By Nate Raymond
Nov 13 (Reuters) - A lawsuit accusing Louis Dreyfus
Commodities BV of inflating cotton prices last year has failed
to allege any legal violations and amounted to complaints by
traders whose bets "fared poorly," the commodity trading house
said in a court filing.
In letter filed in U.S. District Court in Manhattan on
Thursday, Louis Dreyfus said the two plaintiffs, including
former senior Glencore trader Mark Allen, were "speculative"
short sellers whose lawsuit failed to provide a case that it
broke federal antitrust laws.
Louis Dreyfus said it plans to seek dismissal of the
lawsuit, one of the highest-profile commodity
market-manipulation cases in years.
Christopher Lovell, a lawyer for the plaintiffs, did not
immediately respond to a request for comment.
The letter provided the first sign of the legal strategy
Louis Dreyfus would take to escape antitrust claims first
asserted in June by Allen, who lost his job at Glencore last
year after his firm lost $300 million in the market.
The putative class action accuses Louis Dreyfus of alleged
manipulation and monopolization of IntercontinentalExchange
cotton futures contracts expiring in May 2011 and July 2011.
Prices on the cotton market that year hit highs in March not
seen since the U.S. Civil War in the 1860s before falling
The traders accused Louis Dreyfus of "uneconomically"
overpaying for cotton and forcing deliveries "that could have
been satisfied more cheaply in the cash market."
In its letter, Louis Dreyfus said Allen and another trader
named as a lead plaintiff in the case, Stuart Satullo, incurred
$400,000 in losses as their "speculative short selling of cotton
futures fared poorly."
"In this litigation, plaintiffs allege that these losses
were caused not by plaintiffs' own ill-timed and poorly executed
speculation, but by the defendants' monopolization and
manipulation of the cotton futures market," Louis Dreyfus said.
Lawyers for Louis Dreyfus at the law firm Sullivan &
Cromwell LLP argued that even if the traders' claims were true,
the lawsuit failed to establish a case that shouldn't be
Louis Dreyfus said the traders had made no allegations that
it had "cornered" the cotton. Such an allegation is required to
establish liability under the Commodity Exchange Act, the letter
As for the federal antitrust claims, the traders failed to
identify any third-parties Louis Dreyfus agreed to restrain
trade with, the letter said. And "overpaying" for a product is
not anticompetitive, Louis Dreyfus said.
The plaintiffs, in a separate letter also filed on Thursday,
sought to rebut Louis Dreyfus's arguments, contending they
"plausibly allege" their antitrust claims.
The case is In Re: Term Commodities Cotton Futures
Litigation, U.S. District Court, Southern District of New York,
Follow us on Twitter @ReutersLegal | Like us on Facebook