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June 21, 2017

Posted  June 21, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order filing and simultaneously settling charges against Respondents McVean Trading & Investments, LLC (MTI), a Memphis-based Futures Commission Merchant (FCM), its Chairman and CEO, Charles Dow McVean, Sr. (McVean), and President, Michael J. Wharton (Wharton), and long-time MTI consultant Samuel C. Gilmore (Gilmore).  The Order finds that, by secretly using cattle feedyards as straw purchasers for hundreds of long live cattle futures contracts — which at some points more than doubled CME spot month position limits — McVean and Wharton intentionally or recklessly used a manipulative or deceptive device to inject false information into the market, which had the potential to affect the live cattle futures market.  By using these straw purchasers, McVean and Wharton were able to control substantial portions of the market without disclosing that control, which caused other market participants, including live cattle traders with open short positions, to see wider market interest, participation, and fragmentation on the long side of the market than actually existed.  James McDonald, the CFTC’s Director of Enforcement, said: “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 Order requires McVean to pay a civil monetary penalty of $2,000,000, MTI to pay a civil monetary penalty of $1,500,000, Wharton to pay a civil monetary penalty of $1,000,000, and Gilmore, who was charged as an aider and abettor of McVean’s position limits violations, to pay a civil monetary penalty of $500,000. CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations,