Dairy co-op settles CFTC charges
The U.S. Commodity Futures Trading Commission (CFTC) announced last week that the Dairy Farmers of America, Inc. (DFA), its former chief executive officer.
Gary Hanman, and its former chief financial officer Gerald Bos will pay a $12 million civil monetary penalty for attempting to manipulate the Class III milk futures contract and exceeding speculative position limits in that contract.
Additionally, Frank Otis, former president and CEO of a DFA subsidiary, and Glenn Millar, former executive vice president of the subsidiary, will pay $150,000 for DFA’s speculative position limit violation.
“Today’s enforcement action punishes those responsible for DFA’s manipulative scheme with a $12 million civil penalty and a trading ban, and ensures future compliance with federal commodities laws through the imposition of a monitor. Given the severity of the past misconduct, we are pleased that DFA has committed to reform its trading practices,” said CFTC acting Director of Enforcement Stephen J. Obie. The commission’s order found that in 2004, DFA attempted to manipulate the price of the Chicago Mercantile Exchange’s (CME) Class III milk futures contracts.
The order finds that the pricing relationship between the CME block cheese market and the Class III milk futures market is well known throughout the industry, and the CME block cheese market price plays a significant part in establishing Class III milk futures prices. — WLJ