Hagens Berman and its attorneys Steve Berman, managing partner, and Shayne Stevenson, partner managing the whistleblower practice, represent the CFTC whistleblower behind the government’s investigation of unlawful practices at Cargill Inc. and its business, Cargill Risk Management, that culminated in a $10 million settlement with the CFTC announced Nov. 6, 2017.
The CFTC found that Cargill, a global agricultural, commodity and financial services business headquartered in Minnesota, had provided counterparties and regulators with inaccurate mid-market marks that concealed its full mark-up on certain swaps, in violation of the Commodity Exchange Act and CFTC Regulations.
"In particular, Cargill was reluctant to disclose its mark up on certain complex swaps because of a concern that such transparency might ultimately reduce its revenue. As a result of this concern, Cargill chose to provide a mark that was based on a termination or 'unwind' value that included a portion of Cargill’s estimated revenue during the first sixty calendar days of the swap, and also credited the counterparty with a portion of its estimated revenue if the counterparty terminated the swap during that same period," the order settling charges against Cargill reads.
The CFTC went on to say that Cargill's methods effectively concealed "from the counterparty the full revenue that Cargill expected to make from the swap transaction. Cargill took this approach despite concerns that its contemplated mid-market mark methodology did not meet the requirements of the Commission’s regulations concerning mid-market marks, either pre-trade or during the first sixty calendar days of the swap. As a result of this conduct, Cargill violated the mid-market mark disclosure requirements and swap reporting rules, and failed to supervise its employees."
The CFTC's order also highlighted Cargill's failure to supervise employees in relation to certain swaps executed based on prices derived by Cargill's ProPricing program. Cargill employees provided reports to third-party marketers on the ProPricing accounts that failed to reveal that the ProPricing accounts on which the swap is priced were over- or under-hedged.
Hagens Berman's whistleblower practice provides information to whistleblowers regarding the CFTC's whistleblower program, protections and rewards. The firm's whistleblower attorneys have represented several successful CFTC and SEC whistleblowers and have developed a strong understanding of how to best develop and present CFTC and SEC whistleblower complaints.
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