The US Commodity Futures Trading Commission (CFTC) has issued an Order filing and simultaneously settling charges against CHS, Inc (CHS) over the inaccurate reporting of positions in corn and soybean purchases and sales, in violation of the reporting requirements in CFTC Regulation 19.01. CHS is based in Inver Grove Heights, Minnesota.
The CFTC’s Order also filed and simultaneously settled charges against CHS Hedging, LLC (CHS Hedging) (formerly CHS Hedging, Inc.), a CFTC-registered Futures Commission Merchant. CHS Hedging wilfully aided and abetted CHS’s violations and is liable for CHS’s violations, the CFTC Order finds. CHS Hedging is headquartered in St Paul, Minnesota.
The CFTC Order requires CHS and CHS Hedging jointly to pay a USD1 million civil monetary penalty and to cease and desist from committing further violations of CFTC Regulation 19.01.
As the CFTC Order states, under CFTC Regulations all persons holding or controlling reportable futures and options positions in certain agricultural commodities (including wheat, corn, oats, soybeans, soybean oil, and soybean meal) and any part of which constitute bona fide hedging positions as defined in CFTC Regulation 1.3(z), are required to file CFTC Form 204 reports showing the composition of their fixed price cash position in each such commodity hedged. According to the Order, a purpose of the Form 204 report is to check compliance with speculative position limits by ensuring that filers that classify their futures positions as hedging actually own or control offsetting cash positions.
The Order finds that during the period from at least January 2000 until May 2013, CHS held reportable positions in Form 204 commodities and was required to file Form 204 reports showing the quantities of the fixed price purchase and sale open cash positions of such commodities it hedged. The Order further finds that during this same period, CHS Hedging, on behalf of CHS, filed consistently incorrect Form 204 reports on a monthly basis with the CFTC that did not accurately state the quantities of CHS’s fixed price cash positions of each such commodity it hedged.
