October 1, 2019
CFTC Orders CHS, Inc. to Pay $500,000 Penalty for Reporting Violations
Washington, DC — The U.S. Commodity Futures Trading Commission announced today that an order filing and simultaneously settling charges against CHS, Inc. a cooperative corporation headquartered in Minnesota, for failing to submit accurate monthly CFTC Form 204 Reports regarding the composition of CHS’s fixed price cash corn and soybean purchases and sales. The order was entered on Monday, September 30, 2019. The order also charges CHS for violating the cease and desist provision of a 2016 CFTC order [See Release No. 7337-16], which involved a 13-year failure to file correct Form 204 reports with the Commission.
The order entered today imposes a $500,000 civil monetary penalty and recognizes that CHS’s self-reporting, cooperation, and remediation substantially reduced its penalty.
“This resolution reflects the fact that entities that violate prior orders will be held accountable, but also that self-reporting and full cooperation carry real and substantial benefits,” said CFTC Director of Enforcement James McDonald. “We acknowledge that CHS itself discovered the reporting errors and promptly self-reported the issue to the Commission, even as CHS continued to investigate the scope of the potential violations. The reporting errors in this case were likely not of the type that the Commission would have detected otherwise. The civil monetary penalty reflects this self-report and substantial cooperation.”
In March 2016, the CFTC entered an order which found that CHS had violated Regulation 19.01 by failing to submit correct Form 204 reports for a thirteen-year period. The Commission ordered CHS to pay a $1 million civil monetary penalty, and required CHS to cease and desist from violating Regulation 19.01.
The order entered today finds that subsequent to the entry of the 2016 order, CHS continued to experience difficulty submitting correct Form 204 Reports. These difficulties stemmed in part from a number of steps CHS took to replace its enterprise software, which, among other things, would automate the Form 204 Report process. Following the 2016 order, CHS began auditing the various inputs into the reports for compliance. These inputs came from, among other things, certain of CHS’s divisions and subsidiaries.
According to the order entered today, in May 2018, CHS self-reported the Form 204 Report errors it was aware of to the Commission. Subsequently, CHS continued auditing its Form 204 Reports and apprised the Commission when it discovered new information. CHS accepted responsibility for its failures, was forthcoming and responsive in connection with questions regarding the violations and remediation, and performed an analysis to determine if any position limits violations had occurred as a result of the erroneous Form 204 Reports.
Consistent with this filing, the CFTC’s Division of Market Oversight issued in 2013 an advisory regarding the obligation of market participants to submit accurate Form 204 Reports. [See CFTC Staff Advisory No. 13-42]
The Division of Enforcement thanks the Division of Market Oversight for their assistance in this matter.
The Division of Enforcement staff members responsible for this action are Kelly Beck, Janet Briner, Linda Chalet, James H. Holl III, Alison B. Wilson, and Rick Glaser.