June 4, 2004
What's New - CWT Update
Two NMPF executives took CWT to the farmers in a series of meetings during May.
The purpose of their visits -- increased participation among independent producers
and producers affiliated with cooperatives not committed to CWT.
"Now's the time to take steps to make sure that we don't fall back into the spiral of
increased production and rapidly declining prices," CWT's Executive Director, Walt
Wosje, told farmers in Wisconsin. "CWT helped farmers get back on solid footing after
years of depressed prices. I'm confident that increased participation in CWT can keep
us from sliding back." Meetings were held in Eau Claire, Wausau, Fond Du Lac,
Shawano, and Janesville. He was accompanied by NMPF's Vice President of Special
Projects, Jim Tillison. Tillison also arranged and conducted a series of meetings in
California's dairy land -- Chino, Selma, Turlock, Ripon and Petaluma. He told farmers
there, "You can't argue with success. CWT delivered tremendous results for the
farmer's nickel last time around. Now, we need to make sure the program is ready to
keep prices at reasonable levels."
The meetings were well received and new CWT members are expected to result.
Monday, May 24, 2010
What is CWT
What is CWT?
Cooperatives Working Together (CWT) is a program designed exclusively by dairy farmers for the benefit of dairy farmers. It is a multi-dimensional, voluntary, producer-funded national program developed by the National Milk Producers Federation (NMPF), to strengthen and stabilize milk prices by balancing supply with demand.
CWT is designed to reduce milk production and increase demand for dairy products in order to provide meaningful financial returns to dairy producers in all parts of the country. Because CWT has been designed as a voluntary farmer-led and farmer-funded non-government program, it is able to adapt rapidly to changes in marketplace conditions. All dairy farmers, whether they contribute or not, reap the financial rewards of CWT.
Who is investing in CWT?
Dairy farmers in every state, producing nearly 70% of the nation's milk are investing 10¢ per hundred pounds of milk (called a hundredweight, the symbol for which is cwt) in CWT. These producers are either members of the 35 cooperative-members of CWT, or individual producers who recognize the tremendous benefit of this unique program.
How does CWT strengthen prices?
The CWT uses two programs to strengthen and stabilize prices:
The Herd Retirement Program reduces milk production by reducing the number of cows in the national dairy herd. This is done on a voluntary basis in which farmers wishing to get out of the dairy business bid to do so. If their bid is selected, their cows are permanently removed from milk production. CWT has completed eight herd retirements since it began in 2003, removing a total of 451,000 cows that produced over 8.6 billion pounds of milk.
Because CWT is a voluntary, producer-funded program, its Export Assistance Program has been able to financially help CWT member cooperatives compete in the world marketplace. Since 2003, CWT has helped to export over 186 million pounds of cheese, butter, anhydrous milk fat, and whole milk powder to 52 countries on four continents.
What has CWT done for all dairy farmers?
The table below shows how CWT has helped producers by adding a total of nearly $8 billion to their milk checks:
2004 2005 2006 2007 2008 2009
Herd Retirement $0.20 $0.50 $0.60 $0.86 $0.78 $1.50
Export Assistance $0.02 $0.01 $0.09 $0.20 $0.09 $0.04
Total CWT Impact $0.22 $0.51 $0.69 $1.06 $0.87 $1.54
CWT has helped stabilize milk prices
Not only has CWT strengthened dairy farmer milk prices, it has helped stabilized milk prices as well.
Since the government support price for milk was reduced to $9.90 per cwt., milk prices had been very volatile, as the top chart at right shows. Milk prices were below $14 per cwt. for many months from 1991 to 2003, broken by very short periods of milk prices above that level.
However, after CWT went into operation, executing herd retirements in a timely manner, milk prices stabilized considerably.
The second chart at right shows that well-timed CWT-run herd retirements were a major factor in dairy farmers enjoying the longest period ever of milk prices over $14 per cwt. For 23 consecutive months the All Milk price was above that benchmark level.
However, the milk production landscape has changed. A collapse of demand both here and abroad sent milk prices plummeting in 2009 to the lowest levels since CWT started. Combine that continuing high feed and energy costs and dairy farmers’ margins disappeared.
Fortunately, CWT had raised the producer investment to 10¢ per hundredweight in 2006 and received a two-year commitment from members to invest in CWT through 2010. This enabled CWT to secure a line of credit giving CWT the capability to carry out the largest reduction in milk production capacity and cow numbers since the government-run Dairy Termination program in the mid-1980s. Since the beginning of 2009, CWT has removed 226,000 cows that would have produced 4.5 billion pounds of milk. Combined with the other actions taken by NMPF, prices are headed in the right direction.
