Washington/Chicago/Reuters – Cargill Inc will pay a $10 million fine for providing inaccurate information on swaps to protect its revenue, and for failing to supervise the company’s swap dealers, the Commodity Futures Trading Commission said on Monday.
The CFTC said that beginning in 2013, Cargill did not comply with regulations on thousands of complex swaps that affected hundreds of counterparties. Swaps are utilized in varying financial markets by companies to manage risk outside of futures and options markets.
Cargill, one of the largest agriculture commodities traders in the world, provided inaccurate marks that concealed as much as 90 percent of its mark-up.
Some of the swaps were based on prices derived from Cargill’s ProPricing grain program that helps farmers hedge against volatility, according to the statement.
The CFTC said Cargill used these tactics out of concern “that providing counterparties marks that disclosed Cargill’s full mark-up would reduce Cargill’s earnings,” it stated. Marks are a calculation of the value of uncleared swaps.
Cargill, in an emailed statement, admitted no wrongdoing but said it was “enhancing its internal controls and employee training programs” inside its swap dealer division.
The Wayzata, Minnesota-based company has been hit alongside rival traders by a global grain glut that has squeezed profit margins in shipping and processing crops such as corn, soybeans and wheat.
– Reporting by Doina Chiacu in Washington and Michael Hirtzer in Chicago.