Nearly $200 Million Awarded In Largest Single Whistleblower Award

Oct 21, 2021 | Whistleblower

On October 21, 2021, the Commodity Futures Trading Commission (“CFTC”) announced an award of nearly $200 million to a whistleblower whose specific, credible, and timely original information significantly contributed to an already open investigation and led to a successful enforcement action, as well as to the success of two related actions, by a U.S. federal regulator and a foreign regulator.

According to the order, the whistleblower’s information led the CFTC to important, direct evidence of wrongdoing. In order to qualify for an award, a whistleblower who significantly contributed to the success of an enforcement action must demonstrate that there is a “meaningful nexus” between the information provided and the CFTC’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding. In this latest award, the CFTC determined that the whistleblower met this standard.

The whistleblower’s claim in connection with a third related action by a state regulator was denied, because the whistleblower’s information was never shared with the state regulator.

With this award, the CFTC has granted whistleblower awards associated with enforcement actions that have resulted in monetary sanctions totaling more than $3 billion.

The CFTC’s Whistleblower Program

The CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  The CFTC issues awards related not only to the agency’s enforcement actions, but also in connection with actions brought by other domestic or foreign regulators if certain conditions are met.

The Commodity Exchange Act (“CEA”) provides confidentiality protections for whistleblowers. Regardless of whether the CFTC grants an award, the CFTC will not disclose any information that could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances. Consistent with this confidentiality protection, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information or the exact dollar amount of the award granted.

Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund, which was established by Congress, and is financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from injured customers to fund the program.

How Does One Become Eligible For A Whistleblower Award?

The first step to becoming eligible for a whistleblower award is for an individual or group of individuals to submit a tip, complaint, or referral on a Form TCR that contains information about a potential violation of the CEA. Whistleblowers can be anyone, such as corporate insiders, market observers, investors, customers, and fraud victims. A whistleblower need not be a company insider. But entities cannot be eligible for awards themselves, and not every whistleblower will be eligible for an award.

Information provided by a whistleblower could lead the CFTC to open a new investigation, re-open a closed investigation, pursue a new line of inquiry in an ongoing investigation, or significantly contribute to the success of an enforcement action. This could result in a successful enforcement action or a Related Action, which could be brought by another governmental authority. Only those whistleblowers who submit information before the CFTC contacts them will be eligible for an award. In order for information to be voluntarily submitted, it must be submitted before the CFTC or certain other authorities request, inquire, or demand information from the whistleblower related to the original information being provided.

Individuals can submit a tip anonymously, with or without a lawyer’s help. Because the CFTC may need to contact a whistleblower for more information, individuals should provide some means of contact, such as an email address or telephone number. Likewise, there are detailed requirements for submitting an award application anonymously. If you have any questions about submitting anonymously, you are encouraged to contact the Whistleblower Office before you file.

Whether or not an individual submits anonymously, the CFTC is committed to protecting the identities of whistleblowers. The CFTC treats information learned during the course of an investigation—including the identity of sources—as non-public and confidential.

The exception to this policy is that in an administrative or court proceeding, the CFTC may be required to produce documents or other information which would reveal a whistleblower’s identity. Likewise, the CFTC may also provide the information provided by whistleblowers, subject to confidentiality requirements, to other government or regulatory entities.

CFTC Whistleblower Prerequisites & Eligibility Requirements

The Whistleblower Rules specify the prerequisites and eligibility requirements. The prerequisites include the following:

  • Whistleblower information must be provided voluntarily, prior to a request, inquiry, or demand for information;
  • The information must be original information not previously known to the CFTC, but if the whistleblower is the original source of the information, it would be deemed original information;
  • The information must have led to a successful resolution of CFTC action or a Related Action;
  • The whistleblower, upon CFTC staff’s request, must provide certain additional information;
  • The whistleblower must have submitted an award application (Form WB-APP) in response to a Notice of Covered Action or a final judgment in a Related Action or both.

Source: CFTC.gov

Kehoe Law Firm, P.C. 

Consumer Protection Alert: Amazon Impersonation Scams

Oct 21, 2021 | Blog, Consumer Protection

Amazon Impersonators Target Consumers, Take Advantage Of Amazon’s Name – Thousands Have Been Targeted In A “Runaway Favorite For Scammers”

The FTC recently reported that “Amazon tops [the] list of impersonated businesses.” According to the FTC, reports to the FTC’s Consumer Sentinel point to Amazon as a runaway favorite for scammers. From July 2020 through June 2021, about one in three people who reported a business impersonator said the scammer claimed to be Amazon.  About 96,000 people reported being targeted, and nearly 6,000 said they lost money. Reported losses totaled more than $27 million, and the reported median individual loss was $1,000.

These impersonators, according to the FTC, get your attention with messages to call about suspicious activity or unauthorized purchases on your Amazon account. When you call the number, a phony Amazon representative tricks you into giving them remote access to your computer or phone to supposedly fix the problem and give you a refund. But then—whoops—a couple of extra zeros are keyed in and too much money is (supposedly) refunded. They tell you to return the difference. In fact, some people have reported that the “representative” even begged for help, saying Amazon would fire them if the money wasn’t returned.

To make their lies about refunding that so-called overpayment more believable, scammers, reportedly, have accessed people’s online banking. Scammers, according to the FTC, move money from one account to another—say, from savings to checking. Then, when people see a large deposit in their checking account, they think it’s the refund, but it’s all fake. If they send money, as requested, they end up sending their own (very real) money.

Scammers also tell people to buy gift cards and send pictures of the numbers on the back. The scammers may call these numbers “blocking codes” or “security codes,” and explain that sharing them can block the hackers who, supposedly, took over the Amazon account in question. But the only thing those numbers are good for is getting (or stealing) the money on the card. After people send pictures of the gift cards, they often report getting texts confirming a supposed account credit in the amount of each gift card purchase. That’s just another trick scammers use to get their targets to buy more cards.

Another scam involves text messages saying you won a raffle for a free product from Amazon. Consumers who click the link to claim their free prize then have to enter credit card information to pay for “shipping.” Before long, they see charges to which they never agreed.

The FTC reports that the data suggests that Amazon impersonation scams may be disproportionately harming older adults. Over the past year, people ages 60 and older were over four times more likely than younger people to report losing money to an Amazon impersonator.  Older adults also reported losing more money—their median reported loss was $1,500, compared to $814 for people under age 60.

The FTC has provided the following guidance to avoid some common tricks business impersonators use:

  • Never call phone numbers given in unexpected calls, texts, emails, or messages on social media. And don’t click any links. Those are scams.
  • If you’re worried, check it out. Go directly to the company’s website to find out how to reach them. Don’t trust the phone numbers or links that come up in search results.
  • Never give anyone remote access to your devices unless you contacted the company first (using its real number). If someone tells you to give remote access to get a refund, it’s a scam.
  • Never pay by gift card. Nobody legit will ever require you to. And never send pictures of gift cards. If someone tells you they need the numbers on the back of a gift card, it’s a scam.
  • Talk about it. If you’re getting these messages, so are people you know. Help them avoid the scam by sharing what you know.

Source: FTC.gov

Kehoe Law Firm, P.C.