D.F.A. pays $12 million to settle C.F.T.C. charges
December 16, 2008
by Eric Schroeder
KANSAS CITY — The board of directors of Dairy Farmers of America, Inc. said it has agreed to pay a $12 million civil monetary penalty as part of a settlement with the U.S. Commodity Futures Trading Commission.
The $12 million penalty, which involved D.F.A., Gary Hanman, former chief executive officer, and Gerald Bos, former chief financial officer, stemmed from attempts to manipulate the Chicago Mercantile Exchange’s Class III milk futures contract and exceeding speculative position limits in that contract.
Additionally, Frank Otis, former president and c.e.o. of a D.F.A. subsidiary, and Glenn Millar, former executive vice-president of the subsidiary, will pay $150,000 for aiding and abetting D.F.A.’s speculative position limit violation.
In addition to paying the penalty, D.F.A. agreed to not engage in speculative trading in milk futures contracts for two years and to retain a monitor to review its trading activities on the C.M.E. during that period.
"Settling this matter will allow us to focus wholly on serving our members and moving the cooperative forward," said Rick Smith, president and c.e.o. of D.F.A. "The transactions addressed by the settlement took place over a one-month period more than four years ago."
The D.F.A. is a dairy marketing cooperative based in Kansas City that serves and is owned by more than 18,000 dairy farmers in 48 states.