The
Commodity Futures Trading Commission operates a highly successful whistleblower
program.
As
one of the senators who led the effort to establish that program back in 2010,
I’m proud of what it has accomplished.
Since
the Commission issued its first whistleblower award in 2014, whistleblowers
have helped the agency root out waste, fraud and abuse in the commodities
trading industry and recover nearly $950 million.
That’s
a lot of restitution for harmed investors. It’s also a lot of money going to
the U.S. Treasury and to American taxpayers.
Now,
if Congress doesn’t act quickly, all of that progress could come to a swift and
sudden halt.
Several
months ago, the Commission contacted my office to tell me that its
whistleblower program is facing the prospect of a sudden cash shortage – one
that could require it to furlough staff and even close down operations.
The
reason for this potential shortage isn’t that the whistleblower program has
wasted or mismanaged funds, or that it hasn’t been doing its job.
It’s
just the opposite.
Whistleblowers
have been approaching the Commission to report actionable claims of wrongdoing
in far greater numbers, and its whistleblower program has grown at a much
faster rate than Congress expected when we created it back in 2010.
Last
year, the Commission issued a single whistleblower award for approximately $9
million. In the past, it has given out awards as high as about $30 million.
As
a result of these successes, in the near future, the Commission faces the
possibility of having to pay out several large whistleblower awards in close
succession. If that happens, the whistleblower program could run short of
having the cash on hand it needs to pay these awards and other office operating
expenses.
Again,
this is not an issue of bad management. It just means the program works even
better than we thought.
By
law, the Commission is only allowed to keep a certain amount of cash on hand to
pay out awards, and that amount is capped at $100 million. Because Congress
expected the program to remain relatively small, it set the cap for its
Customer Protection Fund, which is also used to pay the operating expenses of
the whistleblower office, lower than the caps it has set for larger
whistleblower programs such as the one at the SEC.
Increasing
the cap will ensure that the Commission can keep enough of the proceeds from
the fines it collects on-hand to pay whistleblower awards and also ensure that
the program itself doesn’t run out of money.
In
2019, I introduced the Whistleblower
Programs Improvement Act, which increased the cap on the fund and made
several additional improvements to the program, including provisions that would
allow the Commission greater flexibility to share information with law
enforcement.
I
did this because I realized that as the awards became bigger and more frequent,
it was only a matter of time before the Commission would run into trouble.
A
year later, my predictions came true and the Commission notified me of their
impending money problems.
I
introduced a bipartisan bill alongside Senators Hassan, Ernst and Baldwin in
December to quickly address this problem. I worked with then-Chairman Roberts
and then-Ranking Member Stabenow to include language that would have made the
most critical updates for the program in last year’s Omnibus.
These
updates would have ensured that the whistleblower office could keep enough
funds on-hand to pay upcoming whistleblower awards and continue to fund its own
operations.
Unfortunately,
that effort also hit a roadblock and the language wasn’t included by the House
of Representatives.
Now,
two months have passed, and a matter that was already urgent has become even
more critical.
The
Commission told my office they’ve now completely stopped work on four cases
with potentially large awards that could bankrupt the fund. It’s now a conflict
of interest for staff to even work on those cases because they know if they
were to approve a large award, it could mean putting themselves out of a job.
That’s
unacceptable. Whistleblowers shouldn’t have to wait just because Congress has
been dragging its feet on this issue.
That’s
why I reintroduced my bill and ask that my colleagues support this legislation
to fix the cap and protect the whistleblower program.
This
standalone bill is short and simple. It increases the cap on the Customer
Protection Fund from $100 million to $150 million and requires that funds
needed for the operating expenses of the whistleblower office be held in a
separate account, to ensure that the whistleblower office will have the resources
it needs to pay staff while the amount in the customer protection fund builds
up to a higher level.
Allowing
this successful whistleblower office to close, simply because it’s doing its
job, is unacceptable to me. It ought to be unacceptable to every member of
Congress.
It’s
important that we act now to ensure that doesn’t happen.
That’s
why I urge my colleagues on both sides of the aisle support this bipartisan
legislation.
