OMAHA (DTN) -- The Commodity Futures Trade Commission has fined an Iowa commodity trader $1.25 million and placed permanent restrictions on his business practices after he caused customers to lose approximately $10.3 million in unauthorized trades from 2012 to 2014.
Nathan Harris of Akron, Iowa, was a trader for Kooima & Kaemingk Commodities Inc. until August 2014.
Kooimi & Kaemingk, out of Sioux Center, Iowa, was fined $1.25 million in September 2018 and ordered to repay customers $12 million after the CFTC found one of the firm's owners and an employee engaged in unauthorized trades from "investment accounts" in 2014 and that the firm did not obtain authorization from customers for certain trades and did not receive power-of-attorney documents from others.
The trading company changed its name earlier this year to Kooima Kooima Varilek Trading.
According to the CFTC settlement, Harris began opening accounts with customers early in 2012 and misrepresented Kooimi & Kaemingk's trading history and profitability to customers, stating that investment accounts with the company would be low risk. Harris also omitted facts about financial losses.
Harris then engaged in unauthorized trades that came to light in spring 2014 when he caused more than $7 million in losses on two customer accounts. Harris had been warned that his unauthorized trading was too aggressive, but he continued making such trades. The CFTC stated, "In particular, Harris placed unauthorized trade in a number of customer accounts in June 2014 based on a news story that Harris believed would lead to a sharp downturn in live cattle futures. Due to the losses incurred as a result of Harris's trading in June 2014, at least one customer took out a mortgage on his farm to cover the losses."
At least 12 customers lost a total of approximately $10.3 million.
Along with the $1.25 million civil penalty, Harris is prohibited from trading with a registered entity for 18 months and his registration will be permanently restricted with the CFTC, requiring all business calls to be recorded and his work must undergo quarterly audits.
"This case shows the CFTC's unwavering commitment to protect America's farmers and ranchers from fraud and other misconduct in connection with the agricultural derivatives markets, stated CFTC Chairman Heath Tarbert. "The commission will continue to work to ensure all Americans who use these markets can have confidence in their integrity."
Chris Clayton can be reached at Chris.Clayton@dtn.com
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