CFTC Fines Tyson $1.5M Over Futures Trading and Recordkeeping Violations

Last Friday, the Commodity Futures Trading Commission (CFTC) simultaneously filed and settled charges against Tyson Foods Inc. for violating the Commodity Exchange Act and CFTC regulations. According to the commission’s press release, the global food company exceeded the CFTC position limits for soybean meal futures contracts traded on the Chicago Board of Trade and failed to comply with reporting and recordkeeping obligations concerning its cash positions in grains.

As to the CFTC’s position limits allegations, applicable law prohibits persons from holding “an all-months position in soybean futures in excess of 6,500 contracts net long or short.” The order determined that on nearly 600 dates between January 2016 and January 2021, the respondent held more than the permitted number of contracts.

In addition, the CFTC also charged Tyson with filing incorrect official forms, statements of cash positions in grain. The forms reported “non-existent fixed-price cash sales of soybean meal, overstated fixed-price cash sales of corn, and failed to report purchases and sales from Tyson’s grain elevators,” according to the commission.

Additionally, Tyson reportedly utilized an incorrect pounds-to-bushels conversion factor that resulted in understated cash purchases of soybean oil. Finally, Tyson failed to maintain records of some cash transactions relating to futures positions in excess of position limits, transgressing formerly applicable recordkeeping requirements, the CFTC said.

Tyson reportedly cooperated with the commission during its investigation, including self-reporting additional violations after the inquiry began. On top of the civil penalty, which was reduced in view of Tyson’s assistance, the settlement requires that Tyson agree not to commit future violations.