rules. We may revisit the WBO at a later date. 

Finally, we are concerned with the level of institutional safeguards in place to protect a 

whistleblower's identity. The WBO and the Division ofEnforcement (DOE or Enforcement) use 

Practice Manager to track open cases. Included in open case fi les, among other material ge1mane 

to the Enforcement investigation, is the identity of a whistleblower. We understand that CFTC 

staff who are directly involved in an investigation could potentially need access to the 

whistleblower's identity; but we do not see any reason why staff unaffiliated with the 

investigation need such access. We recommend barring access to Practice Manager files 

containing a whistleblower's identity from anyone not involved in the underlying investigation. 

We will follow up this recommendation in our semiannual reports. 

We are pleased with the level of cooperation my Office has received from Management 

and staff in the Whistleblower office and DOE during our fieldwork. As always, I appreciate 

your continuing support of my Office. 

CC: 	 Anthony C. Thompson, Executive Director 

Ai tan Goel man, Director, Division ofEnforcement 

Christopher Elm11an, Director, Whistleblower Office 

4 Eaglesham, Jean, CFTC Can 't Give Whist/eblower Monev Awav, Wall Street Journal, Feb. 8, 20 16 (reporting that 

the CFTC had spent roughly $4 million in administrative costs of its whistleblower and outreach programs while 

paying $530,000 million in whistleblower awards). 

8 1 FR5955 1 (Aug.30.20 16). 6 1 use § 26(h)(2).