CFTC Fines Futures Commission Merchant MTI $5 Million for Live Cattle Fraud

McVean Trading and Investments LLC brokerage has been charged with inserting false information into the market.

Yesterday, the United States Commodity Futures Trading Commission (CFTC), an American regulatory authority, filed an order and settled its charges against McVean Trading and Investments LLC (MTI), a futures commission merchant based in Memphis, USA, for allegedly feeding false information into the market.

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The accused men are the company’s Chairman and CEO Charles Dow McVean Sr., President Michael J. Wharton, and long-standing consultant Samuel C. Gilmore. According to the allegations, the three secretly used cattle feed yards as straw buyers (someone who makes a purchase on behalf of another individual) of buy live cattle futures contracts, for decades. These are said to have increased to more than twice the set limits of Chicago Mercantile Exchange’s spot month positions.

McVean and Wharton are being accused of having put incorrect information into the market.

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In addition, they were able to gain control of large parts of the market without disclosing this information by using straw buyers. This brought about a situation in which other figures in the market, such as live cattle traders with open sell positions, received a warped perception of growth of both interest and activity in the market. Moreover, the buy portion of the market seemed fragmented.

James McDonald, the CFTC’s Director of Enforcement, commented: “For markets to have integrity, market participants must be able to trust that the markets operate free of manipulative or deceptive conduct.  The Commission will always act to address those threats to the markets it regulates.  That includes cases like this one, where market participants try to game the markets by injecting false information, which distorts the view of that market seen by other participants.”

The settlement with the CFTC means that McVean is required to pay $2 million, and the company is to pay $1.5 million in penalty fines. Wharton will pay $1 million, and Gilmore, who is accused of being an accessory, is to pay $500,000.

Last week, the CFTC charged a couple and their Florida-based company, North American Asset Management LLC, for allegedly having illegally run precious metal transactions via brokerages such as Hunter Wise, AmeriFirst, and Lloyds Commodities. alongside violations of registration laws. The couple will have to pay over $1.6 million in fines.

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