Overland Park, Kansas – Lansing Trade Group, LLC, a commodity merchandising firm, has been slapped with a $3.4 million penalty by the Commodity Futures Trading Commission (CFTC) for attempting to manipulate wheat futures and options contracts traded on the Chicago Board of Trade (CBOT). The firm also stood accused of aiding and abetting the attempted manipulation of cash prices for yellow corn originating from Columbus, Ohio.
The CFTC order, issued July 12, 2018, requires Lansing to not only pay the substantial civil monetary penalty but also to overhaul its internal controls and procedures to ensure compliance with anti-manipulation provisions of the Commodity Exchange Act (CEA) and CFTC Regulations. A cease and desist order was also included, prohibiting further violations of the CEA and Regulations.
According to the CFTC, Lansing focuses on the purchase, handling, storage, and sale of physical commodities, including grains, feed ingredients, and energy products, operating locations across North America and the United Kingdom. The company hedges its physical grain trading and engages in speculative positions through commodity futures, specifically CBOT wheat futures and options.
The investigation revealed that between March 3, 2015, and March 11, 2015, Lansing deliberately coordinated a strategy to manipulate CBOT wheat futures and options prices. This involved acquiring and preparing to deliver wheat containing 3 parts per million of deoxynivalenol (3 ppm Vomitoxin) by purchasing and canceling 250 wheat shipping certificates. By canceling these certificates, Lansing aimed to create a false impression of demand for the lower-grade wheat, hoping to artificially inflate the price of its wheat spread and option positions.
To amplify the impact of their scheme, Lansing traders reportedly collaborated with the writer of a market newsletter, instructing them to disseminate information about the impending certificate cancellations. A recorded phone call from March 6 revealed a Lansing trader stating a desire to “make sure the market got lopsided first,” and later boasting that the newsletter writer would “give it the gas tonight, and it’s gonna be good.”
“This Order shows the CFTC’s relentless commitment to preventing manipulation in our agricultural markets,” stated CFTC Director of Enforcement, James McDonald. “The CFTC will continue to work with our law enforcement partners and other regulators to fight manipulation and to preserve market integrity.”
Source: CFTC.gov
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