By Joseph Ax
NEW YORK, Nov 28 (Reuters) - The traders who sued Louis
Dreyfus Commodities BV for allegedly manipulating cotton prices
last year are trying to avoid the blame for their own bad bets,
the company said in a court filing Tuesday.
In a motion to dismiss the lawsuit in U.S. District Court in
Manhattan, Louis Dreyfus said the plaintiffs, who include former
senior Glencore trader Mark Allen, failed to provide any
evidence that the company illegally inflated prices by
monopolizing cotton futures. Instead, it said, the traders were
speculators who sold cotton futures short at the wrong time.
"Despite their level of sophistication and full appreciation
of the risk that they could lose money, plaintiffs now seek to
shift the burden of their bad investment decisions onto Louis
Dreyfus," the commodity trading giant said in the filing, which
asked Judge Andrew Carter to throw out the case.
The move to dismiss the putative class action, one of the
highest-profile commodity market manipulation cases in years,
was expected after lawyers for Louis Dreyfus wrote a letter to
the court earlier this month arguing that the case has no merit.
The lawsuit claims Louis Dreyfus illegally cornered the
chaotic cotton market last year as prices tumbled from highs not
seen since the U.S. Civil War 150 years earlier.
The traders assert that Louis Dreyfus kept prices of
IntercontinentalExchange cotton futures contracts expiring in
May and July artificially high.
According to exchange data, Louis Dreyfus took delivery of
most ICE cotton futures contracts at expiration. The lawsuit
claims the company declined to buy physical cotton at lower
prices on the spot market.
In its motion, Louis Dreyfus said the fact that it bought
the futures is not an indication of manipulation.
"There is nothing unusual about a single firm taking
delivery of most or even all of the cotton delivered in a given
month," it said.
The filing also argues that the fact that physical cotton
was available precludes any claim of manipulation under the law.
"Plaintiffs fail to allege - as they must to state a
manipulation claim - that there was any shortage of cotton in
the physical market that prevented them from making delivery,
let alone that defendants intentionally caused that shortage,"
the company's lawyers wrote.
"Plaintiffs allege the opposite: that cotton of acceptable
and even superior quality was readily available in the physical
market at lower prices than in the futures market."
Christopher Lovell, a lawyer representing Allen, did not
return a request for comment on Wednesday evening.
Allen lost his job at Glencore after the trading firm lost
more than $300 million in the market, according to the
The traders are seeking class-action status to include
anyone with positions in the contracts. The judge has not yet
ruled on that issue.
The case is In Re: Term Commodities Cotton Futures
Litigation, U.S. District Court, Southern District of New York,
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