On October 25, the U.S. Commodity Futures Trading Commission (CFTC) posted a Notice of Covered Action (NCA) for an enforcement action taken against Ceres Global Ag Corp. over allegations that the Minnesota-based company attempted to manipulate the price of oats futures contracts.
The CFTC alleges that Ceres attempted to manipulate the July 2016 and March 2017 oats futures contracts. According to the CFTC, “senior personnel at Ceres knew about and facilitated the building of large long positions at or close to the spot month speculative limits, holding those long positions into the delivery period, and taking delivery of oats, intending both to boost the price of oat futures in those contracts and to obtain higher quality oats at lower delivery prices.”
Ceres agreed to pay a $3 million penalty to settle the charges.
“If Ceres thought it could roll the oats market without consequence, it was mistaken,” said Director of Enforcement Ian McGinley. “The CFTC will act decisively to protect all its agricultural markets, as well as the producers, market participants, and consumers who rely on them.”
The NCA signals that the CFTC is now accepting whistleblower award claims for the case. Through the CFTC Whistleblower Program, qualified whistleblowers are entitled to monetary awards of 10-30% of the funds collected by the government in the enforcement action connected with their disclosure.
The law firm Kirby McInerney LLP issued a press release stating that a whistleblower was involved in the success of the CFTC’s action against Ceres. “Our client came forward and helped the CFTC see into this obscure and illiquid market,” said Kirby McInerney Co-Managing Partner David Kovel.
On October 12, the CFTC issued an $18 million whistleblower award to an individual who voluntarily provided original information and further assistance which led to successful enforcement actions by both the CFTC and another agency.
Since the CFTC Whistleblower Program was established in 2010, whistleblower tips have allowed the CFTC to recover over $3 billion from fraudsters. The program has in turn paid out over $365 million in whistleblower awards.
The CFTC Whistleblower Program is currently in danger of being a victim of its own success, as a funding crisis threatens to undermine the program. A bipartisan bill introduced in July provides a long-term fix to the funding issue undermining the CFTC Whistleblower Program. The CFTC Whistleblower Fund Improvement Act is widely supported by whistleblower advocates.