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Exclusive: K-Ratio X banned from futures trading after fuel hedging probe

‘If you want a takeaway, it’s this: K-Ratio got banned for life, I did not,’ Lintner says

NFA charged K-Ratio X with operating an unregulated trading program without having financial resources to support its fuel hedging program. Photo: Shutterstock

A national regulatory body has permanently banned the Chicago-based parent companies of K-Ratio X’s now-defunct fuel hedging program that targeted trucking companies from any futures trading.  

The National Futures Association ordered K-Ratio Advisory LLC and K-Ratio Brokerage LLC, along with K-Ratio X, an unregistered affiliate of the two companies owned by Russell Gallemore, to never reapply for membership or act as a principal of an NFA member.

The NFA’s Business Conduct Committee issued its decision last week, eight months after it launched an investigation into K-Ratio X’s fuel hedging program that in June abruptly closed, a move that stunned participating trucking companies.

According to the settlement agreements reached with the NFA, K-Ratio X and Kyle Lintner, the former principal and managing director of the company’s fuel swap program, did not admit or deny the allegations in the NFA’s investigation.


Both K-Ratio X and Lintner faced four counts of “operating an unregulated trading program without having adequate financial wherewithal to do so” as well as using “misleading and deceptive promotional material and communications to solicit and describe a fuel protection program offered to the public.”

Investigators also charged K-Ratio X and Lintner with allowing an unregistered individual to act as an associated person without being registered in such capacity and an NFA associate, a violation of NFA bylaws.

The fourth count claims K-Ratio X and Lintner violated NFA’s compliance rule by “failing to supervise” its Fuel Protection Program. 

The regulatory association barred Lintner, a former NFA member, from reapplying for membership for three years, but after that time, he may reapply after paying a $15,000 fine to the futures association, according to the decision.


“If you want a takeaway, it’s this: K-Ratio got banned for life, I did not,” Lintner told FreightWaves in an exclusive interview.

“Though I maintain my innocence and while two complaints against me were dropped, I did accept a settlement offer on the remaining two complaints in an effort to limit my legal bills and put this unfortunate situation to rest,” Lintner said. “Without any financial control of K-Ratio, the experience of many was out of my hands, but I do wish things turned out differently, as all of this could and should have been avoided.”

What happened?

Prior to its abrupt closure, K-Ratio X’s Fuel Protection Program allowed trucking companies to customize the number of gallons of fuel on a monthly basis, according to the company’s website. Trucking companies said the lure of this program was that it provided “protection against rising prices while not anchoring you to a fixed price, should prices decrease.” 

Days before trucking companies were to receive settlements from K-Ratio X in late June, it notified customers that it was shutting down its fuel hedging program because of apparent insufficient hedging, which happened around the same time Lintner’s independent contract agreement with K-Ratio was terminated and he was locked out of the company’s system.

At that time, a K-Ratio spokesperson issued the following statement: “The person that was responsible for operating and managing the fuel protection program was promptly placed on administrative leave and his relationship with K-Ratio has since been terminated. The consequences of this person’s actions were limited to the fuel protection program only.”

While Gallemore and others claimed Lintner was solely responsible for K-Ratio X’s fuel futures program, the NFA investigation proved otherwise.

Federal investigators found that two of the freight companies Gallemore owns “executed 11 of the transaction confirmations with [K-Ratio X] starting in November 2020 through March, and that he [Gallemore] signed at least one of the transaction confirmations,” also in March.

According to documents reviewed by FreightWaves, K & L Freight Management Inc., one of the companies owned by Gallemore, the main investor in K-Ratio X, also participated in its fuel swap program.


The documents show that K-Ratio X’s futures statements were sent daily from Wedbush Securities Inc., its bank or futures commission merchant (FCM) as it is known in the trading world, to a distribution list that included Lintner and members of its management team that included Gallemore and Chris Poole, the CFO of Kore 4, the managing entity of Gallemore’s companies.

As of publication, neither Gallemore nor Poole responded to FreightWaves’ phone calls and emails seeking comment.

NFA findings

According to the NFA investigation, approximately 40 freight and transportation companies participated in K-Ratio X’s fuel protection program. From April 2020 until the program was abruptly shut down in June, participating trucking companies paid more than $3.3 million in premiums that were deposited into a bank account belonging to K-Ratio Advisory, which is owned by Gallemore.

Trucking companies’ premiums were also the “primary source of funding” to make payouts to settle expired options and to pay other miscellaneous expenses, the NFA found. 

Investigators stated that K-Ratio X had enough funds to cover payouts to participating carriers until April, when the price of underlying NYMEX diesel fuel contracts “started to move against” K-Ratio X.

The investigation also found that K-Ratio purported to be a Commodities Futures Trading Commission-registered swap firm, which it was not.

Only Gallemore and an unnamed individual had access to K-Ratio X’s bank account. Both confirmed in August that Lintner didn’t have access to the fuel program’s account when interviewed by NFA investigators.

“Prior to revelation of the alleged conduct, Kyle Lintner was an unpaid contributor to FreightWaves media,” a FreightWaves spokesperson said. 

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Click for more articles by Clarissa Hawes.

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 18 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and Trucks.com. If you have a news tip or story idea, send her an email to chawes@firecrown.com or @cage_writer on X, formerly Twitter.