C.F.T.C. Accuses Kraft and Mondelez of Manipulating Wheat Prices.

[elleng]

Less than a week after agreeing to sell itself to H. J. Heinz in a blockbuster deal, the Kraft Foods Group has found itself the target of a government lawsuit over wheat prices.

The Commodity Futures Trading Commission on Wednesday sued Kraft and its former corporate parent, Mondelez, over what the regulator said in a statement were illicit trades of both wheat futures and other violations of commodity trading rules.

In its complaint, filed in federal court in the Northern District of Illinois, the C.F.T.C. homed in on trades involving wheat futures in the fall of 2011. As the cash price of wheat rose, Kraft Foods, the former parent of both companies, bought about $90 million worth of futures.

The intent was to cause a price drop in the cash wheat market, as sellers were led to believe that Kraft’s trade meant that it would require less of a type of wheat, the commission contended. Yet Kraft never intended to take possession of the wheat tied to the futures contracts, which amounted to a six-month supply for its main mill.

Ultimately, Kraft received more than $5.4 million in illicit profits from its trading strategy, according to the complaint.

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[Sherman A1]

1. If found guilty

of these charges. I would think that Kraft should have to pay back every dime plus interest and the Corporate officers who did this deed should spend some significant time as guests of a nice Federal Facility for the fraud that was foisted upon the public and investors.