NEW YORK--(BUSINESS WIRE)--A commodities whistleblower represented by Hagens Berman provided information to the Commodities and Futures Trading Commission (CFTC) about unlawful behavior by Cargill Inc. that culminated today in a final whistleblower award of roughly $2.5 million for the information and ongoing assistance provided by the whistleblower to the CFTC.
“We are grateful to represent our whistleblower client who came forward and brought Cargill’s fraud to light, and pleased to see that our client has been justly rewarded for doing so,” said Shayne Stevenson, partner and head of the whistleblower practice at Hagens Berman who represented the whistleblower. “Our client stood on principle, and is appreciative of the exhaustive work done by the CFTC. The CFTC treated him with the utmost respect and consideration from day one. We are pleased to have maximized our client’s whistleblower claim and to have protected the whistleblower’s anonymity and best interests.”
Today’s award announcement comes after the CFTC ordered Cargill, a global agricultural, commodity and financial services business headquartered in Minnesota, and its business, Cargill Risk Management, to pay a $10 million civil monetary penalty in November 2017. At that time, the CFTC announced the filing and simultaneous settlement of charges against Cargill for providing mid-market marks that concealed from counterparties and its swap data repository its full mark-up on certain swaps, in violation of the Commodity Exchange Act and CFTC regulations.
In its 2017 Enforcement order against Cargill, the CFTC stated, "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."
In its press release issued today, the CFTC stated that Hagens Berman’s whistleblower client “assisted the CFTC at every step of the investigation” and stressed the importance of reporting fraud under the CFTC’s whistleblower program.
According to the CFTC, 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.
The CFTC stated that it considered the significance and timeliness of the reporting of misconduct, components among five things whistleblowers should consider before reporting fraud.
Since issuing its first award in 2014, the CFTC has awarded over $90 million to whistleblowers. The Commission actions associated with those awards have resulted in sanctions orders totaling more than $730 million.
Hagens Berman’s whistleblower clients have been, among other things, the first to receive a maximum award under the CFTC program and the first awarded for a “related action” brought by the Department of Justice.
The whistleblower’s attorney, Hagens Berman partner and head of whistleblower practice, Shayne Stevenson, is available to speak regarding the implications of the case and other trends in whistleblower litigation. To schedule an interview, please contact the firm’s media contact, Ashley Klann at 206-268-9363.
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with 11 offices across the country. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List eight times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.