Following in the footsteps of government agencies like the SEC and IRS, the Commodity Futures Trading Commission (“CFTC”) had an eventful fiscal year 2014, resulting in its first-ever whistleblower reward and a significant jump in complaints over fiscal year 2013.
Much like the qui tam provisions of the False Claims Act, the CFTC’s relatively new whistleblower program incentivizes those with knowledge of fraud within the commodity futures trading market to come forward with their allegations to the CTFC and its whistleblower lawsuit staff. From there, each complaint is individually investigated and either pursued or dismissed. Also like the False Claims Act, whistleblowers advancing successful claims are eligible to receive a portion of the recovery amount from the CTFC – provided certain eligibility criteria is met.
Details of Fiscal Year 2014 for the CTFC
The CTFC investigates claims of fraud within the commodity futures trading industry. Commodity futures trading is a highly-complex market wherein investors agree to buy or sell a pre-determined amount of a commodity (e.g., oil, coffee, grains) before the commodity is actually harvested or produced. This somewhat risky practice serves the dual function of both locking in a price for the seller (to avoid dips in market price once tender is due) and to protect the buyer from the unexpected price fluctuations of valuable raw materials.
Fraud in this market can be difficult to detect, but quite costly nonetheless. Oftentimes, inter-continental commodity futures trades can invoke some component of fraud on the part of either party. Likewise, traders may be inclined to misrepresent the value or quality of their product – as well as when it will likely be ready for exchange.
In FY 2014, the CTFC received 227 complaints of fraud within the market, up from 138 in FY 2013. Also, the CTFC issued its first-ever whistleblower reward following allegations of multiple violations of the Commodity Exchange Act. The details of the whistleblower action and the identity of the whistleblower were not released by the CTFC; however, common signs of fraud include:
- Scams involving pooling investment money with others
- Trades involving foreign currency or counterfeit money
- Promises that commodities futures trading is low-risk and will result in a major profit
- Scams targeted at vulnerable individuals or those with a minimal understanding of the English language
- Claims of trading on the “Interbank Market”
- Unsolicited calls about investing in commodities
Contact Berger Montague Today
If you are aware of investment fraud either in the commodities futures trading market or the stock markets, please contact our office today for more information about how CTFC and SEC whistleblower programs operate. It is vital to keep your information confidential, as certain rules may apply to preclude recovery if your information becomes public knowledge or is reported by another employee.
There are three easy ways to contact our firm for a free, confidential evaluation with one of our whistleblower attorneys:
Your information will be reviewed by a Berger Montague qui tam attorney and remain confidential.