The Securities and Exchange Commission today charged David Pope, a rail freight trader formerly employed by agricultural cooperative CHS Inc., for manipulating the values and quantities of certain of the company's rail freight contracts. In December 2018, CHS restated its publicly filed financial statements from 2014 through 2018 to correct errors caused by Pope.

As alleged by the SEC, Pope reported false values for shuttle loader train contracts to CHS's accountants in an effort to smooth out the rail freight trading desk's financial results. According to the SEC's complaint, he also reported fictitious shuttle contracts to the company's accountants for the same purpose. The SEC further alleged that Pope provided altered emails concerning CHS's shuttle contracts to the company's external auditor to conceal his misconduct.

The SEC's complaint against Pope, filed in U.S. District Court for the District of Minnesota, charges him with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The complaint also charges him with violating Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder, and with aiding and abetting violations of Exchange Act Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and a civil penalty.

In a separate proceeding, without admitting or denying the SEC's findings, CHS agreed to cease and desist from committing or causing any violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.

The SEC's investigation was conducted by Jason Rose and Laura Bennett and was supervised by David Reece and Eric Werner. The litigation against Pope will be led by Mr. Reece under the supervision of B. David Fraser.