The Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Cargill, Inc. (Cargill), of Minnesota, for providing mid-market marks (marks) that concealed from counterparties and its swap data repository (SDR) its full mark-up on certain swaps, in violation of the Commodity Exchange Act (CEA) and Commission Regulations.
Specifically, the CFTC Order finds that Cargill provided counterparties and the SDR inaccurate marks which had the effect of concealing up to ninety percent of Cargill’s mark-up. Cargill also failed to diligently supervise its employees in connection with these inaccurate marks, and in connection with inaccurate statements made to swap counterparties. In particular, the CFTC Order finds that Cargill provided marks that concealed its full mark-up because of a concern that providing accurate marks would reduce Cargill’s revenue.
The CFTC Order requires Cargill to pay a $10 million civil monetary penalty, cease and desist from violating Section 4s(h)(1) of the CEA and Commission Regulations 23.431(a) and (d), 45.4(d)(2), and 166.3, as charged, and comply with certain remedial undertakings.
CFTC Enforcement Director Comments
CFTC Director of Enforcement James McDonald said: “The Commission will vigorously pursue those who undermine the fairness and integrity of our markets, as Cargill did by providing marks that concealed its full mark-up on the swaps at issue in this case. As the Order finds, Cargill provided its counterparties and SDR inaccurate information about its swaps, and did so because of a concern that disclosing its full markup—as it was required to do—could reduce its revenue. Participants in our markets are entitled to trust that information they receive from counterparties complies with governing laws and regulations. Thanks to the hard work of the team in this case, we uncovered the misconduct and brought this action to ensure the marks on the swaps will be accurate going forward.”