March 9, 2016

CFTC Orders CHS, Inc. and CHS Hedging, LLC to Pay $1 Million for Inaccurately Reporting Positions in Corn and Soybeans

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against CHS, Inc. (CHS), a cooperative corporation for failing to comply with its legal obligation to submit accurate monthly CFTC Form 204 Reports, regarding the composition of CHS’s fixed price cash 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 willfully 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 $1 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.

Consistent with this filing, the CFTC’s Division of Market Oversight has issued an advisory regarding the obligation of market participants to submit accurate Form 204 reports (see CFTC Staff Advisory No. 13-42, Obligation of Reportable Market Participants to File CFTC Form 204 Reports, which is linked in CFTC Press Release 6639-13, July 8, 2013).

The Division of Enforcement staff members responsible for this action are Jordon Grimm, Michelle Bougas, Andrew Ridenour, Jennifer Diamond, James H. Holl III, Alison B. Wilson, and Rick Glaser. The Division of Market Oversight staff members responsible for this matter are Matthew Hunter, Kenneth Danger, Harry Hild, Eugene Kunda, David Amato, and James Outen.

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Dennis Holden
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Last Updated: March 9, 2016