May 2022 | Volume 42 | Issue 5 Futures and Derivatives Law Report accounts on or before August 12 , 2019 , having just discovered the violations on August 1 , 2019 . The DCO was also charged with a violation of CFTC Regulation 39.15 ( a ), which requires DCOs to design and maintain standards and procedures that ensure the safety of funds and assets belonging to clearing members and their customers . Even though only two of the six accounts were funded , the CFTC showed an intolerance for any compliance error by DCOs considering the critical role they play in clearing and guaranteeing market transactions .
Position limits is another area in which the CFTC is likely to show impatience with compliance failures . 93 Despite recent changes to the federal position limits rules , the CFTC will continue to look for and bring enforcement actions involving violations of position limits . 94 The CFTC brought an enforcement action against a national food processing company whose interactions with the derivatives market were limited to a small subset of agricultural derivatives futures . The CFTC ordered a $ 1.5 million penalty for multiple alleged regulatory violations , including position limits , reporting , and recordkeeping violations . 95 The order was issued on August 13 , 2021 , just a few months after the Commission ’ s newly finalized position limits rules went into effect . 96 The CFTC issued another order connected to position limits on November 8 , 2021 , after the close of FY 2021 , alleging that a commodity pool operator failed to disclose in SEC Form 8-Ks that its inability to make further investments in futures contracts was due to applicable position limits . 97 Actions such as these should prod market participants to review their transactions and related bona fide hedge exemptions to ensure compliance with the new rules .
IV . ROLE OF SPECIFIC ENFORCEMENT PROGRAMS
A . WHISTLEBLOWER OFFICE
The Commission has issued a number of big payouts to whistleblowers over the past year . 98 The program has become important in supporting cases that are already underway and in initiating enforcement investigations . The CFTC ’ s whistleblower program has thus maintained an active role since its creation in 2014 . The program permits monetary awards to individuals who provide the CFTC with information that leads to successful enforcement by the CFTC or other regulators . Whistleblower awards range from 10- 30 % of monetary sanctions collected through enforcement proceedings . The CFTC provides whistleblowers with anonymity protection and therefore divulges only the fact that an award was made ( and in many cases , the amount of the award ), rather than connecting the award to a particular enforcement action . Whistleblower complaints are submitted daily to the agency and have proven fruitful to the Division in bringing new cases and assisting in cases already underway .
Over the course of FY 2021 , the CFTC announced six whistleblower awards , totaling more than $ 3 million . 99 Since the end of FY 2021 , the CFTC ’ s Whistleblower Program issued a nearly $ 200 million whistleblower award , the largest issued to a single whistleblower in CFTC history . 100 Just as whistleblower programs in other agencies , including the SEC and IRS , have enjoyed success , CFTC Enforcement expects whistleblower complaints to continue to flow into the CFTC and the Division will be proactive in investigating these complaints and bringing enforcement cases stemming from them .
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