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2016 CFTC LEXIS 4

Commodity Futures Trading Commission

March 09, 2016

CFTC Docket No. 16-07

Opinion

The Commodity Futures Trading Commission ("CFTC" or "Commission") has reason to believe CHS, Inc. ("CHS") violated Commission Regulation 19.01, 17 C.F.R. § 19.01 (2014) and that CHS Hedging, LLC (formerly CHS Hedging, Inc.) ("CHS Hedging, " collectively "Respondents") willfully aided and abetted CHS's violations and, pursuant to Section 13(a) of the Commodity Exchange Act ("the Act"), 7 U.S.C. § 13c(a) (2014), is liable for such violations. Therefore, the Commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted to determine whether Respondents engaged in the violations set forth herein and to determine whether any order should be issued imposing remedial sanctions.

In anticipation of the institution of this administrative proceeding, Respondents have submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Without admitting or denying any of the findings or conclusions herein, Respondents [*2]  consent to the entry of this Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, Making Findings and Imposing Remedial Sanctions ("Order") and acknowledge service of this Order. 1 

The Commission finds the following:

A. Summary

Entities are required to file Form 204 reports if they 1) hold or control reportable futures and options positions in certain agricultural commodities -- including wheat, corn, oats, soybeans, soybean  [*3]  oil, and soybean meal; 2 and 2) any part of those positions constitute bona fide hedging positions. 3 In the Form 204 reports, entities are required to show the composition of their fixed price cash position of each such commodity hedged. From at least January 2000 until May 2013 (the "Relevant Period"), CHS held reportable positions in the corn and soybean futures markets in an effort to hedge cash positions in corn and soybeans thus triggering their Form 204 report obligations. CHS delegated to CHS Hedging the responsibility to prepare and submit the Form 204 reports. During the Relevant Period, CHS Hedging filed consistently incorrect Form 204 reports on a monthly basis with the Commission that did not comply with the statutory requirements.

In accepting Respondents' Offer, the Commission recognizes that Respondents have already instituted remedial action to strengthen the internal controls and policies relating to the preparation of Form 204 reports.

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2016 CFTC LEXIS 4 *

In the Matter of: CHS, Inc. and CHS Hedging, LLC, (formerly CHS Hedging, Inc.), Respondents.

CORE TERMS

hedge, commodity, soybean, fixed price, corn, relevant period, cooperative, quantity, spot, date of entry, incorrect, successor