Two companies agreed to pay $16 million to settle CFTC charges of wheat futures price manipulation. Pursuant to the settlement, the CFTC agreed not to make "any public statement about this case." The Consent Order does not contain either factual findings or conclusions of law.
In its Complaint filed in the U.S. District Court for the Northern District of Illinois Eastern Division, the CFTC alleged that Kraft Foods Group, Inc. and Mondelēz Global LLC devised and executed a scheme designed to manipulate the prices of the December 2011 wheat futures contract traded on the Chicago Board of Trade. The CFTC alleged that the Defendants had no intention of sourcing wheat from the futures market but sought to create a false demand for more than 3,000 futures contracts (estimated $90 million) of Soft Red Winter Wheat. The CFTC found that the Defendants made over $5 million through their improper conduct.
In a public statement, the Commission emphasized that it likely will not agree to a gag order again, with certain exceptions. The Commission further clarified that, although it cannot speak on the litigation, individual Commissioners may speak on the matter in their personal capacity.
Although they expressed support for settlement, CFTC Commissioners Dan M. Berkovitz and Rostin Behnam urged the Commission not to "bargain this right away in settlement negotiations." Specifically, the Commissioners stated that it is crucial that they retain the ability to speak to Congress and the public in order to explain the logic behind entering into settlement agreements. Going forward, they urged the Commission not to accept any confidentiality provisions or restrictions on public statements.
The CFTC announced its filing of a civil enforcement complaint (the "Complaint") against Kraft Foods Group, Inc. and Mondelēz Global LLC (together, the "Companies") for the manipulation and attempted manipulation of wheat futures and cash wheat prices.
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