The Wall Street Journal recently quoted Mayer Brown Partner Matthew F. Kluchenek regarding a federal judge’s demand that the new chairman and two commissioners of the Commodity Futures Trading Commission (“CFTC”) testify in response to a motion for contempt and sanctions. U.S. District Court for the Northern District of Illinois Judge John Robert Blakey ordered CFTC Chairman Heath Tarbert to testify about agency statements regarding a $16 million consent order (“Consent Order”)[1] with Kraft Foods Group Inc. and Mondelez Global LLC (“Kraft and Mondelez”) to settle a 2015 complaint that alleged wheat market manipulation.[2]

The August 14^th Consent Order contained no findings, but enjoined Kraft and Mondelez from engaging in future violations of the manipulation, wash trade, and position limit provisions of the Commodity Exchange Act and related CFTC rules. Among other terms, the Consent Order included a provision in Section I, paragraph 8, which stated that, “[n]either party shall make any public statement about this case other than to refer to the terms of this settlement agreement or public documents filed in this case, except any party may take any lawful position in any legal proceedings, testimony or by court order.”[3]  Such a provision in a Consent Order is unusual.

On August 15^th, the date Judge Blakey entered his judgment, CFTC issued a press release that included a statement from Chairman Tarbert regarding the Consent Order and published a separate statement by the CFTC and a joint statement by Democratic Commissioners Dan Berkovitz and Rostin Benham. In response, Kraft and Mondelez filed a Motion for Contempt, Sanctions, and Other Relief against the CFTC, which has been sealed.[4]  The CFTC responded on August 17.[5] In an emergency hearing, the CFTC agreed to remove the press release and statements from its website and Judge Blakey ordered Chairman Tarbert and Commissioners Berkovitz and Benham to testify at a hearing scheduled for September 12.[6]  The CFTC and Commissioners Berkovitz and Benham have provisionally asserted their Fifth Amendment rights against self-incrimination.[7]

The CFTC has since issued a Sunshine Act Notice for a closed CFTC meeting on September 4 to consider enforcement matters.[8]

To view the full text of The Wall Street Journal article, click on the headline below:

Judge’s Order Puts New CFTC Chairman in Unusual Position – The Wall Street Journal

For more information about CFTC enforcement matters, please contact Matt Kluchenek, Ansley Schrimpf or your point of contact at Mayer Brown.

[1] See Consent Order, CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881 (N.D. Ill. Aug. 14, 2019).

[2] See Complaint, CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881 (N.D. Ill. April 1, 2015).

[3] See Consent Order, CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881, at 3, Section I, para. 8 (N.D. Ill. Aug. 14, 2019).

[4] See Motion for Contempt, Sanctions, and Other Relief, CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881 (N.D. Ill. Aug. 16, 2019).

[5] See Response Motion (Sealed), CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881 (N.D. Ill. Aug. 17, 2019).

[6] See Minute Entry, CFTC v. Kraft Foods Grp., Inc., No. 15-CV-2881 (N.D. Ill. Aug. 19, 2019).

[7] Id.

[8] See Sunshine Act Meetings, 84 Fed. Reg. 165, 44603 (Sept. 4, 2019).