1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

1 

Benjamin E. Sedrish 

Ashley J. Burden

Allison V. Passman 

Commodity Futures Trading Commission

525 W. Monroe St., Ste. 1100

Chicago, IL 60661

Tel. (312) 596-0700

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF WASHINGTON

 ) 

COMMODITY FUTURES TRADING ) 

COMMISSION, ) Case No.: 4:21-cv-5050

 ) 

Plaintiff, ) COMPLAINT FOR

 ) INJUNCTIVE RELIEF, 

 vs. ) CIVIL MONETARY 

 ) PENALTIES, AND OTHER 

CODY EASTERDAY, EASTERDAY ) EQUITABLE RELIEF 

RANCHES, INC., ) 

 ) JURY TRIAL REQUESTED 

 Defendants. ) 

____________________________________)

Plaintiff Commodity Futures Trading Commission (“Commission” or 

“CFTC”), an independent federal agency, alleges as follows:

SUMMARY

1. For more than 10 years, Defendant Cody Easterday accumulated 

staggering losses speculatively trading in the cattle futures markets, ultimately 

amassing more than $200 million in losses in his personal and corporate accounts. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.1 Page 1 of 24

I. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

2

To meet margin calls, Easterday concocted a scheme to defraud one of his biggest 

business partners.

2. Beginning in or before October 1, 2016 and continuing to at least 

December 1, 2020 (“Relevant Period”), Defendants Easterday Ranches, Inc. 

(“Easterday Ranches”) and Cody Easterday operated a scheme to defraud a producer 

of beef and pork products (“Producer”) out of more than $233 million by submitting 

to the Producer fabricated invoices for reimbursement for cattle that Easterday 

Ranches had agreed to purchase and care for on behalf of the Producer. 

3. In or around November 2020, Cody Easterday admitted to a Producer 

representative that he had caused Easterday Ranches to submit invoices to the 

Producer for cattle that never existed, and that he did so to generate money to cover 

millions of dollars of losses he and Easterday Ranches incurred while engaging in 

speculative trading in the cattle and corn futures markets. 

4. In furtherance of the fraud, in at least 2017 and 2018, Easterday caused 

Easterday Ranches to submit false cattle inventory, purchase, and sales figures to the 

Chicago Mercantile Exchange (“CME”) in two hedge exemption applications to 

seek permission to exceed the exchange’s speculative position limits and avoid 

disciplinary action. 

5. Because Easterday Ranches was not entitled to any hedge exemptions 

as a result of the false information in its hedge exemption applications, Easterday 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.2 Page 2 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

3

Ranches, through Easterday’s actions, violated CME’s position limits in 2017 and 

2018.

6. Easterday also admitted to the fraud and false statements to the CME to 

the Department of Justice in or about March 2021. 

7. By engaging in the conduct summarized above, Defendants violated the 

Commodity Exchange Act (“Act”), 7 U.S.C. §§ 1–26 (2018), and accompanying 

regulations (“Regulations”), 17 C.F.R. pts. 1–190 (2020). Namely, by this conduct 

and further conduct described below, Defendants have engaged in acts and practices 

in violation of the following:

a. Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2018), and Regulation 

180.1(a)(1)–(3), 17 C.F.R. § 180.1(a)(1)–(3) (2020), which prohibit 

fraud in connection with commodity transactions; 

b. Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4) (2018), which prohibits 

false statements to entities registered under the Act; and

c. Section 4a(e) of the Act, 7 U.S.C. § 6a(e) (2018), which prohibits 

exceeding position limits established by exchanges. 

8. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 

(2018), the Commission brings this action to enjoin Defendants’ unlawful acts and 

practices and to compel Defendants’ compliance with the Act and Regulations.

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.3 Page 3 of 24
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

4 

9. In addition, the Commission seeks civil monetary penalties and 

remedial ancillary relief, including, but not limited to, trading and registration bans, 

restitution, disgorgement, pre- and post-judgment interest, and such other relief as 

the Court may deem necessary and appropriate.

