ADM Ordered to Turn Over Employee Info

Archer Daniels Midland Ordered to Turn Over Employee Info in Ethanol Lawsuit

Todd Neeley
By  Todd Neeley , DTN Environmental Editor
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A federal court on Monday ordered Archer Daniels Midland to provide documents about an employee at the center of an ethanol-markets lawsuit. (Graphic courtesy Archer Daniels Midland)

LINCOLN, Neb. (DTN) -- Archer Daniels Midland was ordered by a federal court on Monday to turn over documents and other information in connection with the unpaid 2019 suspension of a company employee at the center of an ongoing ethanol-markets lawsuit.

ADM faces several lawsuits accusing the Illinois-based agricultural giant of manipulating ethanol prices and violating the Commodity Exchange Act. Despite being an ethanol producer, lawsuits allege ADM suppressed daily prices of ethanol to benefit the company's short positions.

The U.S. District Court for the District of Central Illinois said in an order that ADM's objection to a May 3 order to provide documents to AOT Holding AG on ADM employee Adam Kuffel, "rests on several unfounded arguments." The court affirmed that order on Monday.

Kuffel was suspended for violating internal accounting policies, by moving positions in ethanol derivatives between segregated accounts. According to court documents, Kuffel alleges he was ordered by company officials to violate the policy.

"ADM suggests that plaintiffs' claims are for 'manipulation of the market price of ethanol,' and that Kuffel's suspension 'had nothing to do whatsoever with ADM's trades of physical ethanol at Argo or elsewhere,'" the court said.

"But those statements ignore plaintiffs' claim that ADM intentionally suppressed the price of ethanol -- ADM's own product -- in order to profitably manipulate the prices of ethanol derivatives in which it held massive-short positions."

The court said ADM suggested in its objection to the May 3 order that account transfers at the center of Kuffel's suspension occurred at the end of September 2019.

The court order said ADM suggested discovery related to the account transfers at issue is "irrelevant" because plaintiffs alleged in their amended complaint that the filing of their original complaint on Sept. 4, 2019, "'caused ADM to stop manipulating ethanol prices.'"

In the amended complaint filed by AOT, the company did not allege ADM stopped manipulating the price of ethanol derivatives in September 2019. "Only that prices bounced back in the immediate aftermath of this lawsuit," the court said in its order, "when ADM temporarily took its foot off the gas in light of additional public scrutiny."

AOT's amended complaint adds, "Indeed, it was that bounce in prices that caused ADM to incur the losses that Kuffel and his superiors likely tried to conceal through the accounting misconduct that led to Kuffel's suspension. ADM attempts to explain away the significance of the suspension through self-serving factual assertions that the policy violation concerned only the values at which the transfers of ethanol derivatives were made. There is no evidence in the record that reveals the exact nature of the policy violation -- Kuffel could not recall the details."

AOT is one of several plaintiffs that have sued ADM alleging ADM manipulated ethanol prices, a violation the Commodity Exchange Act. Specifically, AOT has alleged ADM suppressed the daily benchmark price of ethanol to benefit its short positions.

AOT filed its complaint just prior to the Kuffel suspension, according to the order.

According to the May 3 court order, Kuffel testified he was acting at the direction of either Rachel Hudson or Chris Cuddy, both of whom are Kuffel's superiors at ADM.

AOT has alleged Ray 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.

ADM attorneys argued the court's May 3 ruling released information that should have been sealed as part of the 2019 order.

AOT has alleged ADM's actions benefited the company 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 in its May 3 ruling.

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.

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.

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Todd Neeley

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