The U.S. Commodity Futures Trading Commission (CFTC) is actively seeking whistleblower tips on fraud or manipulation in the carbon markets.
On June 20, the CFTC’s Whistleblower Office posted a Whistleblower Alert which explains that “individuals can become eligible for both financial awards and certain protections by identifying potential Commodity Exchange Act (CEA) violations connected to fraud or manipulation in the carbon markets.”
Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of the funds collected by the government.
According to the CFTC, Carbon markets (CMs) “support the transition to a low‐carbon economy through market‐based initiatives where carbon credits (a/k/a offsets) are purchased and sold either in an over‐the‐counter market or on spot exchanges.” The alert further explains that “carbon credits are the underlying commodity for futures contracts that are listed on CFTC designated contract markets (DCMs).”
Because carbon credits are a commodity, the CFTC has enforcement authority and regulatory oversight over them. “CFTC jurisdiction also applies to carbon allowances and other environmental commodities products that are linked to futures contracts,” the alert further clarifies.
The CFTC’s alert lays out different forms of carbon market misconduct that whistleblowers can report to the CFTC:
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