JURISDICTION AND VENUE

10. This Court has jurisdiction over this action under 28 U.S.C. § 1331 

(2018) (federal question jurisdiction) and 28 U.S.C. § 1345 (2018) (district courts 

have original jurisdiction over civil actions commenced by the United States or by 

any agency expressly authorized to sue by Act of Congress). Section 6c(a) of the 

Act, 7 U.S.C. § 13a-1(a) (2018), authorizes the Commission to seek injunctive relief 

against any person whenever it shall appear that such person has engaged, is 

engaging, or is about to engage in any act or practice that violates any provision of 

the Act or any rule, regulation, or order promulgated thereunder. 

11. Venue properly lies with this Court pursuant to 7 U.S.C. § 13a-1(e) 

because Defendants are found in and inhabit the Eastern District of Washington, 

Defendants transacted business in this District, and the acts and practices in 

violation of the Act and Regulations occurred within this District, among other 

places.

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.4 Page 4 of 24

II. 
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

5 

PARTIES

12. Plaintiff Commodity Futures Trading Commission is the 

independent federal regulatory agency charged with the administration and 

enforcement of the Commodity Exchange Act and Regulations promulgated 

thereunder.

13. Defendant Cody Easterday is an individual who, during the Relevant 

Period, was a co-owner and co-manager of Easterday Ranches. On information and 

belief, Cody Easterday resides in Mesa, Washington. Easterday has never been 

registered with the Commission. 

14. Defendant Easterday Ranches, Inc. is a Washington corporation with 

its principal place of business in Pasco, Washington. Easterday Ranches filed for 

bankruptcy protection on February 1, 2021. Easterday Ranches has never been 

registered with the Commission in any capacity.

FACTS

A. The Producer and Easterday Ranches’ Business Relationship

15. The Producer is part of a family of companies that together constitute 

one of the largest food suppliers in the world. The Producer, which is headquartered 

in South Dakota, operates a beef processing plant in Pasco, Washington.

16. Dating back to at least 2010, Easterday Ranches entered into a series of 

cattle feeding agreements with the Producer, pursuant to which Easterday Ranches 

would purchase and fatten cattle for delivery to the Producer. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.5 Page 5 of 24

III. 

IV. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

6

17. For almost all of the Relevant Period, the business relationship between 

the Producer and Easterday Ranches was governed by a February 20, 2017 Cattle 

Feeding Agreement (“Agreement”), under which Easterday Ranches agreed to 

procure or care for up to 145,000 to 180,500 head of cattle per year for the Producer. 

Pursuant to an August 20, 2020 amendment, the Agreement’s term was extended 

through August 20, 2021.

18. Cody Easterday, as President of Easterday Ranches, signed both the 

Agreement and the August 2020 amendment thereto.

19. Cody Easterday also signed a personal guaranty of the Agreement, 

“unconditionally, irrevocably, and absolutely guarantee[ing], as primary obligor[] 

and not as suret[y], the full and timely payment, performance, and satisfaction by 

EASTERDAY RANCHES, INC. of all their obligations to [the Producer] pursuant 

to the terms of this agreement.”

20. Under the Agreement, Easterday Ranches agreed to purchase, feed, and 

manage the purchased cattle “to an acceptable finished weight,” at which point the 

cattle would be delivered to the Producer’s Pasco, Washington plant for slaughter. 

Until delivery, Easterday Ranches was entitled to reimbursement for the initial 

purchase price, plus periodic reimbursement for certain “grow costs” according to a 

procedure set forth in the Agreement whereby Easterday Ranches would bill the 

Producer twice monthly for such costs. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.6 Page 6 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

7

21. Upon delivery of the fattened cattle, Easterday Ranches would be 

reimbursed pursuant to compensation according to schedule set forth in the 

Agreement.

B. Cody Easterday Admits to Defrauding the Producer

22. At all relevant times, Easterday and Easterday Ranches each 

maintained futures trading accounts that traded livestock and grain futures. 

Easterday controlled the futures trading in the trading accounts in his name and in 

Easterday Ranches’ name.

