Kraft Foods Group and Mondelez Global moved in federal court in Illinois to dismiss certain charges brought against them by the Commodity Futures Trading Commission earlier this year. The CFTC had alleged that certain of the firms’ wheat trades on the Chicago Board of Trade entered during 2011 for the alleged purpose of hedging were in fact placed for the purpose of artificially lowering prices in the related cash market. This activity, claimed the CFTC, was a violation of federal law and the Commission’s rules. (Click here for details regarding the CFTC’s original allegations in the article “Manipulation Is Not Hedging Says CFTC in Federal Court Lawsuit Against Kraft Foods Group and Mondelez Global” in the April 5, 2015 edition of Bridging the Week.) Kraft and Mondelez sought to dismiss one count of the Commission’s complaint that relied on the CFTC’s newly gotten anti-manipulative or deceptive device or contrivance authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to Kraft and Mondelez, “[a]t its core, the CFTC’s complaint accuses [the firms] of fraud and manipulation for seeking to purchase wheat at the best price it could in the face of difficult market conditions.” However, say the firms, “[t]hese decisions and consequences do not transform [the firms’] conduct into a fraud or a manipulation.” Among other things, the firms alleged that the Commission’s pleadings do not describe how they allegedly deceived the market –as required– and thus the relevant count should be dismissed. The firms also said that the Commission’s claims under its traditional manipulative authority should also be dismissed because the CFTC failed to plead that the firms’ conduct caused an artificial price and they had the requisite specific intent. The firms claimed the CFTC’s argument is effectively “when faced with higher wheat prices in one market and lower wheat prices in another, [the firms’ were] required by law to purchase wheat in the more expensive market.” This theory is wrong, claimed the respondents, and this count should be dismissed too.