The Commodity Futures Trading Commission (Commission) settled an enforcement action against CHS Hedging, LLC (CHS) with a $6.5 million civil penalty for the brokerage firm’s alleged violations of the Commodity Exchange Act. The Commission alleges that CHS failed to implement an adequate anti-money laundering program, particularly as applied to a futures and options trading account controlled by Cody Easterday, who recently was sentenced to eleven years in federal prison and ordered to pay $244 million restitution for his “ghost cattle” fraud scheme. The Commission also alleged that CHS failed to implement risk-based limits on Easterday’s trading and failed to comply with recordkeeping obligations, thereby enabling Easterday to carry out his scheme to bill Tyson Foods for cattle that did not exist.
Brokerage Firm Fined with $6.5 Million Civil Penalty for Failing to Stop “Ghost Cattle” Fraud Scheme
Excerpt from Animal Law Digest: US Edition: Issue 170