Overland Park Firm Ordered to Pay $3.4 Million Civil Penalty



The Consumer Futures Trading Commission has fined Overland Park firm Lansing Trade Group $3.4 million for “the attempted manipulation of the price of certain wheat futures and options contracts that were traded on the Chicago Board of Trade (CBOT) and for aiding and abetting the attempted manipulation of the cash price for yellow corn from Columbus, Ohio (Columbus Corn).”

According to the order against Lansing,  “From at least March 3 to March 11, 2015, Lansing coordinated and executed a strategy to attempt to manipulate the price of certain wheat futures and options contracts that were traded on the Chicago Board of Trade (“CBOT”), a Designated Contract Market operated by CME Group Inc. (“CME”). Respondent’s strategy centered on acquiring and loading-out for delivery, by train or barge, wheat with 3 parts per million deoxynivalenol, also known as vomitoxin (“3 ppm Vomitoxin”), through the purchase and cancellation of 250 wheat shipping certificates (“Wheat Certificates”). Through the cancellation of these Wheat Certificates, Respondent intended to send a false or misleading signal to the market of a demand for 3 ppm Vomitoxin wheat in order to increase the value of its wheat spread and option positions. By such conduct, Lansing attempted to manipulate the price of certain wheat futures and options contracts being traded on the CBOT.”

The report goes on to say, “Also, during at least February 19, 2015, Lansing aided and abetted an attempt to manipulate the cash price for yellow corn from Columbus, Ohio (“Columbus Corn”) by entering into a transaction with its counterparty, a Grain Company (“Grain Company”) for Columbus Corn at a price below the market price with the understanding that a third-party broker to the
transaction told Lansing that “they (the Grain Company) want to drive Columbus basis down.” By such conduct, Lansing aided and abetted an attempt to manipulate downward the price of
Columbus Corn.”

The report includes transcripts of phone calls between three different Lansing traders and a market participant.

Lansing’s General Counsel Jason Phelps returned our call this afternoon and said that they have ‘no comment’ on the penalty. 

UPDATE:

Lansing agreed to settle the charges, neither admitting nor denying fault, and pay the $3.4 million fine.

07/13/2018