The U.S. Commodity Futures Trading Commission (CFTC) announced July 22 the filing and simultaneous settlement of charges related to the failure of Gage’s Fertilizer & Grain Inc. to register as a futures commission merchant (FCM), and of Steven W. Gage to register as an associated person (AP) of Gage’s Fertilizer, as required by the Commodity Exchange Act and CFTC regulations. The CFTC order requires Gage’s Fertilizer and Gage jointly and severally to pay a $75,000 civil penalty and disgorge $100,000 of ill-gotten gains.
Gage’s Fertilizer is a grain elevator and farm supply company based in Stanberry, Mo. Gage, who resides in Stanberry, is the company’s president, director, and majority owner.
The CFTC order finds that, from at least January 2004 to December 2008, Gage’s Fertilizer acted as an FCM by soliciting and accepting orders for the purchase and sale of domestic, exchange-traded commodity option contracts without registering with the CFTC as an FCM. The order finds that Gage’s Fertilizer failed to properly account for or segregate customer funds relating to such transactions. The order also finds that Gage solicited and accepted orders for the purchase and sale of domestic, exchange-traded commodity option contracts while failing to register as an AP of Gage’s Fertilizer. Gage’s Fertilizer allowed Gage to engage in such acts, usually conducted by an AP, without registering as such with the CFTC, according to the order. The order also requires Gage’s Fertilizer and Gage to comply with undertakings, including the commitment to disclose the CFTC order to Gage’s Fertilizer’s principals and employees, and to cooperate with any further investigation or legal action arising from this matter.
The order appoints the National Futures Association to collect payments by Gage’s Fertilizer and Gage, and to distribute such payments to those harmed by the violations described in the CFTC order.
Both Gage and his attorney, Todd Graves, told Green Markets that Gage should have registered with the CFTC, and that was the problem. Otherwise, Graves said there was no admission of wrongdoing. He denied that there were any allegations of fraud, and said the charges were in relation to trades on the grain elevator side of the business.
According to its Web site, Gage says it has provided quality agricultural supply sales and grain purchasing and storage options for farmers throughout Northwest Missouri since 1988, and that it has eight locations – in Stanberry, Maitland, Ravenwood, Albany, St. Joseph, Kansas City, Skidmore, and Bethany, Mo.
Gage is one of the plaintiffs in one of several antitrust lawsuits brought against potash producers a few years ago (GM Sept. 22, 2008; Feb. 9, 2009). Sources said last week that those cases continue to linger in the court system before the U.S. Court of Appeals for the Seventh Circuit.