Lansing Trade Group LLC
CBOT RULE VIOLATIONS:
Rule 432 (“General Offenses”) (in relevant part)
It shall be an offense:
H. to… attempt to engage in, the manipulation of prices of Exchange futures or options contracts;
J. to knowingly disseminate …false, misleading or inaccurate information concerning crop or market information or conditions that affect or may affect the price of any Exchange futures or options contract or spot transaction in the underlying commodity;
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
Pursuant to an offer of settlement in which Lansing Trade Group LLC (“Lansing”) neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on May 23, 2018, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that in March 2015, employees of Lansing engaged in a strategy in which it acquired and loaded out wheat for delivery in order to send false or misleading signals to the market of demand, in an attempt to manipulate the price of Wheat futures contracts and benefit Lansing’s futures and options positions at CBOT.
Specifically, the Panel found that prior to March 2015, Lansing held 134 Soft Red Winter Wheat certificates (“SRW certificates”). On March 3, 2015, 250 SRW certificates (1.25 million bushels) of 3 part per million vomitoxin SRW certificates were registered for delivery against CBOT futures, bringing the total amount of registered certificates to
384. Between March 5 and 10, 2015, Lansing acquired all 250 remaining SRW certificates and, therefore, held all 384 SRW certificates. While Lansing acquired the remaining SRW certificates, its traders entered into a speculative position using futures and options. Lansing also contacted multiple market participants and a daily cash wheat newsletter to notify them of Lansing’s intention to cancel the SRW certificates for load out, thereby attempting to influence the market to benefit Lansing’s futures and options positions.
From March 6 through March 11, 2015, Lansing canceled for load out all SRW certificates in an attempt to send a false or misleading signal of demand to the market. Lansing’s strategy was devised primarily to benefit its futures and options positions.
The Panel concluded that Lansing thereby violated CBOT Rules 432.H., 432.J., and 432.W.
In accordance with the settlement offer, the Panel ordered Lansing to pay a fine of $3,150,000.
July 12, 2018