September 15, 2019

September 13, 2019

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September 12, 2019

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CFTC v. Kraft Dispute Continues with CFTC on Defensive

Following the August 15 2019 public announcement of a settlement between the Commodity Futures Trading Commission (CFTC) and Kraft Foods Group, Inc./Mondelez Global, LLC (together “Kraft”), the parties appeared on August 19 before the Honorable John Robert Blakey on a sealed motion for contempt, sanctions and other relief filed by Kraft.  This controversy stems primarily from a provision included in the Consent Order that limits the parties’ ability to talk about the case except in legal proceedings, testimony, or by court order.[1]  During the hearing, the CFTC appears to have agreed to remove the disputed press releases from the CFTC’s website until the next court date.  According to a minute entry, the CFTC also invoked the Fifth Amendment.  The Chairman and the two commissioners who issued a joint statement on the settlement, as well as the Director of Enforcement, are all ordered to appear in person at an evidentiary hearing on September 12, 2019, and may be called upon to provide live testimony in the matter.

Both CFTC commissioners and some industry observers have raised concerns about any limitation on the CFTC’s ability to speak about settlements.  While guidance and transparency are valuable, and the ability of public officials to speak openly is important, the concerns about the “gag” component of the order, in this case, are misguided.  We have heard from the CFTC and can continue to hear from the CFTC about market manipulation generally, and even this case specifically. 

For example, the CFTC has spoken through its pleadings in the case, including a Complaint that presented the CFTC’s perspective.  Moreover, the order permits CFTC commissioners to testify on the subject, which means they can testify before Congress about the case, the reasons for settling the case, and what this case means for market participants.  Finally, nothing prevents the CFTC from issuing guidance or otherwise making statements about market manipulation generally, and the comments from the CFTC about the specific case have not been, and typically are not, detailed or nuanced enough to add any substantive value other than to publicly censure the company further.


[1] “Neither 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.” (Consent Order, pg. 3)

© 2019 Bracewell LLP

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About this Author

Michael Brooks, Energy, Commodities, attorney, Bracewell, law firm
Partner

Michael focuses his practice in the areas of energy, commodities and derivatives law. He represents energy companies and commodity trading companies in a wide variety of regulatory, compliance and enforcement matters and routinely advises clients regarding compliance with federal rules and regulations governing the trading, ownership and transportation of energy commodities.

In addition to actively representing clients in investigations and regulatory matters involving the Federal Energy Regulatory Commission (FERC) and the Commodity Futures...

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Robert E. Pease, Energy, Attorney, Bracewell law firm
Senior Counsel

Bob Pease represents clients involved in the energy sector in CFTC and FERC regulatory, compliance and enforcement matters involving power, gas, and crude oil, as well as Dodd Frank implementation. Bob has more than 25 years of senior-level experience at CFTC and FERC handling energy-related policy, compliance and enforcement matters, most recently as Counsel to the Director in the Division of Enforcement with the CFTC. Before his time with the CFTC, Bob spent more than 20 years at FERC most recently as Director of Investigations. Bob was involved in some of the most significant investigations and enforcement cases at FERC since the enactment of the Energy Policy Act of 2005. Bob’s experience at the CFTC and FERC enables him to bring a unique perspective to compliance and enforcement, and Dodd Frank matters before these agencies.

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Joshua Robichaud Energy Attorney
Associate

Joshua focuses on Federal Energy Regulatory Commission (FERC) regulation and compliance for renewables and natural gas and oil pipelines. He also has experience with Constitutional considerations that overlap with energy law and rule-making before administrative agencies, as well as the environmental considerations involved in the production and transmission of power.

Prior to joining Bracewell Josh worked as a legal intern for the Environmental Protection Agency (EPA) and as a legal fellow for the American Wind Association. Before law school, Josh worked for a renewable energy...

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