23. For more than 10 years, Easterday engaged in speculative trading in the 

cattle futures markets in Easterday Ranches’ corporate accounts and his personal 

trading accounts. His trading resulted in millions of dollars of losses every year, 

ultimately totaling more than $200 million. The vast majority of those trading 

losses occurred in the corporate accounts. To cover margin calls, Easterday devised 

a scheme to defraud the Producer.

24. Beginning in or around October 2016, Easterday knowingly and 

intentionally prepared false invoices and caused Easterday Ranches to submit them 

to the Producer for the purpose of deceiving the Producer. Using these false 

invoices, Easterday intended to induce the Producer to pay for both purchases and 

grow costs of more than 200,000 “ghost cattle” that Easterday Ranches had never 

actually purchased or cared for. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.7 Page 7 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

8

25. These false invoices were submitted by Easterday Ranches from its 

Pasco, Washington offices to the Producer’s headquarters in South Dakota, where 

an employee would review and then approve the false invoices for reimbursement.

26. Given the parties’ long business relationship, the Producer justifiably 

relied on the invoices submitted by Easterday Ranches and paid Easterday Ranches 

more than $233 million to which it was not entitled. The Producer never took 

delivery of the 200,000 ghost cattle for which it had reimbursed Easterday Ranches.

27. Easterday admitted to this fraudulent scheme in or around November 

2020 when confronted by a Producer representative with evidence of the fraud. 

Easterday further admitted to the fraud in or around March 2021 to the Department 

of Justice. Easterday acknowledged that he engaged in the fraudulent scheme to 

cover losses he incurred engaging in speculative trading in the cattle and corn 

futures markets.

C. Defendants’ False Statements to CME

28. On or around October 16, 2017, a member of CME’s Market 

Regulation Department emailed Easterday Ranches’ futures commission merchant 

(“FCM”), noting that Easterday Ranches had carried short positions in feeder cattle 

futures that exceeded CME speculative position limits. According to the CME 

email, Easterday Ranches’ intraday high position in feeder cattle contracts on 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.8 Page 8 of 24
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

9 

October 13, 2017 was 329, or 29 contracts above the CME exchange-set position 

limit for feeder cattle.

29. This email stated that, if Easterday Ranches wanted to seek an 

exchange position limit exemption because its short position was being carried for 

hedging purposes, it would need to fill out applications detailing the physical 

exposure underlying the hedge positions.

30. In response to the CME email, on or around October 17, 2017, 

Easterday completed and signed on Easterday Ranches’ behalf a CME Group 

Application to Exceed Position Limits (the “2017 Application”). In the 2017 

Application, Easterday set forth the cattle inventory at Easterday Ranches as 

follows: 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.9 Page 9 of 24

ure he foUowl I tegorit!s far the p ous 12. rnCN'lths. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

10

31. Easterday described the Easterday Ranches hedging strategy as 

follows: “use live & feeder cattle futures to hedge live & feeder cattle inventory.”

32. The 2017 Application materially overstated Easterday Ranches’ actual 

cattle inventory, purchases, and sales.

33. Based upon the materially false and misleading information provided 

by Easterday, who was not engaged solely in bona fide hedging activities to hedge 

the represented cash risks of Easterday Ranches, on or around October 31, 2017, 

CME’s Market Regulation Department sent Easterday a letter noting that it had 

approved the 2017 Application and increased Easterday Ranches’ feeder cattle 

position limit.

34. On or around July 12, 2018, a member of CME Group’s Market 

Regulation Department emailed Easterday Ranches’ FCM, noting that Easterday 

Ranches had carried positions in live cattle futures that exceeded CME exchange-set 

position limits. According to the CME email, Easterday Ranches’ intraday futuresequivalent high position in live cattle contracts on July 11, 2018 was 6,426.645, or 

126.645 contracts above the CME exchange-set position limit for live cattle. 

35. This email noted that, if Easterday Ranches wanted to seek an 

exchange position limit exemption because its short position was being carried for 

hedging purposes, it would need to fill out applications detailing the physical 

exposure underlying the hedge positions.

