MINNEAPOLIS, MN – CHS Hedging LLC, a Minnesota-based futures commission merchant, will pay $650,000 in penalties to settle charges brought by the Commodity Futures Trading Commission (CFTC) related to recordkeeping deficiencies and unauthorized trading, the agency announced Thursday.
The CFTC order details that between June 21, 2019, and September 2, 2023, CHS Hedging failed to properly record approximately 3,000 audio recordings of communications between its associated persons (APs) and customers. The company utilized at least three different recording platforms, which experienced deficiencies leading to the loss of critical call data. These calls included discussions regarding quotes, solicitations, bids, offers, trading instructions, and pricing related to commodity interest transactions.
The investigation also revealed that CHS Hedging, through three of its APs, executed 75 trades for seven customers without proper authorization. These trades were placed without a power of attorney on file and without obtaining specific details from the customers regarding the quantity or precise commodity interest to be traded.
CHS Hedging admitted to the facts outlined in the order and has agreed to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. The CFTC acknowledged the company’s self-reporting of the issues and its cooperation throughout the investigation led by James Deacon, Alison Wilson, and Rick Glaser of the Division of Enforcement.
While admitting no wrongdoing beyond the stated facts, CHS Hedging has reportedly taken steps to remediate the issues identified by the CFTC. The $650,000 civil monetary penalty reflects the severity of the recordkeeping and authorization failures, highlighting the CFTC’s commitment to ensuring transparency and compliance within the commodity futures market.
Source: CFTC.gov
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