Is Cotton a Rigged Game?
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Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 1.5%
Revenue Growth %: +5.1%
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In what will soon be one of the most talked about lawsuits in the commodities markets, today we learned that Louis Dreyfus Commodities BV is being sued by a former trader at Glencore. The trader alleges that Dreyfus rigged cotton prices last year by inflating prices on IntercontinentalExhange (NYSE: ICE) cotton futures contracts expiring in May and July of 2011, according to reports out of Reuters.
According to the lawsuit, Dreyfus controlled prices over the May and July 2011 contract, which reflects "monopoly power and collusion," according to the complaint filed Friday afternoon in the U.S. district court in Manhattan.
The former Glencore trader, Mark Allen, lost his job last November after his firm lost over $300 million on cotton futures, say reports.
The U.S. Commodity Futures Trading Commission has opened a probe into the trading, but since these types of cases are hard to prove, CTFC enforcement officials aren’t overly optimistic that violations will be proven.
Glencore is not a defendant in the lawsuit and declined to comment. Louis Dreyfus also declined to comment.
According to the lawsuit, Dreyfus controlled prices over the May and July 2011 contract, which reflects "monopoly power and collusion," according to the complaint filed Friday afternoon in the U.S. district court in Manhattan.
The former Glencore trader, Mark Allen, lost his job last November after his firm lost over $300 million on cotton futures, say reports.
The U.S. Commodity Futures Trading Commission has opened a probe into the trading, but since these types of cases are hard to prove, CTFC enforcement officials aren’t overly optimistic that violations will be proven.
Glencore is not a defendant in the lawsuit and declined to comment. Louis Dreyfus also declined to comment.
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