LINCOLN, Neb. (DTN) -- Archer Daniels Midland was ordered by a federal court on Tuesday to turn over documents and other communications related to the 2019 suspension of an ADM accounting employee, as part of an ongoing ethanol markets lawsuit. The employee alleged in a deposition that he was ordered by superiors to take the actions at the center of the case.
The order, handed down by the U.S. District Court for the District of Central Illinois, will require ADM to provide information related to the suspension of employee Adam Kuffel to plaintiff AOT Holding AG. Kuffel was suspended for allegedly violating the company's internal accounting policy.
AOT is one of several plaintiffs that have sued ADM, alleging the company manipulated ethanol prices, violating the Commodity Exchange Act. Specifically, AOT has alleged ADM suppressed the daily benchmark price of ethanol to benefit its short positions.
At an AOT deposition of Kuffel, he revealed he was suspended without pay by ADM in September 2019, according to the order. Kuffel said during a deposition that a superior ordered him to violate the policy.
AOT filed its complaint just prior to the suspension, according to the order.
"Specifically, Kuffel improperly transferred short ethanol hedges from a 'mark-to-market' account to a 'slotted-futures' account," the order said.
"Kuffel testified that he was acting at the direction of either Rachel Hudson or Chris Cuddy, both of whom are Kuffel's superiors at ADM. Central to plaintiff's theory of the case are the actions of Ray Bradbury and Adam Kuffel (ADM employees)."
AOT has alleged Bradbury and Kuffel, as "senior members of ADM's ethanol group" worked to artificially lower the price of ethanol derivatives. Hudson passed away recently after working for 17 years at ADM.
AOT has alleged the action benefited ADM by increasing the value of ADM's "short" or "hedged" ethanol positions. "Stated differently, plaintiff alleges that Bradbury and Kuffel artificially stunted ethanol prices to benefit ADM investments," the court said.
ADM declined to comment when contacted by DTN, citing the ongoing litigation.
The court sided with AOT on its claim that all documents and communications related to Kuffel's suspension are relevant to the overall case.
According to the order, ADM argued in court that Kuffel's suspension happened after the complaint was filed and could not have affected the price manipulation alleged.
"ADM thus argues that documents and communications related to Mr. Kuffel's suspension are collateral," the order said. "In addition, ADM argues that private employment information, such as disciplinary files, raises serious privacy concerns. ADM's argument fails to meet its burden. Plaintiff's complaint lists Kuffel as a primary architect of the alleged ethanol-price-manipulation scheme. Now, by ADM's own definition via its internal policies, it is uncontested that Kuffel engaged in accounting misconduct relating to ethanol trades."
The court said AOT should have the opportunity to probe whether Kuffel's suspension was in any way connected to the alleged price-manipulation scheme.
"Under Rule 26, it is not necessary to determine the exact implication of Kuffel's accounting misconduct, but to instead assess its relevancy," the order said.
"This case is about hedged-ethanol investments. ADM suspended Kuffel for misplacing hedged-ethanol investments. There is evidence Kuffel's supervisors directed him to violate the policy, and further, engaged in identical conduct themselves. Taken in totality, the documents related to the suspension are relevant on these grounds alone."
AOT filed a class-action lawsuit in May 2020, alleging ADM manipulated the market at the Argo, Illinois, terminal by flooding the fuel terminal with lower-priced ethanol starting in November 2017 through March 2019.
The Argo terminal is the daily location for ethanol trading. The court said the specific trading in question occurred during the 30-minute "market-on-close," or MOC, window.
The trading window is considered crucial because the trading is used to set the daily Chicago benchmark price to determine the value of Chicago ethanol derivatives.
Similar lawsuits were filed by Wisconsin ethanol producers United Wisconsin Grain Producers, Didion Ethanol, Ace Ethanol, Fox River Valley Ethanol, Badger State Ethanol and Iowa producer Pine Lake Corn. In addition, a lawsuit filed by Green Plains Inc. in Nebraska was transferred to the Illinois court.
Read more on DTN:
"Ethanol Price Manipulation Case Moves," https://www.dtnpf.com/…
"ADM Trial Set for 2024," https://www.dtnpf.com/…
"Iowa, Wisconsin Ethanol Plants Sue ADM," https://www.dtnpf.com/…
Todd Neeley can be reached at firstname.lastname@example.org
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