CWT is run by dairy farmers
Every dairy farmer cooperative, regardless of size, that is a full member of CWT (investing 10¢ per cwt on all its members' milk) has representation on the CWT Committee. In addition, individual producers are represented by dairy farmers from their ranks appointed by the CWT Committee.
The CWT Committee reviews CWT's program effectiveness, approves changes to programs and policies, and oversees the management of CWT. CWT has two full time employees and utilizes NMPF staff when necessary to carry out it programs as directed. As a result, CWT has been able to use over 98% of the funds invested for supply reduction and demand increasing programs.
CWT is in its sixth year of operation and 2009 has been a year like no other dairy farmers have experienced. CWT continues to take action to improve producer margins. To do even more, CWT needs more dairy farmers investing in CWT.
Cooperatives Working Together (CWT) is a program designed exclusively by dairy farmers for the benefit of dairy farmers. It is a multi-dimensional, voluntary, producer-funded national program developed by the National Milk Producers Federation (NMPF), to strengthen and stabilize milk prices by balancing supply with demand.
CWT is designed to reduce milk production and increase demand for dairy products in order to provide meaningful financial returns to dairy producers in all parts of the country. Because CWT has been designed as a voluntary farmer-led and farmer-funded non-government program, it is able to adapt rapidly to changes in marketplace conditions. All dairy farmers, whether they contribute or not, reap the financial rewards of CWT.
Who is investing in CWT?
Dairy farmers in every state, producing nearly 70% of the nation's milk are investing 10¢ per hundred pounds of milk (called a hundredweight, the symbol for which is cwt) in CWT. These producers are either members of the 35 cooperative-members of CWT, or individual producers who recognize the tremendous benefit of this unique program.
How does CWT strengthen prices?
The CWT uses two programs to strengthen and stabilize prices:
The Herd Retirement Program reduces milk production by reducing the number of cows in the national dairy herd. This is done on a voluntary basis in which farmers wishing to get out of the dairy business bid to do so. If their bid is selected, their cows are permanently removed from milk production. CWT has completed eight herd retirements since it began in 2003, removing a total of 451,000 cows that produced over 8.6 billion pounds of milk.
Because CWT is a voluntary, producer-funded program, its Export Assistance Program has been able to financially help CWT member cooperatives compete in the world marketplace. Since 2003, CWT has helped to export over 186 million pounds of cheese, butter, anhydrous milk fat, and whole milk powder to 52 countries on four continents.
What has CWT done for all dairy farmers?
The table below shows how CWT has helped producers by adding a total of nearly $8 billion to their milk checks:
2004 2005 2006 2007 2008 2009
Herd Retirement $0.20 $0.50 $0.60 $0.86 $0.78 $1.50
Export Assistance $0.02 $0.01 $0.09 $0.20 $0.09 $0.04
Total CWT Impact $0.22 $0.51 $0.69 $1.06 $0.87 $1.54
CWT has helped stabilize milk prices
Not only has CWT strengthened dairy farmer milk prices, it has helped stabilized milk prices as well.
Since the government support price for milk was reduced to $9.90 per cwt., milk prices had been very volatile, as the top chart at right shows. Milk prices were below $14 per cwt. for many months from 1991 to 2003, broken by very short periods of milk prices above that level.
However, after CWT went into operation, executing herd retirements in a timely manner, milk prices stabilized considerably.
The second chart at right shows that well-timed CWT-run herd retirements were a major factor in dairy farmers enjoying the longest period ever of milk prices over $14 per cwt. For 23 consecutive months the All Milk price was above that benchmark level.
However, the milk production landscape has changed. A collapse of demand both here and abroad sent milk prices plummeting in 2009 to the lowest levels since CWT started. Combine that continuing high feed and energy costs and dairy farmers’ margins disappeared.
Fortunately, CWT had raised the producer investment to 10¢ per hundredweight in 2006 and received a two-year commitment from members to invest in CWT through 2010. This enabled CWT to secure a line of credit giving CWT the capability to carry out the largest reduction in milk production capacity and cow numbers since the government-run Dairy Termination program in the mid-1980s. Since the beginning of 2009, CWT has removed 226,000 cows that would have produced 4.5 billion pounds of milk. Combined with the other actions taken by NMPF, prices are headed in the right direction.
