The CFTC, and in particular its new chairman, may be playing night time hardball in the federal courts. It certainly isn’t playing the game out under the lights, though.
Last month, Chairman Tarbert, Commissioners Berkovitz and Behnam, and Enforcement Division Director McDonald were ordered to be ready to provide testimony in Judge John Robert Blakely’s court regarding whether they had defied a court order, knowingly defied a court order, plotted to defy a court order, or done nothing improper at all, in the Kraft/Mondelez case.
And with its latest in a string of sealed motions, the CFTC may be trying to wriggle out of the whole thing. On September 13 the once transparent agency appealed to a higher court than Blakely’s – the Seventh Circuit Court of Appeals – for we-don’t-know-what since the agency is keeping the document under seal. Notice of the appeal is here. We got it from the court’s website and saved it, which is good since the court has since removed it.
Blakely, whose court entered the settlement agreement that included the extraordinary gag order that Kraft Foods now views the CFTC to have violated, seems concerned that the CFTC is trying to avoid its day in court. Blakely entered the following statement in the court docket last week:
For clarification purposes, the 10/2/19 hearing is simply an evidentiary proceeding, set in response to Kraft’s motion for contempt, sanctions, and other relief . The proceeding is a civil proceeding, where, as this Court previously explained, a variety of potential measures or remedies may be considered if supported by the record, including civil contempt, referral for a potential investigation into criminal contempt or ethical violations, vacating the consent decree, and/or setting new case management dates (including a trial date). At this point, this Court has made no ruling on any procedural objections or assertions of privilege by any party. Given the nature of the CFTC’s filing in the Seventh Circuit, this Court retains jurisdiction to conduct the proceeding as scheduled, unless and until the Seventh Circuit directs otherwise. (emphasis added)
A copy of the docket entry is here for your convenience in case someone moves to have it removed from the court’s website.
The back story, for anyone tuning in late, is that in 2015 the CFTC charged Kraft with manipulating the wheat futures market in 2011. The case never went to trial. Instead the CFTC climbed down and settled with the (alleged) culprit for $16 million more than four years later. The CFTC very unusually, and maybe even extra-legally, agreed to a gag order on the settlement. (Kraft: “We will give you $16 million to go away and never tell anyone anything about this.”) After leaving federal court, the CFTC, however, trumpeted its vanquishment of the manipulator in a usual press release. It also published a statement about why Commissioners were not bound by the gag order. Kraft took issue and they were all back in federal court the very next week.
At mid August hearing Judge Blakely, who had entered the final settlement four days earlier, ordered the CFTC to produce the key personnel in the matter for an evidentiary hearing to explore whether the CFTC had violated its agreement with Kraft which, after all, had been formalized as an order from his court.
Since then, the CFTC has filed several motions which it is keeping secret along with the secret appeal of the whole case. It was troubling enough when Tarbert’s CFTC first agreed formally to keep secrets about the Kraft/Mondelez settlement, but a public, government agency’s likely embarrassment hardly provides a reasonable basis for the subsequent secret motions and appeal.