Olam to pay US$3 million to settle US speculation violations

Olam's Singapore office. Mainboard-listed Olam International, one of the world's top coffee traders, will pay US$3 million to settle US regulatory claims that it breached limits on speculation in cocoa derivatives. -- PHOTO: OLAM INTERNATIONAL
Olam's Singapore office. Mainboard-listed Olam International, one of the world's top coffee traders, will pay US$3 million to settle US regulatory claims that it breached limits on speculation in cocoa derivatives. -- PHOTO: OLAM INTERNATIONAL

WASHINGTON (BLOOMBERG) - Mainboard-listed Olam International, one of the world's top coffee traders, will pay US$3 million (S$4 million) to settle US regulatory claims that it breached limits on speculation in cocoa derivatives.

The Singapore-based firm, whose business practices were criticised in 2012 by short-seller Carson C. Block, exceeded position limits by failing to ensure trading accounts in different units were separately controlled, the US Commodity Futures Trading Commission said in a statement.

Olam traders in London and Summit, New Jersey, regularly discussed market information and their positions from 2011 through 2013, according to the CFTC. The interactions meant the units' positions should have been considered together, and by that measure the firm exceeded limits set by Intercontinental Exchange Inc. on six occasions, the agency said.

"As far as Olam is concerned this matter is now settled and we wish to emphasize that there has been no impact on our clients or the market," Mr Stephan Ariyan, Olam's chief compliance counsel, said in an e-mail statement.

Mr Block in 2012 said Olam was likely to fail because it invested in projects that wouldn't generate large enough returns to pay back debt. He subsequently credited the company, which is now controlled by a unit of Temasek Holdings, for taking some steps to address its shortcomings.