CWT is run by dairy farmers
Every dairy farmer cooperative, regardless of size, that is a full member of CWT (investing 10¢ per cwt on all its members' milk) has representation on the CWT Committee. In addition, individual producers are represented by dairy farmers from their ranks appointed by the CWT Committee.
The CWT Committee reviews CWT's program effectiveness, approves changes to programs and policies, and oversees the management of CWT. CWT has two full time employees and utilizes NMPF staff when necessary to carry out it programs as directed. As a result, CWT has been able to use over 98% of the funds invested for supply reduction and demand increasing programs.
CWT is in its sixth year of operation and 2009 has been a year like no other dairy farmers have experienced. CWT continues to take action to improve producer margins. To do even more, CWT needs more dairy farmers investing in CWT.
CWT Member Cooperatives
Agri-Mark Inc.
Arkansas Dairy Cooperative Association
California Dairies Inc.
Conesus Milk Producers Cooperative
Continental Dairy Products, Inc.
Cooperative Milk Producers Association, Inc.
Cortland Bulk Milk Producers Cooperative
Dairy Farmers of America
Dairylea Cooperative Inc.
Empire Keystone Cooperative
Farmers Cooperative Creamery
Foremost Farms USA
Jefferson Bulk Milk Cooperative
Just Jersey Cooperative, Inc.
Konhokton Milk Producers Cooperative
Land O' Lakes, Inc.
Lone Star Milk Producers
Lowville Producers Dairy Cooperative Inc.
Maryland & Virginia Milk Producers Cooperative Association
Massachusetts Cooperative Milk Producers Federation Inc.
Michigan Milk Producers Association
Mount Joy Farmers Cooperative Association
National Farmers Organization
Northwest Dairy Association
Oneida-Madison Milk Producers Cooperative
Preble Milk Cooperative Association Inc.
St. Albans Cooperative Creamery, Inc.
Schoharie County Cooperative Dairies
Select Milk Producers, Inc.
Snake River Dairyman Association Inc.
South New Berlin Milk Cooperative, Inc.
United Dairy Cooperative Services, Inc.
United Dairymen of Arizona
Upstate Niagara Cooperative, Inc.
Western Tier Milk Producers Cooperative
Zia Milk Producers
Manitowoc Milk Producers Cooperative is a partial contributor to CWT.
Arkansas Dairy Cooperative Association
California Dairies Inc.
Conesus Milk Producers Cooperative
Continental Dairy Products, Inc.
Cooperative Milk Producers Association, Inc.
Cortland Bulk Milk Producers Cooperative
Dairy Farmers of America
Dairylea Cooperative Inc.
Empire Keystone Cooperative
Farmers Cooperative Creamery
Foremost Farms USA
Jefferson Bulk Milk Cooperative
Just Jersey Cooperative, Inc.
Konhokton Milk Producers Cooperative
Land O' Lakes, Inc.
Lone Star Milk Producers
Lowville Producers Dairy Cooperative Inc.
Maryland & Virginia Milk Producers Cooperative Association
Massachusetts Cooperative Milk Producers Federation Inc.
Michigan Milk Producers Association
Mount Joy Farmers Cooperative Association
National Farmers Organization
Northwest Dairy Association
Oneida-Madison Milk Producers Cooperative
Preble Milk Cooperative Association Inc.
St. Albans Cooperative Creamery, Inc.
Schoharie County Cooperative Dairies
Select Milk Producers, Inc.
Snake River Dairyman Association Inc.
South New Berlin Milk Cooperative, Inc.
United Dairy Cooperative Services, Inc.
United Dairymen of Arizona
Upstate Niagara Cooperative, Inc.
Western Tier Milk Producers Cooperative
Zia Milk Producers
Manitowoc Milk Producers Cooperative is a partial contributor to CWT.
2003 CWT Story
The National Milk Producers Federation announced Thursday that, with more than 70% of the nation's milk volume committed to participate, it now has reached the critical threshold Critical threshold, a notion derived from the percolation theory, refers to a threshold, that summons up to a critical mass. Under the threshold the phenomenon tends to abort, above the threshold, it tends to grow exponentially. necessary to start its new voluntary, producer-funded program to better align dairy supply and demand, Cooperatives Working Together (CWT cwt
112 pounds avoirdupois weight. ).
