Kraft/Mondelez CFTC Case a Test for New Manipulation Standard, Perry Says

Law360 spoke with Braden Perry, Kennyhertz Perry partner and former CFTC Senior Trial Attorney, regarding the Kraft/Mondelez suit accusing the snack makers of manipulating the price of wheat in 2011, and the significance of the relaxed manipulation standard under Dodd-Frank. Under rules passed out of the 2010 law, the CFTC no longer must show that traders specifically intended to manipulate the markets, and that they had created an artificial price in doing so, only that traders acted recklessly.

“When you change standards of proof in certain activities, there are always questions that come with that,” said Braden Perry. “At some level, there needs to be judicial interpretations of the new provisions of Dodd-Frank. It’s a matter of time and testing before the true legal standard comes out.”

The potential dollar amounts at stake — potentially a disgorgement of $5.4 million plus penalties and interest — may be too small for Kraft and Mondelez to fight over, as the companies collected $18 billion and $34 billion, respectively, in revenue in 2014.

Even if a settlement comes before a layer of judicial review is applied to the rule, the case still sends a message to so-called end users, such as Kraft and Mondelez, which take advantage of bona fide hedging exemptions to amass futures contracts beyond what speculative traders can take on.

“It would show those end users that they have privileges for a reason and not to overextend what they are trying to do,” Perry said.

Kennyhertz Perry, LLC is a business and litigation law firm representing clients in highly-regulated industries. The firm was founded by two veteran Kansas City attorneys, John Kennyhertz and Braden Perry. Kennyhertz Perry is in Kansas City, Mo. To learn more about the firm, visit

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