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.10 Page 10 of 24
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

11 

36. In response, on or around July 12, 2018, Easterday completed and 

signed on Easterday Ranches’ behalf a CME Group Application to Exceed Position 

(the “2018 Application”). In the 2018 Application, Easterday set forth the following 

cattle inventory at Easterday Ranches:

37. Easterday described the Easterday Ranches hedging strategy as 

follows: “hedge live cattle inventory using mostly the front month contract as I feel 

the front month has the most potential weakness.”

38. The 2018 Application materially overstated Easterday Ranches’ actual 

cattle inventory, purchases, and sales.

39. Based upon the materially false and misleading information provided 

by Easterday, who was not engaged solely in bona fide hedging activities to hedge 

the represented cash risks of Easterday Ranches, on or around July 23, 2018, CME’s 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.11 Page 11 of 24

1. ,lease I st your cash e posur• th followln - cetegotles for the p evious 12 mon hs. 

Month Year 

Tot.al FilledPl'lc. 

nvento,:y PurdlHIS Purdtases 

1,D11 103 ,2,fs" 12~ ,,.--:-v I 

'l,Ll' 1 I ot.11 II. 32-'S"" I 1,3 Z-:- 11., 11 111,.-, - 1,01'1 /C>3Js~ 1'31'2. ~ 1311. 'S' I?.. ,J..J?.:r , i. 12r-

"Wr1 10tl,'5SO I t,boO ll,V> 11.~'J, JI, 2'1<" 

1.PJ1 Jod1J(Yi qg~IS'" 98Z~ ;e/111 10327 

"l; ., /0?,60~ 734~ 73y..; q&4'-1 'fS'-JL} 

Z.01 1011/a '--I 7/~7 7lb7 I l,"3Z '<i° Jl3Z~ 

ci,o;~ 9t.,q66 'l,17, 811~ q~l1~ ?~ ~ 

'1J;I 'l'Ji~ /'3,&7 ' I f.>7 7/<';'-f 76~ 

$1\ /07./Sr? ll,ti7C I I s.171.J fi2f" lgz2.t,if" /D1, b'2. /1, B,l(, ,3 Lf1 /0/Z<J /()JZ. 1" 0 .~Jff,__ ,,, .fJt-.1 /'l.,. S'Z.7 154& 11,4 
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

12 

Market Regulation Department sent Easterday a letter noting that it had approved 

the 2018 Application and increased Easterday Ranches’ live cattle exchange 

position limit.

40. Easterday has admitted to making false or misleading statements to the 

CME in connection with the 2017 and 2018 Applications. 

41. On at least October 13, 2017 and July 11, 2018, Easterday Ranches did 

not possess a valid hedge exemption permitting it to exceed applicable CME 

speculative position limits in feeder and live cattle futures, respectively.

VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND 

COMMISSION REGULATIONS

COUNT ONE

Violations of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2018), and Regulation 

180.1(a)(1)–(3), 17 C.F.R. § 180.1(a)(1)–(3) (2020)

Fraud in Connection with Contract for Sale or Purchase of Commodities 

in Interstate Commerce

42. The allegations set forth in Paragraphs 15–41 above are realleged and 

incorporated herein by reference.

43. Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), makes it unlawful for any 

person, directly or indirectly, to:

[U]se or employ, or attempt to use or employ, in connection 

with ay swap, or a contract of sale of any commodity in 

interstate commerce, or for future delivery on or subject to 

the rules of any registered entity, any manipulative or 

deceptive device or contrivance, in contravention of such 

rules and regulations as the Commission shall promulgate 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.12 Page 12 of 24

V. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

13

by not later than 1 year after [July 1, 2010, the date of 

enactment of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act] . . . . 

44. Regulation 180.1(a), 17 C.F.R. § 180.1(a), provides in part:

It shall be unlawful for any person, directly or indirectly, in 

connection with any swap, or contract of sale of any 

commodity in interstate commerce, or contract for future 

delivery on or subject to the rules of any registered entity, 

to intentionally or recklessly:

(1)Use or employ, or attempt to use or employ, any 

manipulative device, scheme, or artifice to defraud;

(2)Make, or attempt to make, any untrue or misleading 

statement of a material fact or to omit to state a material 

fact necessary in order to make the statements made not 

untrue or misleading;

(3)Engage, or attempt to engage, in any act, practice, or 

course of business, which operates or would operate as 

a fraud or deceit upon any person . . . .

