WASHINGTON, D.C. – Commodity trading firm SummerHaven Investment Management LLC has been ordered to pay $500,000 in penalties for engaging in manipulative trading practices, the Commodity Futures Trading Commission (CFTC) announced on May 18, 2021.
The CFTC charged SummerHaven, a Connecticut-based commodity trading advisor and commodity pool operator, with conducting wash sales and non-competitive transactions on the InterContinental Exchange and Chicago Mercantile Exchange. The firm also faced accusations of failing to adequately supervise its trading activities.
According to the CFTC’s order, on July 2, 2018, SummerHaven executed over 100 pre-arranged, offsetting trades totaling over $570 million while transferring client positions between futures commission merchants. These trades involved contracts for crude oil, heating oil, gasoil, live cattle, lean hogs, soybean meal, gasoline, cocoa, and cotton. The CFTC determined these transactions constituted wash sales – trades designed to create the illusion of volume and manipulate prices – and non-competitive trades.
The investigation revealed a lack of internal policies and procedures to prevent such manipulative practices. Critically, the decision to execute these trades was reportedly directed by senior management, including SummerHaven’s then-Chief Compliance Officer and Managing Partner, indicating a systemic failure in oversight.
As part of the settlement, SummerHaven is required to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. The $500,000 civil monetary penalty is intended to address the firm’s misconduct and deter future violations.
The case was led by CFTC Division of Enforcement staff members Kevin Samuel, Brian Hunt, Alison Wilson, Michael Loconte, Erica Bodin, Linda Chalet, Kelly Beck, and Rick Glaser.
Source: CFTC.gov
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