Dairy Farmers of America, Inc., announced on Tuesday today that the milk marketing cooperative had reached a settlement with the Commodity Futures Trading Commission. The settlement ends the CFTC's investigation into DFA's 2004 trading activities on the Chicago Mercantile Exchange in 2004.
Without admitting or denying the CFTC's findings in the administrative order, DFA and two of its former officers agreed to pay an aggregate civil monetary penalty of $12 million. The cooperative also agreed to not engage in speculative trading in milk futures contracts for two years. It also agreed to retaining a monitor to review its CME trading activities.
DFA President and CEO Rick Smith said the settlement was in the best interests of the cooperative and its members. The long-pending probe was expensive and diverted time and resources.
"Settling this matter allows us to focus wholly on serving our members and moving the cooperative forward," said Smith, who took DFA's helm in 2006 after the trading activity in question. "We have fully cooperated with the CFTC's investigation and wanted to put this matter behind us."
Prior to reaching the settlement agreement, DFA management voluntarily developed and implemented new policies and procedures designed to ensure that all trading complies with both the spirit and the letter of the law.