Articles Posted in Commodities trading whistleblower

According to a recent report, two whistleblowers have earned a total of $2 million in awards for information they provided that instigated an investigation by the CFTC. The whistleblowers participated in a variety of interviews and provided incriminating documents that proved that several violations of the Commodity Exchange Act had taken place.

“This award demonstrates how whistleblowers can play an integral role in our investigations and be rewarded for their significant contributions,” stated Christoper Ehrman, director of the CFTC’s Whistleblower Office. He added, “It often takes integrity and courage to report specific, timely, and credible information about misconduct, and such information enhances our ability to police the markets.”.

Under the Whistleblower Program, which was established in 2010, the CFTC has awarded over $90 million to individuals who have decided to come forward with information regarding suspected fraud. In total, whistleblowers participating in this program have helped to earn over $730 million in sanctions.

A whistleblower who revealed that JP Morgan Chase didn’t inform wealthy investors about investment conflicts of interest will receive a record reward of $30 million. JP Morgan agreed to pay $367 million for improperly failing to disclose that it was steering asset management customers to investments that would be profitable for the bank. Of the Commodity Futures Trading Commission (CFTC) portion, $30 million will go to one of several whistleblower applicants.

Under the Dodd-Frank Act of 2010, the SEC and CFTC operate separate whistleblower programs. Each can provide claimans between 10 percent and 30 percent of recoveries based on the value of the information provided.

The Securities and Exchange Commission said that starting in 2007, JPMorgan developed basic investment portfolios, in a program known as the Chase Strategic Portfolio, that automatically invested a significant portion of any money in proprietary JPMorgan mutual funds. The company developed a similar program for wealthier clients in JPMorgan’s private bank, known as the JPMorgan Investment Portfolio, which funneled money into the bank’s own hedge funds. JPMorgan also gave a preference to outside hedge fund managers who were willing to pay placement fees — or retrocessions — to JPMorgan. In some cases, regulators said, the clients were put into products with higher fees, which earned JPMorgan more money, even when the same JPMorgan product was available for a lower fee.