WASHINGTON, D.C., U.S. — CHS, Inc., a cooperative based in Minnesota, U.S., is being ordered to pay a $500,000 penalty to the U.S. Commodity Futures Trading Commission (CFTC) 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 also charges CHS for violating the cease-and-desist provision of a 2016 CFTC order, which involved a 13-year failure to file correct Form 204 reports with the CFTC.
“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 James McDonald, director of enforcement at the CFTC. “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 that found that CHS had violated Regulation 19.01 by failing to submit correct Form 204 reports for a 13-year period. The CFTC ordered CHS to pay a $1 million civil monetary penalty, and required CHS to cease and desist from violating Regulation 19.01.
“The order finds that subsequent to the entry of the 2016 order, CHS continued to experience difficulty submitting correct Form 204 Reports,” the CFTC said. “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. The inputs came from, among other things, certain of CHS’s divisions and subsidiaries.
According to the order entered on Oct. 1, 2019, in May 2018, CHS self-reported the Form 204 Report errors it was aware of to the CFTC. Subsequently, CHS continued auditing its Form 204 Reports and apprised the CFTC 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,” the CFTC said.
CHS is a cooperative corporation headquartered in Inver Grove Heights, Minnesota, U.S. It is a global agribusiness owned by farmers, ranchers and cooperatives across the United States. CHS is listed with the National Futures Association as a principal of CHS Hedging LLC, a registered futures commission merchant since 1986.