This week the US Commodity Futures Trading Commission (CFTC) announced that the District Court for the Eastern District of Washington issued an order against Cody Easterday of Easterday Ranches, requiring him to pay a USD $1m civil monetary penalty in connection with a phantom cattle fraud scheme. Easterday previously was sentenced to 11 years in prison and ordered to pay $244 million in restitution for the scheme. The order permanently prohibits Easterday from trading on any CFTC-registered entity and from engaging in any activities requiring CFTC registration.
The original CFTC complaint was filed on 31 March 2021 which charged Easterday and Easterday Ranches with the sale of more than 200,000 non-existent head of cattle to a beef processor, making false statements to an exchange, and exceeding the number of contracts permitted by exchange-set position limits (see here).
Commissioner Goldsmith Romero issued this comment concerning the case. In the strongly worded statement, the Commissioner refers again to her views expressed in September 2022 (click here) objecting to neither-admit-nor-deny settlements where defendants can avoid publicly acknowledging responsibility and wrongdoing (see Week in Review: Sept 19 – 23 where RegTrail covered this topic.) She again referred to the proposed Heightened Enforcement Accountability and Transparency test (HEAT Test) to assist the CFTC in assessing whether specific cases demand heightened justice for victims, heightened accountability, and heightened deterrence that would accompany defendant admissions noting that this case met six of the seven of the criteria that she set forth under this framework.
She urges the CFTC to “conduct deep dive studies into market manipulation and excessive speculation in commodities markets” presumably with a view of introducing some form of the HEAT Test setting a higher level of deterrence for would-be manipulators.