Hedge funds and their reps become whistleblowers to curb illegal financial behavior

 

Citadel,  a $24 billion hedge fund, or a representative on its behalf  has filed with the U.S. Commodity Futures Trading Commission (CFTC) as a whistleblower , revealing what it says is unscrupulous trading on futures exchanges beginning in 2013, according to Bloomberg News.

Under law, whistleblowers rendering information to the  CFTC which results in  a prosecution can win awards of  between 10 percent and 30 percent of the recovered amount. Earlier this month, the CFTC awarded a whistleblower, more than $10 million for providing key original information that resulted in a successful enforcement action.

In the case of Citadel, it reported the phenominon called spoofing  the form of cheating in which Spoofers place orders they don’t intend to fill for the sole purpose of moving prices in a direction favorable to their strategy, and then cancel them before they are filled. While there’s nothing wrong with canceling orders, it’s illegal to place orders with no intention of following through on them.

The CFTC whistleblower program allows the whistleblowers to remain anonymous.

Jeffrey Newman represents whistleblowers