Food Giants Request That Potential Penalty Be Capped at US $16 Million If Adverse Judgment of Manipulation Reached in CFTC Enforcement Action as Sanction for Agency’s Contempt

Kraft Foods Group Inc. and Mondelez Global, LLC said that the Commodity Futures Trading Commission should not be left off the hook for a contempt determination and sanctions solely because the underlying consent settlement order that the CFTC purportedly violated has been vacated. Defendants claimed the CFTC violated the consent order when the Commission and two commissioners publicly discussed the order despite a gag order contained in the settlement.

Defendants argued that the CFTC’s alleged violation of the consent orders “have had real consequences.” Among other things, the CFTC’s public statements in violation of the gag order “cannot be unmade” and defendants’ exposure is no longer limited to US $16 million, the amount of the agreed settlement. Additionally, defendants must incur legal fees through the end of the enforcement action.

Although the CFTC previously argued for the contempt proceeding to be halted as moot, including that sanctions could not be levied against it as a sovereign entity, defendants claimed there are meaningful sanctions that can be lawfully imposed: a rebuke, as well as a limit on any possible fine to US $16 million. (Click here for background on the CFTC’s arguments in the article “CFTC Submits Suggestion of Mootness Regarding Potential Contempt Determination Against It” in the November 17, 2019 edition of Bridging the Week.) Also, the CFTC could be required to pay defendants’ legal fees for handling the contempt proceeding as such amounts fall outside any sovereign immunity of the CFTC, said the food giants.