After discussions earlier this week, the NMPFNMPF National Milk Producers Federation
NMPF Network Management Productivity Facility
..... Click the link for more information. Board of Directors approved a modified version of the original CWT concept, one that would collect 5 cents per hundredweight hun·dred·weight
n. pl. hundredweight or hun·dred·weights Abbr. cwt
1. A unit of weight in the U.S. Customary System equal to 100 pounds (45.36 kilograms). from participating dairy cooperatives and/or individual producers. On Tuesday, the level of participation in CWT was slightly under the 70% level necessary to launch the program. Subsequently, additional commitments have been received, pushing the membership level above the 70% threshold, allowing NMPF to begin the program.
"We're thrilled to be able to move forward with CWT. This groundbreaking program is tremendously important for the dairy producer community," said Jerry Kozak, NMPF President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "It not only offers relief to dairy farmers facing record low prices; it also allows them to begin to improve marketing conditions by helping to balance supply with demand."
Beginning immediately, CWT will use the proceeds from the 5 cent per hundredweight contribution by participating dairy producers to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds over a 12-month period.
The money raised by the program -- estimated at $60 million in the coming 12 months -- will be apportioned among three supply reduction programs to maximize the program's effectiveness. The three include a dairy product export assistance program, a herd retirement program, and a milk production reduction program.
"We've revised the CWT concept, lowering the assessment to a nickel, to encourage as many farmers to participate as possible," Kozak said. "CWT's goal is to achieve an average 400% net return on investment for farmers," he added. The program's activities are targeting an average increase in the all milk price of 36 cents per cwt., which would result in a net return of 23 cents per cwt., when factoring in the cost of the assessment and lower government Milk Income Loss Contract (MILC MILC Milk Income Loss Contract
MILC Metal-Induced Lateral Crystallization
MILC Modified Intermediate Load Cycle ) payments.
"We've witnessed enormous volatility in the past seven or eight years, which has really made it difficult for dairy farmers to plan and budget. This program's benefits include not only strengthened prices, but better price stability in the future," Kozak said. "Many people said it was an impossible task to get producers to work together; CWT proves them wrong."
While the program was designed by NMPF, Cooperatives Working Together has also received the backing of other dairy cooperatives not part of the NMPF membership, and from individual dairy producers not affiliated with a dairy cooperative. The program will continue to solicit participation from interested farmers and dairy cooperatives. Enrollment information, and related details, can be obtained through NMPF or on the Web at http://www.cwt.coop/.
The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF's 34 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.
CONTACT: Christopher Galen of the National Milk Producers Federation, +1-703-243-6111, ext. 356, or Cgalen@nmpf.org; or Susan Mora MORA, In civil law. This term, in mora, is used to denote that a party to a contract, who is obliged to do anything, has neglected to perform it, and is in default. Story on Bailm. Sec. 123, 259; Jones on Bailm. 70; Poth. Pret a Usage, c. 2, Sec. 2, art. 2, n. , +1-202-496-2125, for the National Milk Producers Federation
Web site: http://www.nmpf.org/ http://www.cwt.coop/
112 pounds avoirdupois weight. ).
After discussions earlier this week, the NMPFNMPF National Milk Producers Federation
NMPF Network Management Productivity Facility
..... Click the link for more information. Board of Directors approved a modified version of the original CWT concept, one that would collect 5 cents per hundredweight hun·dred·weight
n. pl. hundredweight or hun·dred·weights Abbr. cwt
1. A unit of weight in the U.S. Customary System equal to 100 pounds (45.36 kilograms). from participating dairy cooperatives and/or individual producers. On Tuesday, the level of participation in CWT was slightly under the 70% level necessary to launch the program. Subsequently, additional commitments have been received, pushing the membership level above the 70% threshold, allowing NMPF to begin the program.
"We're thrilled to be able to move forward with CWT. This groundbreaking program is tremendously important for the dairy producer community," said Jerry Kozak, NMPF President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "It not only offers relief to dairy farmers facing record low prices; it also allows them to begin to improve marketing conditions by helping to balance supply with demand."
Beginning immediately, CWT will use the proceeds from the 5 cent per hundredweight contribution by participating dairy producers to implement a multi-dimensional program to reduce milk supplies by 1.2 billion pounds over a 12-month period.
The money raised by the program -- estimated at $60 million in the coming 12 months -- will be apportioned among three supply reduction programs to maximize the program's effectiveness. The three include a dairy product export assistance program, a herd retirement program, and a milk production reduction program.
