WHISTLEBLOWER QUOTE OF THE DAY:

"By providing robust financial incentives and enhanced protections to whistleblowers, the Commission incentivizes people to come forward with high quality information about serious violations of the law that we might not otherwise uncover. An award this size shows the importance that the Commission places on incentivizing future whistleblowers.”

Aitan Goelman, Director of the CFTC’s Division of Enforcement

 

DAILY WHISTLEBLOWER HEADLINES:

CFTC Spoofing Witness Says He's Oystacher Whistle-Blower

By Janan Hanna, Bloomberg

A former competitor told a federal judge considering whether to impose a trading ban on Igor Oystacher that he filed a whistle-blower complaint over market manipulation and stands to profit if the Commodity Futures Trading Commission wins its lawsuit against the alleged spoofer.

Matthew Wasko, who said he worked for CGTA Analytics before it closed last year, said Monday in Chicago federal court that his firm lost money trading against a spoofer, whom he has since learned was Oystacher. Wasko said CGTA partnered with HTG Capital Partners LLC, a well-known Chicago-based trading firm.

Wasko said CGTA Analytics, which operated as a market maker, observed suspicious trading activity numerous times in 2013 and 2014 in the E-mini S&P 500 futures contract market. He said he and a colleague filed the whistle-blower complaint with the CME and the CFTC in June 2013. The complaint was updated continuously in 2013 and again through 2015 as his firm discovered continuing spoofing conduct, he said.

Wasko’s testimony came on the first day of a hearing to consider the CFTC’s request that Oystacher be barred from trading in at least five futures trading markets while its lawsuit seeking to strip him of his trading license awaits trial. read more »

SEC Announces Financial Fraud Cases

The Securities and Exchange Commission today announced a pair of financial fraud cases against companies and then-executives accused of various accounting failures that left investors without accurate depictions of company finances.

In one case, technology manufacturer Logitech International agreed to pay a $7.5 million penalty for fraudulently inflating its fiscal year 2011 financial results to meet earnings guidance and committing other accounting-related violations during a five-year period.  Logitech’s then-controller Michael Doktorczyk and then-director of accounting Sherralyn Bolles agreed to pay penalties of $50,000 and $25,000, respectively, for violations related to Logitech’s warranty accrual accounting and failure to amortize intangibles from an earlier acquisition.  The SEC filed a complaint in federal court yesterday against Logitech’s then-chief financial officer Erik Bardman and then-acting controller Jennifer Wolf alleging that they deliberately minimized the write-down of millions of dollars of excess component parts for a product for which Logitech had excess inventory in FY11.  For Logitech’s financial statements, the two executives falsely assumed the company would build all of the components into finished products despite their knowledge of contrary facts and events. 

In the other case, three then-executives at battery manufacturer Ener1 agreed to pay penalties for the company’s materially overstated revenues and assets for year-end 2010 and overstated assets in the first quarter of 2011.  The financial misstatements stemmed from management’s failure to impair investments and receivables related to an electric car manufacturer that was one of its largest customers.  Former CEO and chairman of the board Charles L. Gassenheimer, former chief financial officer Jeffrey A. Seidel, and former chief accounting officer Robert R. Kamischke agreed to pay penalties of $100,000, $50,000, and $30,000, respectively. read more »

 

WHISTLEBLOWER AWARDS & SETTLEMENTS:

CFTC Announces Whistleblower Award of More Than $10 Million

The U.S. Commodity Futures Trading Commission (CFTC) today announced an award of more than $10 million to a whistleblower who provided key original information that led to a successful CFTC enforcement action. 

The award is the largest made by the CFTC’s Whistleblower Program to date and the third award to a whistleblower who provided valuable information about violations of the Commodity Exchange Act (CEA).

By law, the CFTC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

“By providing robust financial incentives and enhanced protections to whistleblowers, the Commission incentivizes people to come forward with high quality information about serious violations of the law that we might not otherwise uncover. An award this size shows the importance that the Commission places on incentivizing future whistleblowers,” said Aitan Goelman, Director of the CFTC’s Division of Enforcement. 

Christopher Ehrman, the Director of the CFTC’s Whistleblower Office, added, “The Whistleblower Program is working. My hope is that this multimillion dollar award will encourage others to come forward with information that will assist the Commission in protecting our markets.”

The CFTC’s Whistleblower Program was created by section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). The CFTC pays monetary awards to eligible whistleblowers who voluntarily provide the CFTC with original information about violations of the CEA that leads the CFTC to bring a successful enforcement action resulting in monetary sanctions exceeding $1,000,000. read more »