The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against CHS Hedging, LLC, a Minnesota based futures commission merchant, for recordkeeping deficiencies and failure to obtain customer authorizations before entering trades for customers.
The order requires CHS Hedging, LLC, to pay a $650,000 civil monetary penalty. The respondent admits the facts related to its recordkeeping deficiencies as detailed in the order and is ordered to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged. In accepting CHS’s Offer, CFTC recognizes CHS’s self-reporting and cooperation in connection with this Division of Enforcement’s investigation.
Case Background
The order finds from June 21, 2019, to Sept. 2, 2023, CHS used at least three different recording platforms to make or keep audio recordings of communications by its associated persons (APs) with CHS customers. At various points during that time, these platforms suffered from deficiencies or other issues resulting in CHS’s failure to make or keep approximately 3,000 audio recordings of its APs calls with CHS customers. These calls would have included communications concerning quotes, solicitations, bids, offers, instructions, trading, and/or prices leading to transactions in commodity interests.
Additionally, the order finds during this time, CHS, through three of its APs, placed 75 trades for seven customers without a power of attorney and without obtaining specific information from customers about the quantity and/or precise commodity interest to be purchased or sold.
The order also acknowledges CHS’s representations concerning its remediation in connection with this matter.
The Division of Enforcement staff responsible for this matter are James Deacon, Alison Wilson, and Rick Glaser.