"We've revised the CWT concept, lowering the assessment to a nickel, to encourage as many farmers to participate as possible," Kozak said. "CWT's goal is to achieve an average 400% net return on investment for farmers," he added. The program's activities are targeting an average increase in the all milk price of 36 cents per cwt., which would result in a net return of 23 cents per cwt., when factoring in the cost of the assessment and lower government Milk Income Loss Contract (MILC MILC Milk Income Loss Contract
MILC Metal-Induced Lateral Crystallization
MILC Modified Intermediate Load Cycle ) payments.
"We've witnessed enormous volatility in the past seven or eight years, which has really made it difficult for dairy farmers to plan and budget. This program's benefits include not only strengthened prices, but better price stability in the future," Kozak said. "Many people said it was an impossible task to get producers to work together; CWT proves them wrong."
While the program was designed by NMPF, Cooperatives Working Together has also received the backing of other dairy cooperatives not part of the NMPF membership, and from individual dairy producers not affiliated with a dairy cooperative. The program will continue to solicit participation from interested farmers and dairy cooperatives. Enrollment information, and related details, can be obtained through NMPF or on the Web at http://www.cwt.coop/.
The National Milk Producers Federation, headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF's 34 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 60,000 dairy producers on Capitol Hill and with government agencies.
CONTACT: Christopher Galen of the National Milk Producers Federation, +1-703-243-6111, ext. 356, or Cgalen@nmpf.org; or Susan Mora MORA, In civil law. This term, in mora, is used to denote that a party to a contract, who is obliged to do anything, has neglected to perform it, and is in default. Story on Bailm. Sec. 123, 259; Jones on Bailm. 70; Poth. Pret a Usage, c. 2, Sec. 2, art. 2, n. , +1-202-496-2125, for the National Milk Producers Federation
Web site: http://www.nmpf.org/ http://www.cwt.coop/
U.S. Commodity Futures Trading Commission Findings
www.cftc.gov/PressRoom/PressReleases/pr5584-08.html
Dairy Farmers of America (DFA) and Two Former Executives to Pay $12 Million Penalty to Settle CFTC Charges of Attempted Manipulation and Speculative Position Limit Violations
Two Former Executives of a DFA Subsidiary to Pay $150,000 for Aiding and Abetting DFA’s Position Limit Violation
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Dairy Farmers of America, Inc. (DFA), its former Chief Executive Officer Gary Hanman, and its former Chief Financial Officer Gerald Bos will pay a $12 million civil monetary penalty for attempting to manipulate the Class III milk futures contract and exceeding speculative position limits in that contract.
Additionally, Frank Otis, former President and CEO of a DFA subsidiary, and Glenn Millar, former Executive Vice President of the subsidiary, will pay $150,000 for aiding and abetting DFA’s speculative position limit violation.
According to CFTC Acting Director of Enforcement Stephen J. Obie: “Today’s enforcement action punishes those responsible for DFA’s manipulative scheme with a $12 million civil penalty and a trading ban, and ensures future compliance with federal commodities laws through the imposition of a monitor. Given the severity of the past misconduct, we are pleased that DFA has committed to reform its trading practices.”
The Commission’s DFA order finds that, from May 21 through June 23, 2004, DFA, Hanman, and Bos attempted to manipulate the price of the Chicago Mercantile Exchange’s (CME) June, July, and August 2004 Class III milk futures contracts through purchases of block cheddar cheese on the CME Cheese Spot Call market. The order finds that the pricing relationship between the CME block cheese market and the Class III milk futures market is well known throughout the industry, and the CME block cheese market price plays a significant part in establishing Class III milk futures prices.
Additionally, the DFA order finds that on several days in 2004, DFA’s speculative Class III milk futures contracts exceeded the CME’s speculative position limit, in violation of the Commodity Exchange Act.
A separate order against Otis and Millar finds that they aided and abetted DFA’s speculative position violation by directing trading of Class III milk futures in an internal sub-account designated for a DFA subsidiary.
In addition to imposing civil penalties, the DFA order bars Hanman and Bos from trading futures for five years. It also bars DFA from engaging in speculative trading for two years, and orders DFA to comply with certain undertakings, including: 1) retaining a monitor to ensure that DFA does not engage in speculative trading and that DFA’s Cheese Spot Call market cheese purchases are made for legitimate business purposes; 2) implementing a compliance and ethics program; and 3) providing future cooperation to the CFTC.
The DFA is a dairy marketing cooperative based in Kansas City, Missouri. Hanman and Bos reside in Platte City, Missouri, and Weatherby Lake, Missouri, respectively. Otis resides in Ambler, Pennsylvania, and Millar is a resident of Las Vegas, Nevada.
