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CFTC fines Iowa firm $1.25 million, plus restitutionCFTC fines Iowa firm $1.25 million, plus restitution

Restitution is $11.9 million in case involving cover-up of unauthorized trading.

September 28, 2018

1 Min Read

The Commodity Futures Trading Commission issued an order on Sept. 27, 2018, settling charges against Kooima & Kaemingk Commodities, Inc., K&K, Lauren Kaemingk and Bradley Kooima, all of Iowa, which requires them to pay $11,920,857.05 in restitution. A civil monetary penalty of $1.25 million is also levied and K&K, Kaemingk and Kooima are ordered to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations.

The charges include:

  • Kaemingk’s fraud, unauthorized trading and making false or misleading statements to CME Group for a former employee’s fraud, unauthorized trading and violation of CME position limits in live cattle futures contracts; and

  • Supervision failures by Kooima and Kaemingk.

“Many farmers depend on the futures markets to help protect their operations from financial uncertainty,” said James McDonald, CFTC enforcement director. “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.”  

What happened?

K&K fraudulently solicited customers and opened investment accounts for certain customers beginning around January 2012. Further, between January 2012 and February 2016, K&K, through two of its associated persons, a former employee and Kaemingk, defrauded customers by its unauthorized trading, which caused net customer losses of about $11.9 million.

When the CME opened an investigation into the former employee’s position-limit violation, K&K, through Kaemingk, engaged in a cover-up to conceal the scope of the unauthorized trading at K&K. Kaemingk encouraged a customer to withhold information from CME during its investigation. Kaemingk also made misleading statements to CME during an interview.

Source: CFTC


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