U.S. District Judge Colin S. Bruce has moved to allow a suit against Archer Daniels Midland (ADM) alleging price manipulation to advance, finding that plaintiffs made plausible claims that ADM artificially lowered ethanol prices beginning in November 2017 in order to manipulate the market.
The plaintiff, energy trader AOT Holding AG, accused ADM of selling off ethanol to lower its market value in order to increase the payouts of derivatives bets, comparing it to “an owner of a baseball team betting against his team while bribing his players to throw the game.”
While upholding the claim of market manipulation under the Commodities Exchange Act, Judge Bruce also dismissed two individual statutory claims. He also ruled that federal law allows the plaintiff to recover punitive damages from an entity such as ADM.
AOT Holding contends that over a specific period of trading at a fuel terminal in Argo, Illinois, - which is key in setting the Chicago Benchmark Price, a daily price that determines ethanol derivatives on the New York Mercantile Exchange and the Chicago Board of Trade -ADM was selling ethanol at irrationally low prices, while also betting that the price of ethanol would continue to fall.
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