The CFTC wishes to thank the U.S. Department of Agriculture and Tom Sandy and Estelle Nwadiei of the CME Group’s Market Regulation Department for their assistance in this matter.
The following CFTC staff members are responsible for this case: Kenneth McCracken, Jeff LeRiche, Jo Mettenburg, Charles Marvine, Hugh Rooney, David Rosenfeld, David Kass, David Fickert, Rick Glaser, Richard Wagner, and Vincent McGonagle.
Last Updated: December 16, 2008
Media Contacts
R. David Gary
202-418-5085 202-418-5085
Dennis Holden
202-418-5088 202-418-5088
Office of Public Affairs
http://www.cftc.gov/PressRoom/PressReleases/pr5584-08.html
Dairy Farmers of America (DFA) and Two Former Executives to Pay $12 Million Penalty to Settle CFTC Charges of Attempted Manipulation and Speculative Position Limit Violations
Two Former Executives of a DFA Subsidiary to Pay $150,000 for Aiding and Abetting DFA’s Position Limit Violation
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Dairy Farmers of America, Inc. (DFA), its former Chief Executive Officer Gary Hanman, and its former Chief Financial Officer Gerald Bos will pay a $12 million civil monetary penalty for attempting to manipulate the Class III milk futures contract and exceeding speculative position limits in that contract.
Additionally, Frank Otis, former President and CEO of a DFA subsidiary, and Glenn Millar, former Executive Vice President of the subsidiary, will pay $150,000 for aiding and abetting DFA’s speculative position limit violation.
According to CFTC Acting Director of Enforcement Stephen J. Obie: “Today’s enforcement action punishes those responsible for DFA’s manipulative scheme with a $12 million civil penalty and a trading ban, and ensures future compliance with federal commodities laws through the imposition of a monitor. Given the severity of the past misconduct, we are pleased that DFA has committed to reform its trading practices.”
The Commission’s DFA order finds that, from May 21 through June 23, 2004, DFA, Hanman, and Bos attempted to manipulate the price of the Chicago Mercantile Exchange’s (CME) June, July, and August 2004 Class III milk futures contracts through purchases of block cheddar cheese on the CME Cheese Spot Call market. The order finds that the pricing relationship between the CME block cheese market and the Class III milk futures market is well known throughout the industry, and the CME block cheese market price plays a significant part in establishing Class III milk futures prices.
Additionally, the DFA order finds that on several days in 2004, DFA’s speculative Class III milk futures contracts exceeded the CME’s speculative position limit, in violation of the Commodity Exchange Act.
A separate order against Otis and Millar finds that they aided and abetted DFA’s speculative position violation by directing trading of Class III milk futures in an internal sub-account designated for a DFA subsidiary.
In addition to imposing civil penalties, the DFA order bars Hanman and Bos from trading futures for five years. It also bars DFA from engaging in speculative trading for two years, and orders DFA to comply with certain undertakings, including: 1) retaining a monitor to ensure that DFA does not engage in speculative trading and that DFA’s Cheese Spot Call market cheese purchases are made for legitimate business purposes; 2) implementing a compliance and ethics program; and 3) providing future cooperation to the CFTC.
The DFA is a dairy marketing cooperative based in Kansas City, Missouri. Hanman and Bos reside in Platte City, Missouri, and Weatherby Lake, Missouri, respectively. Otis resides in Ambler, Pennsylvania, and Millar is a resident of Las Vegas, Nevada.
The CFTC wishes to thank the U.S. Department of Agriculture and Tom Sandy and Estelle Nwadiei of the CME Group’s Market Regulation Department for their assistance in this matter.
The following CFTC staff members are responsible for this case: Kenneth McCracken, Jeff LeRiche, Jo Mettenburg, Charles Marvine, Hugh Rooney, David Rosenfeld, David Kass, David Fickert, Rick Glaser, Richard Wagner, and Vincent McGonagle.
Last Updated: December 16, 2008
Media Contacts
R. David Gary
202-418-5085 202-418-5085
Dennis Holden
202-418-5088 202-418-5088
Office of Public Affairs
http://www.cftc.gov/PressRoom/PressReleases/pr5584-08.html
Gary Hanman and Gerald Bos Vs. U.S. Sanctions
http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfdfaorder121608.pdf
or
www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfdfaorder121608.pdf
or
www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfdfaorder121608.pdf
Frank Otis and Glenn Millar VS. United States of America Order
http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfotismillarorder121608.pdf
or
www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfotismillarorder121608.pdf
or
www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enfotismillarorder121608.pdf
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