Release: #4194-98 Docket No. 98-4
For Release: September 28, 1998
CFTC ACCEPTS SETTLEMENT OFFER OF TERRY A. DIRKSEN ARISING FROM MARKETING OF SO-CALLED "HEDGE-TO-ARRIVE" CONTRACTS
CFTC Order Accepting Settlement Offer Finds that Dirksen Aided and Abetted and is Liable as a Controlling Person for Fraud in Violation of the Commodity Exchange Act
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it issued an order accepting an offer of settlement from Terry Allan Dirksen of Clarinda, Iowa, in connection with a complaint filed by the CFTC on December 22, 1997 (see CFTC News Release #4090-97, December 22, 1997). Dirksen was a co-owner and principal of both Competitive Strategies for Agriculture, Ltd. (CSA-Iowa) and CSA Investor Services, Inc. (CSA-IB), a registered introducing broker. Dirksen also was a registered associated person of CSA-IB.
The CFTC order as to Dirksen, issued on September 24, 1998, finds that Dirksen aided and abetted fraud violations and that Dirksen also is liable for CSA-Iowa's and CSA-IB's fraud violations as a controlling person of those entities. Dirksen, without admitting or denying the findings, consented to the entry of the order:
-- directing him to cease and desist from further violations; and
-- directing him to pay a $10,000 civil monetary penalty.
Under the settlement, Dirksen also agreed not to seek CFTC registration in any capacity, or to engage in any activity requiring such registration, for a three-year period.
In a prior order filed on August 24, 1998, accepting an offer of settlement from CSA-Iowa, CSA-IB, and Lee D. Amundson, the CFTC found that from mid-1993 through mid-1995, those respondents violated the anti-fraud provisions of the Commodity Exchange Act (CEA) in their market consulting and advisory services to agricultural producers in Nebraska (see CFTC News Release #4182-98, August 25, 1998).
Specifically, the CFTC order found that they recommended that Nebraska clients use so-called hedge-to-arrive contracts (HTAs) that permitted rolling between crop years, and fraudulently represented to Nebraska clients that their strategies concerning such contracts were risk-free due to the ability to "roll out" of a losing HTA position during unfavorable market conditions. The CFTC order also found that those respondents failed to disclose the material risks that: 1) the futures market might move so adversely that the producer might not be able to "roll out" of the HTAs profitably; and 2) in a period of rising prices, the contracting elevator might not be willing or financially able to permit producers to roll indefinitely.
# # #