45. Cattle are “livestock” and therefore commodities under Section 1a(9) of 

the Act, 7 U.S.C. § 1a(9) (2018). 

46. From at least October 2016 through November 2020, as set forth in 

Paragraphs 15–41 above, Defendants violated 7 U.S.C. § 9(1) and 17 C.F.R. 

§ 180.l(a)(1)–(3) by, among other things, in connection with the sale of commodities 

in interstate commerce, submitting to the Producer fraudulent invoices for more than 

200,000 head of cattle and receiving reimbursement for the purchase price and grow 

costs associated with them. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.13 Page 13 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

14

47. In at least 2017 and 2018, as described in Paragraphs 28–41 above, 

Defendants violated 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)–(3) by submitting 

to the CME false or misleading statements in hedge exemption applications 

concerning Easterday Ranches cattle inventory, purchases, and sales to avoid 

disciplinary action and scrutiny from the exchange. 

48. Defendants engaged in the acts and practices described above 

intentionally or recklessly.

49. By this conduct, Defendants violated 7 U.S.C. § 9(1) and 17 C.F.R. 

§ 180.l(a)(1)–(3).

50. Each act of: (a) using or employing, or attempting to use or employ, a 

manipulative device, scheme, or artifice to defraud; (b) making, or attempting to 

make, untrue or misleading statements of material fact, or omitting to state material 

facts necessary to make the statements not untrue or misleading; and (c) engaging, 

or attempting to engage, in any act, practice, or course of business, which operated 

or would operate as a fraud or deceit upon any person, including but not limited to 

those specifically alleged herein, is alleged as a separate and distinct violation of 

7 U.S.C. § 9(1) and 17 C.F.R. § 180.l(a)(1)–(3).

51. As set forth in Paragraphs 15–41 above, Easterday violated 7 U.S.C. 

§ 9(1) and 17 C.F.R. § 180.l(a)(1)–(3) within the scope of his employment, office or 

agency with Easterday Ranches. Easterday Ranches is therefore liable as a principal 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.14 Page 14 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

15

for Easterday’s acts, omissions, and failures constituting violations of 7 U.S.C. 

§ 9(1) and 17 C.F.R. § 180.l(a)(1)–(3) pursuant to Section 2(a)(1)(B) of the Act, 

7 U.S.C. § 2(a)(1)(B) (2018), and Regulation 1.2, 17 C.F.R. § 1.2 (2020).

52. As set forth in Paragraphs 13–41 above, Easterday controlled Easterday 

Ranches during the Relevant Period. Easterday failed to act in good faith and/or 

knowingly induced Easterday Ranches’ violations alleged herein during that time 

period. Easterday is therefore liable for Easterday Ranches’ violations as a 

controlling person pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b) (2018). 

Therefore, Easterday is liable directly and as a control person of Easterday Ranches. 

COUNT TWO

Violations of Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4) (2018)

False Statements to a Registered Entity

53. The allegations set forth in Paragraphs 15–41 above are realleged and 

incorporated herein by reference.

54. Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4) (2018), makes it 

unlawful for any person “willfully to . . . make any false, fictitious, or fraudulent 

statements or representations . . . to a registered entity, board of trade, . . . or futures 

association designated or registered under [the Act] acting in furtherance of its 

official duties under [the Act].” 

55. CME is a registered entity under Section 1a(40)(A) of the Act, 7 U.S.C. 

§ 1a(40)(A) (2018).

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.15 Page 15 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

16

56. In at least 2017 and 2018, Defendants submitted inaccurate applications 

for position limit exemptions by:

a. Submitting to CME, on or around October 19, 2017, an application 

to exceed CME feeder cattle position limits that substantially and 

materially overstated Easterday Ranches’ cattle inventory, 

purchases, and sales; and

b. Submitting to CME, on or around July 12, 2018, an application to 

exceed CME live cattle position limits that substantially and 

materially overstated Easterday Ranches’ cattle inventory, 

purchases, and sales.

