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CTFC Orders Restitution of $11.9M In Commodities Fraud

https://www.silverlaw.com/blog/wp-content/uploads/2017/07/FINRA-Permanently-Bars-Honetta-C.-Kao-After-Allegations-of-Unauthorized-Trading-and-Mishandled-Accounts-300x200.jpgThe Commodity Futures Trading Commission (CTFC) filed orders today that brought and settled cases against two commodities firms engaged in unauthorized trading and two traders attempting to manipulate commodity prices.

In the first case, Iowa-based Kooima & Kaemingk Commodities, Inc. (K&K), Lauren Kaemingk (Kaemingk), and Bradley Kooima (Kooima) were charged with:

  • Fraud
  • Unauthorized trading and fraud
  • Making false or misleading statements to CME Group Inc. (CME)
  • Fraud from a former employee
  • Unauthorized trading and violation of CME position limits in live cattle futures contracts
  • Supervision failures by K&K, and principals Kaemingk, and Kooima supervision failures.

According to the complaint, K&K fraudulently opened up accounts for customers starting in January 2012. Kaemingk, along with a former employee, engaged in unauthorized trading on behalf of these customers until February of 2016, and caused losses of $11.9 million.

When CME Group began its investigation into the former employer’s position-limit violation, Kaemingk gave misleading statements during an interview and began a cover-up of the breadth of trading activities at K&K. She also persuaded one customer to withhold information from CME during the investigation.

The investors involved are primarily individual farmers and large farming operations. This fraud directly impacted these farmers and farming operations in Iowa, Maryland, Minnesota, Nebraska, and South Dakota.

“Many farmers depend on the futures markets to help protect their operations from financial uncertainty,” said James McDonald, CFTC Director of Enforcement. “Those farmers should be able to trust that their Introducing Broker will deal with them honestly.  Brokers are also expected to respond truthfully and completely to CME and other exchanges when misconduct is being investigated.  When brokers defraud their customers and then seek to cover it up — as in this case — the Commission will vigorously pursue them.”  

In addition to a $1.25M fine, K&K and its employees will also be required to repay the $11.9M in restitution to the affected customers in five states.

In the second case, CTFC filed two orders against traders Adam Flavin and Peter Grady from the Commodity Trading Firm for manipulating prices of wheat futures and options contracts traded on the Chicago Board of Trade. Their plan, discussed by phone with others, involved cancelling the shipment of one type of grain, giving the impression of a surge in trading on another type in order to increase its market value. Flavin’s conversation with a newsletter writer indicated that the writer was going to “give it the gas” to further promote their deception.  Flavin was fined $125,000 in civil monetary penalty, and is banned from trading for four years. Grady was fined $250,000, and banned from trading for nine months.

If You Have Engaged In Commodity Trading

Silver Law Group represents investors in securities, commodities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct.  Our attorneys have handled many NFA arbitration claims and routinely represent commodities investors in claims for account mismanagement, fraud and excessive trading.  NFA arbitration can be complex and experienced counsel can help an investor recover their losses. Most cases handled on a contingent fee basis. This means that you won’t any pay legal fees unless we are successful. Call us toll free at 800-975-4345, or use our online contact form to get in touch.

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