The U.S. CFTC Reaches $710 Million Settlement with 11 Financial Institutions
- posted: Feb. 28, 2023
- Whistleblower Litigation, Fraud
Late last year, the United States Commodity Futures Trading Commission reached a $710 million settlement with 11 major financial institutions, including Goldman Sachs, Deutsche Bank, Morgan Stanley, Citibank and Bank of America, for recordkeeping and supervision failures. Similarly, the SEC announced a $1.1 billion settlement with the same institutions, for the same behavior.
Case background
The issue arose from the “widespread use of unapproved communication methods,” alleging that over multiple years, each bank “failed to stop its employees, including those at senior levels, from communicating both internally and externally using unapproved communication methods, including messages sent via personal text, WhatsApp or Signal.” Furthermore, the CFTC alleged that these institutions failed to keep appropriate records of the messages, despite the requirement that they do so, given the messages related to firm business.
This misconduct goes directly against industry standard recordkeeping, supervision and other regulatory requirements. Although institutions are strongly encouraged to set up their own internal controls and supervision mechanisms, if misconduct is discovered, federal regulatory authorities can investigate.
Whistleblowers typically play a role in these investigations. They’re usually employees or other people with insider knowledge of misconduct, who file a claim or make a report to the appropriate agency. In most cases, if the information leads to a successful enforcement action, the whistleblower could receive up to 30 percent of the sanctioned funds. The rest is typically distributed to harmed shareholders or returned to the U.S. Treasury, depending on the type of action and agency involved. Since 2014, the CFTC has awarded about $330 million to qualified whistleblowers. Their program has recovered over $2.6 billion.
For more information about whistleblowing protections and awards, a trusted whistleblower attorney at Kardell Law Group can help. Reach out today to learn more.
