In November 2017, the CFTC ordered Cargill Inc., a global agricultural, commodity and financial services business headquartered in Minnesota, and its business, Cargill Risk Management, to pay a $10 million civil monetary penalty for violating the Commodity Exchange Act and CFTC regulations. In its November 2017 order, CFTC stated, “[i]n particular, Cargill was reluctant to disclose its mark up on certain complex swaps because of a concern that such transparency might ultimately reduce its revenue. As a result of this concern, Cargill chose to provide a mark that was based on a termination or ‘unwind’ value that included a portion of Cargill’s estimated revenue during the first sixty calendar days of the swap, and also credited the counterparty with a portion of its estimated revenue if the counterparty terminated the swap during that same period.” The CFTC’s Order also highlighted Cargill’s failure to supervise its employees in relation to these fraudulent swaps.
Without the whistleblower’s valuable information, this investigation, like many others, would remain unresolved. As evidenced by this award, whistleblowers are important resources for the CFTC in combating corporate misconduct.
Notably, this particular award emphasizes the criticality that the CFTC places on reporting time-sensitive information. Here, the whistleblower provided specific, credible, and important information to the CFTC; however, because of an unreasonable delay in reporting, the CFTC reduced the total amount awarded. The CFTC explains that a failure to report a violation in a timely manner can lead to additional financial loss to customers or the general public. On the other hand, early reporting lessens the harm violators can inflict on the public and hastens the investigations that bring culprits to justice. Because timeliness is such a critical factor to the success of an investigation, a whistleblower’s award is closely related to the timing of his initial report to the CFTC.
The CFTC’s whistleblower program is an important tool for regulators to discover and prevent ongoing violations of the federal securities laws. Experienced counsel can help guide an CFTC whistleblower through the process and help maximize a recovery.
Silver Law Group is a nationally-recognized securities law firm headquartered in South Florida representing investors worldwide with their claims for losses due to securities and investment fraud. The firm has successfully recovered multi-million dollar awards for its clients through securities arbitration and the courts. To contact Scott L. Silver to discuss your legal matter, call toll-free (800) 975-4345 or e-mail him at SSilver@silverlaw.com.