CHICAGO — Judge John Robert Blakey of the U.S. District Court for the Northern District of Illinois has ordered the chairman and two commissioners of the U.S. Commodity Futures Trading Commission (C.F.T.C.), along with the agency’s director of enforcement, to testify and potentially be cross examined about statements made after a consent order settled a case in which the C.F.T.C. alleged Kraft Foods Group, Inc. and Mondelez Global L.L.C. manipulated the wheat market in 2011.
At issue are comments made by C.F.T.C. chairman Heath Tarbert and commissioners Rostin Behnam and Dan Berkovitz about the case, which Kraft and Mondelez allege violated terms of the consent order that prohibited parties from making public comments about the settlement other than referring to public records or terms of the order approved by Judge Blakey. The C.F.T.C. commissioners contend that the consent order prohibits the C.F.T.C. as a body from commenting on the case but not “individual commissioners when speaking in their personal capacities.”
Judge Blakey heard from all parties after an emergency motion filed by Kraft and Mondelez Aug. 16 alleging the C.F.T.C. violated the consent order and should be held in contempt. At the hearing, the C.F.T.C. voluntarily agreed to remove three releases from its web site, which were taken down after the hearing.
Kraft and Mondelez, in their Aug. 16 motion, stated that the “C.F.T.C. and its commissioners engaged in a deliberate, orchestrated effort to violate the court’s consent order within minutes of its entry.”
In addition to asking the court to find the C.F.T.C. and its commissioners in contempt, the motion also asks the court to order the C.F.T.C. and its commissioners “to take remedial actions and pay the monetary sanctions” requested (the amounts where redacted in the public copy of the motion).
Kraft and Mondelez in their motion cited at least 11 points in which they contend the C.F.T.C. chairman’s and/or commissioners’ public statements deliberately mischaracterized and/or violated the consent order.
The C.F.T.C. filed a complaint for injunctive relief, civil monetary penalties and other equitable relief against Kraft and Mondelez on April 1, 2015, for alleged manipulation of the soft red winter wheat futures market (Chicago) in 2011.
The defendants filed their answer on Jan. 15, 2016, “and have denied that they (1) used or attempted to use a manipulative or deceptive device in connection with the December 2011 wheat futures contract … as alleged by the C.F.T.C.; (2) manipulated or attempted the price of the December 2011 wheat futures contract and of cash wheat as alleged by the C.F.T.C.; (3) unlawfully held December 2011 wheat futures positions in excess of speculative position limits as alleged by the C.F.T.C.; and (4) engaged in wash sales or fictitious sales by trading both sides of E.F.P. contracts as alleged by the C.F.T.C.”
The original consent order stated, “The C.F.T.C. and defendants have reached a resolution and are settling this action in accordance with the terms arising from the Court’s settlement conference on March 22, 2019.”
“Defendant Mondelez Global shall pay a civil monetary penalty (CMP) in the amount of $16 million within 90 days of the date of entry of the consent order,” the consent order said. “Defendants are jointly and severally liable for the CMP obligation.”
Judge Blakey gave the parties until Sept. 4 to file briefs on the Kraft-Mondelez motion and set a court date of Sept. 10 for a full evidentiary hearing.