There is No Cap on Fraud-Part II

By Attorney Tony Munter

Check out Part I here.

Would you rather invest your money in a corrupt Commodities market? That’s the real choice, because what people who want to cap awards really want is to undermine the whole idea of whistleblowers coming forward to report fraud and work with the government to fight it.

Incentives are supposed to be big. Otherwise, they are not incentives.

The CFTC awarded $200 Million to a whistleblower who exposed Deutsche Bank’s role in the largest financial fraud ever prosecuted. Op-Eds focus on jealousy of the whistleblower, when the real issue is fraud.

LIBOR Fraud was conducted for greed with more money involved than you can imagine. The bank had to pay billions in fines as a result. So yes, if you report a multi-national fraud, involving trillions, you too could be in for a large award.

One article advocated for a $30 Million Cap on all awards, using the old trick of a big number now, to try to destroy whistleblower rewards over time and grind the whole idea of being a whistleblower and providing an incentive to be a whistleblower to a halt. $30M today reduced by inflation and cut in half next time there is an award and so on till it gets cut down you can see how this will go.

Meanwhile real awards provide real incentives to report fraud. So yes again, they have to be big even very big. The law makes them work on a percentage basis both to provide an award commensurate with the fraud and create a partnership with the government to fight fraud.

It works, which is why the award should be celebrated as good news, because a whistleblower and the government caught the bad guys. It works, which is why there is always an attempt, whenever there is a big award to try make it sound reasonable to undermine the whole idea.

Remember, not everyone is really against fraud, they just pretend to be.

The op-ed peddled nonsense in support of the cap, if you look closely at the argument making the pitch for a cap. The author asks whether $30 million is enough in finance for someone who would expect to earn millions each year over a decade or more. He concedes that maybe it is not enough for that individual to risk everything when they could just change firms to one with a more “ethical culture.”

So, ask yourself how much would “be enough” if it were you risking everything. Risk everything, but have your potential award capped. That message is designed to discourage whistleblowers and allow fraudsters to get away with it. Notably, the CFTC does allow whistleblowers to file anonymously, but filing as a whistleblower is always a bit of a risk.

In the same breath, the article pretends there is no need for any incentive, claiming that certain people should be invested in how their firm reacts to wrongdoing.


The big earners involved in the case, other than the whistleblower, were not “invested” in how their firm reacted to wrongdoing the right way. In this case, The Wall Street Journal reported Deusche Bank AG had to pay a record $2.5 billion penalty to settle U.S. and British allegations that it manipulated interest rates. Worse, the Journal noted the fine ended a years-long investigation that was allegedly delayed by a “lack of cooperation with government authorities” on the part of the German bank.

So, not only were the bank’s big earners apparently not invested in stopping fraud in the first place, a fraud that went on for years and involved huge money, it appears they also did not even cooperate with government investigators once the fraud was discovered.

The CFTC/LIBOR whistleblower is not the average, but the highest paid whistleblower ever, because the whistleblower reported on the largest financial fraud ever. It took almost 10 years for the whistleblower to obtain any award at all, and during that time, the Deutsche bank went right on making money with no cap on the amount it could make as a bank or how much they can pay any executive.

Do not trust your investments with the idea that a company should be allowed to police itself and just do the right thing. Maybe they are invested in doing the right thing, but there are always more opportunities to make money at your expense through fraud, and to repeat, there is no cap on fraud. The incentive to commit fraud is always there and always huge.