The abrupt shutdown of K-Ratio’s fuel hedging program at the end of June left trucking companies scrambling as they wait for responses from the Chicago-based company as to what happened and when or if participating carriers will get back the money owed to them for the June settlements and whether they will be reimbursed for future fuel swap options contracts they paid in cash to lock in fuel prices until ‘in 2022.
K-Ratio is asking carriers who have participated in its fuel program to sign a universal settlement agreement, according to a Midwestern carrier who says he owes more than $ 100,000 for June but has not been paid.
“Two days before we were supposed to receive our June settlement, we were told this was not going to happen,” a source, who did not want to be named, told FreightWaves. “K-Ratio has this universal settlement agreement that they’re trying to get everyone to sign with some sort of veiled threat that if you don’t sign it and you were able to make money with this program, you will have to give all that money back.
A K report The spokesperson confirmed he had ended his fuel term program, but was vague on the details of what had happened.
“As a result of an internal audit of the K-Ratio X, LLC fuel protection program, we recently discovered that insufficient coverage appears to have been conducted,” the K-Ratio spokesperson told FreightWaves. “The person who was responsible for operating and managing the fuel protection program was quickly placed on administrative leave and his relationship with K-Ratio has since ended. The consequences of this person’s actions were limited to the fuel protection program alone.
“Our top priority has been to promptly inform affected parties of the situation and be transparent about our proposed remediation plan, while respecting applicable laws. We quickly self-declared with the relevant regulatory authorities after discovering the apparent inadequacy of coverage and cooperated with them throughout their review process. We remain in discussions with the parties concerned regarding a potential resolution with the aim of resolving this matter as quickly as possible. “
Kyle Lintner, who was the principal and managing director of K-Ratio’s fuel futures program, confirmed to FreightWaves that his independent contractor contract had been terminated, but said the company had given him no reason.
“I have nothing to hide and I don’t want to throw mud at anyone through the media,” Lintner told FreightWaves. “Every day, K-Ratio’s top executives were on a mailing list that showed all futures trading.”
Lintner appeared on several FreightWaves media platforms before his dismissal on June 23.
“Kyle Lintner was a regular, unpaid contributor to FreightWaves media. It will not be used in future FreightWaves media pending final resolution of the issues discussed in this article, ”said a spokesperson for FreightWaves.
Prior to its closure, K-Ratio’s fuel protection program allowed trucking companies to customize gallons of fuel on a monthly basis, according to the company’s website. Trucking companies said the appeal of this program was that it offered “protection against rising prices without pegging you at a fixed price, should prices fall.”
The carriers said they are free to select any gas station and there are no requirements for receipts or invoices, no diesel will be delivered to their business and businesses can fill out. their tanks at any refueling point.
K-Ratio told FreightWaves that it reported the matter to the Commodity Futures Trading Commission and the National Futures Association (NFA). the NFA is conducting a review with which K-Ratio has cooperated.
Lintner said he is also cooperating with the NFA examiners. He said K-Ratio was undergoing a routine review by the NFA before he left the company.
The trucking companies said they have also received letters from the NFA inquiring about their relationship with K-Ratio and its affiliates and asking to set up a speaking moment as part of the review process.
“It is our policy not to comment on ongoing reviews that we are conducting,” Christie Hillsman, director of communications for the NFA, told FreightWaves.
“K-Ratio is currently a member and currently pending withdrawal, so it is in the process of retiring, but as a review is ongoing, this review essentially needs to be finalized and completed before it can be withdrawn,” he said. she declared.
Hillsman said there was no set timeline for completing the review of K-Ratio’s fuel term program.
A carrier who received the letter told FreightWaves that he wants K-Ratio to be more transparent during this process and that being kept in the dark is baffling.
“If there was an error or something was mismanaged, let us know,” a source told FreightWaves. “It’s easier to forgive if you know what’s going on, but when you’ve invested a lot of money in a fuel swap program and your only communication is through K-Ratio’s lawyers, it’s very. frustrating. “
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