The Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against Olam Group Ltd., a Singapore-based integrated supply chain manager, for submitting false, misleading, or inaccurate reports to the CFTC and the U.S. Department of Agriculture in connection with the sale of U.S. cotton worth more than $190 million.
The order requires Olam to pay a $3,250,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
The order finds in August and September 2021, Olam made five sales of U.S. cotton to a counterparty in Asia that is typically one of the largest global purchasers of cotton. In the aggregate, Olam sold more than 375,000 bales of cotton with a sales value of more than $190 million to this counterparty. The order finds rather than immediately reporting those sales to USDA and the CFTC promptly as required, certain Olam employees diverged from Olam’s standard practices, causing the sales to be reported between one to five weeks late.
The export sales data Olam submits to USDA is incorporated into weekly and monthly reports published by USDA that are important indicators of supply and demand for both futures traders and participants in the physical cotton markets. The order states Olam employees knew or recklessly disregarded the fact that Olam’s reports to USDA did not reflect the five sales at the time they occurred.
The order further finds Olam knew the price of cotton is affected or tends to be affected by sales of this magnitude appearing or not appearing in USDA reports, and that information indicating Olam’s counterparty might be purchasing large quantities of U.S. cotton is a significant market indicator that affects or tends to affect the price of cotton.
The order also finds Olam reported inaccurate fixed-price sales data on seven Form 304s it submitted to the CFTC from Aug. 6 through Sept. 17, 2021. Even though those reports identified other fixed-price sales, they did not include the five sales to the Asian counterparty.
