All I want for Christmas is a criminal antitrust whistleblower statute.  The SEC, CFTC and other enforcement agencies charged with uncovering and prosecuting financial fraud have had another strong year thanks to their whistleblower programs.  These agencies sing the praises of their reliance on whistleblowers to uncover illegal schemes.  It is not difficult to understand that one way to uncover secret fraudulent activities is to incentivize someone to “blow the whistle.”

 Meanwhile, measured by number of cases filed, the whistleblower-less Antitrust Division continued a downward trend of cases filed. See Criminal Enforcement Trend Charts, Antitrust Division, US Dept of Justice.

Total Criminal Cases Filed

The Antitrust Division filed 9 criminal antitrust cases in fiscal 2023, which may be a record low.  This is not a criticism of the Antitrust Division as the reasons for the low case count are varied and complex.  But clearly the Corporate Leniency Policy has lost its luster as an incentive for corporations to self-report.  One foundation of a successful leniency program is the “credible threat of detection.”  With such low prosecution figures, the threat of detection is seemingly very low.  It’s time to add a new powerful criminal enforcement tool—a program that incentivizes individuals with knowledge of a cartel to come forward.  An individual whistleblower program will enhance, not replace, the Corporate Leniency Policy by raising the “threat of detection” –giving pause to a corporation that might want to lay low instead of coming clean.  I cannot say this better than Sam Antar of Crazy Eddie fame:

In the two decades I was deeply involved in the Crazy Eddie fraud, the only threat made us lose sleep at night was the possibility of a whistleblower blowing the lid on our crimes. Consistent studies by the Association of Certified Fraud Examiners have shown that most frauds are exposed by whistleblowers, far ahead of frauds exposed by any other source. The SEC will be handing a gift to white-collar criminals if it reduces whistleblower bounties. —-  Sam E. Antar, Former Crazy Eddie CFO, former CPA, and a convicted felon.

I hope 2024 will bring forward a “champion” to revitalize the criminal enforcement program by advocating for a whistleblower statute.  I understand the difficulty of passing any legislation in the current environment but criminal antitrust enforcement traditionally enjoys bipartisan support.  Perhaps the whistleblower idea will be an area where Congress can find common ground.

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Below are excerpts from the annual whistleblower reports from two agencies, the SEC and CFTC.  There are numerous other whistleblower program in the federal enforcement arsenal.  I’ve never heard any call for a repeal of any whistleblower legislation because it turned out to be a bad idea to reward whistleblowers who come forward and provide the information that leads to a successful enforcement action.

The U.S. Securities and Exchange Commission’s Whistleblower Program continued to grow and strengthen in Fiscal Year (FY) 2023, establishing new records for the Program. In FY 2023, the Commission awarded nearly $600 million—the highest annual total by dollar value in the Program’s history—to 68 individual whistleblowers.1 These totals include a single award for almost $279 million—the largest in the history of the Program. The SEC has now awarded more than $1.9 billion to 397 individual whistleblowers since the beginning of the Program in 2011.

The impact of the Whistleblower Program was evident in the unprecedented level of public participation in the Program in FY 2023. The Commission received more than 18,000 whistleblower tips in FY 2023, almost 50% more than the previous record set in FY 2022. The Commission also received a record number of applications for awards in FY 2023.

As a former Inspector General who knows firsthand how important whistleblowers are, I wholeheartedly support whistleblowers and the CFTC’s Whistleblower Program, and am very proud of the Program’s outsized results.  Cumulatively, the CFTC has awarded almost $350 million to whistleblowers, with more than $3 billion in enforcement sanctions ordered in cases associated with those awards.  This includes $16 million in awards this year, including more than $15 million to two whistleblowers who provided significant information and assistance that led the CFTC to bring separate successful enforcement cases.

Whistleblowers play a vital role in supporting CFTC investigations related to fraud and other illegality.  The CFTC could not fully protect customers and markets without whistleblowers.  Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time.  The faster we can stop fraud, the more we can protect customers from harm.

  • Batman & Robin   November 26, 2023

The Dynamic Duo stated: We want to thank Commissioner Gordon and Police Chief O’Hara.  Without the Bat Phone, Robin and I would have been stuck forever in the Batcave with Alfred, clueless about the lawlessness plaguing Gotham City.

“Saints be praised, the Antitrust Division needs a whistleblower statute!,” Police Chief O’Hara exclaimed after his recent trip to the supermarket.

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Below are a few articles/posts I’ve written in support of a criminal antitrust whistleblower program:

A Practical Look at Why A Criminal Antitrust Whistleblower Statute is Needed: Cartel Capers, March 28, 2023

It’s A Crime There Isn’t a Criminal Antitrust Whistleblower Statute, Cartel Capers, April 9, 2018

It’s Time for a Criminal Antitrust Whistleblower  Statute (Part 1), Cartel Capers, October 30, 2017

Thanks for reading.  Happy Holidays and I wish you all the best in 2024.

Bob Connolly   bob@reconnollylaw.com