Rewards for Blowing Whistle On Commodities Trading Fraud
Commodity Futures Trading Commission Issues Whistleblower Alert On Spoofing
Spoofing And Other Commodities Trading Fraud
The U.S. Commodities Futures Trading Commission (CFTC) saw a 126% increase in whistleblower tips during 2020. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Pub. L. 111-203, established a CFTC whistleblower program to protect the U.S. economy and the American public. See 7 U.S.C. § 26 et seq. Among other statutes that the CFTC enforces, most of its prosecutions fall under the Commodity Exchange Act (CEA), 7 U.S.C. § 1 et seq. The CFTC periodically issues alerts to potential whistleblowers describing the kinds of trading fraud under the CEA that the agency identifies as a primary threat to the integrity of the commodities markets and is actively prosecuting. In one recent alert, the CFTC spotlighted the fraudulent trading practice of “spoofing,” described in detail below. If you have credible information of any kind of commodities trading fraud or corrupt practices, call the Los Angeles CFTC whistleblower attorneys at Evans Law Firm, Inc. today at (415)441-8669 or toll free at (888)503-8267.
What is Spoofing?
A trader “spoofs” when he or she places an order in a futures market with the intention to cancel the order prior to execution. Traders typically spoof to misrepresent supply or demand in order to induce other traders to act in a way beneficial to the spoofer. Spoofing is a federal crime punishable by up to 10 years’ imprisonment per violation. The CFTC has used its civil authority to charge individuals and companies with spoofing in a number of recently reported cases. The Commission identifies spoofing through closely examining trading conduct such as:
- Manual and automated trading schemes that place and quickly cancel bids and offers in futures contracts in order to benefit other orders and/or positions
- Orders being quickly placed and canceled at or near the best bid or offer, especially if opposite-side orders are filled
- Multiple orders of the same size repeatedly and simultaneously being placed and canceled
- Any scheme designed to cause prices to artificially move
What Should You Do If You Suspect Spoofing or Other Misconduct?
You do not need to be a company “insider” (like a trader or trading firm employee) to be a whistleblower. In fact, victims of fraud and other market participants who observe misconduct committed by others may be best situated to identify spoofing and qualify as whistleblowers. If you see something suspicious, call the CFTC attorneys at Evans Law Firm and we can help you
- Complete a Form TCR (Tip, Complaint, Referral) correctly and as completely as possible
- Provide details that are specific, credible, and timely
- Include as much information about the misconduct as possible, including the markets and contracts involved, precise timestamps, and Tag 50 identifiers
- Attach supporting documents or files to your Form TCR, as long as they are not protected by the attorney-client privilege – e.g., screen shots or video of the market activity
- Perform independent analysis of trading activity
- Supplement your Form TCR filing.
The CFTC will pay 10%-30% monetary awards to persons who voluntarily provide the agency with original information on a Form TCR about violations of the CEA or its rules, if that information leads to a successful CFTC enforcement action resulting in more than $1 million in monetary sanctions. The program also affords confidentiality and anti-retaliation protections.
Spoofing and other trading fraud in options, swaps, futures, commodities or virtual currency or false advertising may constitute the basis of a whistleblower report to the CFTC. Ingrid M. Evans and the other Los Angeles CFTC whistleblower attorneys at the Evans Law Firm know how to present your information on a TCR with the best chance for an ultimate reward if the CFTC elects to take action and the enforcement action is successful. Call Ingrid and the firm’s other CFTC whistleblower attorneys today at (415) 441-8669, or toll free at (888)503-8267 or by email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>. Ingrid and our other whistleblower attorneys also represent whistleblowers in cases involving the False Claims Act, offshore tax avoidance schemes or other tax fraud before the Internal Revenue Service, and bank fraud under the Financial Reform, Recovery, and Enforcement Act (FIRREA/FIAFEA).