A federal court judge in Chicago has ruled that the wealthy Hunt family of Texas violated speculative limits on soybean futures holdings, but imposed no penalties.
U.S. District Court Judge Frank McGarr Wednesday affirmed the validity of the limits set by the Commodity Futures Trading Commission and acknowledged that seven Hunt family members and a family-operated corporation acted in concert to violate the limits. In what he conceded was an "incongruous" decision, however, McGarr declined to set penalties or to force the Hunts to repay any part of the profits they made from their activities in the soybean market by the Chicago Board of Trade between January and April.
The holdings of the Hunts at one point this spring totaled more than a third of the total availabe U.S. supply.
CFTC staff members estimated that the Hunt's profits from their dealings ranged anywhere between $30 - and $100 million.
The suit was filed last April against Nelson Bunker and W. Herbert Hunt, five of their children and a Hunt holding company. The Hunts contended they acquired their positions individually and were not trading in concert.
Individual speculators in the soybean futures market are held to a 3 million bushel limit on the contracts they may trade at one time. The Hunts argued that they should not be held to an aggregate total of 3 million bushels, but were entitled to trade up to 24 million bushels.
McGarr's opinion found, however, "There is evidence establishing that there was very little or no exercise of independent judgment by the female members" of the family "and very little more" by several of the sons.
McGarr denied the CFTC's request for injunctions against the Hunts to bar similar trading activity in the future, because the case was based on participation in the May and June soybean futures contracts, which have already expired.
He also threw out counterclaims of the Hunts that the CFTC had acted "vindictively" against them and had violated their privacy by publicly disclosing their market holdings at an April press conference.
Both sides interpreted the ruling as a partial victory.
"We're pleased that Judge McGarr confirmed the fundamental position taken by the CFTC," an agency spokesman said Wednesday.
Commission chairman William T. Bagley said yesterday that the agency still is considering taking internal administrative action against the Hunts for their market activity.
He added that the judge's refusal to order disgorgement of profits was "not disappointing. We're not in that business. We're here to make sure the market works right. I think his decision upheld our view. People who were hurt in trading could still file class action civil suits for damages from the Hunts."
W. Herbert Hunt said in Dallas yesterday that the ruling was at least a partial victory for his family.
"I feel quite pleased about the decision as the court did not grant any injunctive or other relief sought by the CFTC and failed to find any evil motive or intent involved on the part of the defendants."
He added, "The case is a complex matter so it is understable that there are aspects of the decision with which I do not agree at all."
Claude Fleet, a Hunt spokesman, said Wednesday, "In my opinion, the enormous expense the government incurred was a gross waste of the taxpayers' money. It was unnecessary and unwarranted."