57. In requesting, receiving, reviewing, and granting the 2017 Application 

and the 2018 Application, the CME was acting in furtherance of its official duties 

under the Act.

58. Each act of making a false, fictitious, or fraudulent statement or 

representation to a registered entity, board of trade, or futures association designated 

or registered under the Act or acting in furtherance of its official duties under the 

Act is alleged as a separate and distinct violation of 7 U.S.C. § 13(a)(4).

59. As set forth in Paragraphs 13–41 above, Easterday violated 7 U.S.C. 

§ 13(a)(4) within the scope of his employment, office, or agency with Easterday 

Ranches. Easterday Ranches is therefore liable for Easterday’s acts, omissions, and 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.16 Page 16 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

17

failures constituting violations of 7 U.S.C. § 13(a)(4) pursuant to 7 U.S.C. 

§ 2(a)(1)(B) and 17 C.F.R. § 1.2.

60. As set forth in Paragraphs 13–41 above, Easterday controlled Easterday 

Ranches during the Relevant Period. Easterday failed to act in good faith and/or 

knowingly induced Easterday Ranches’ violations alleged herein during that time 

period. Easterday is therefore liable for Easterday Ranches’ violations as a 

controlling person pursuant to 7 U.S.C. § 13c(b). Therefore, Easterday is liable 

directly and as a control person of Easterday Ranches. 

COUNT THREE

Violations of Section 4a(e) of the Act, 7 U.S.C. § 6a(e) (2018)

Exceeding CME Position Limits for Live and Feeder Cattle Futures Contracts

61. The allegations set forth in Paragraphs 15–41 above are realleged and 

incorporated herein by reference.

62. Section 4a(e) of the Act, 7 U.S.C. § 6a(e) (2018), makes it unlawful 

“for any person to violate any bylaw, rule, regulation, or resolution of any contract 

market, derivatives transaction execution facility, or other board of trade licensed, 

designated, or registered by the Commission or electronic trading facility with 

respect to a significant price discovery contract fixing limits on the amount of 

trading which may be done or positions which may be held by any person under 

contracts of sale of any commodity for future delivery or under options on such 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.17 Page 17 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

18

contracts or commodities, if such bylaw, rule, regulation, or resolution has been 

approved by the Commission or certified by a registered entity.” 

63. CME is a registered entity under Section 1a(40)(A) of the Act, 7 U.S.C. 

§ 1a(40)(A) (2018), and a designated contract market for trading live cattle futures 

contracts and feeder cattle futures contracts pursuant to Section 5 of the Act, 

7 U.S.C. § 7 (2018).

64. Under CME Rule 562, “[a]ny positions, including positions established 

intraday, in excess of those permitted under the rules of the Exchange shall be 

deemed position limit violations.”

65. CME Rules 10202.E and 559 in effect for the October 2017 feeder 

cattle futures contracts imposed an initial spot month position limit of 300 contracts 

long or short. The CFTC approved the spot month limit.

66. On or around October 13, 2017, Easterday Ranches’ intraday high 

position in feeder cattle futures was 329 contracts, or 29 contracts above the CME 

exchange-set position limit for feeder cattle.

67. CME Rules 10102.E and 559 in effect for the August 2018 live cattle 

futures contracts imposed a single-month position limit of 6,300 contracts long or 

short. The CFTC approved the single-month limit.

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.18 Page 18 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

19

68. On or around July 11, 2018, Easterday Ranches’ intraday high futuresequivalent position in live cattle futures was 6,426.645 contracts, or 126.645 

contracts above the CME exchange-set single-month position limit for live cattle.

69. CME Rule 559 states that to obtain an exemption from position limits, 

a person must, inter alia, “[p]rovide a complete and accurate explanation of the 

underlying exposure related to the exemption request,” and “[a]gree to promptly 

submit a supplemental statement to the Market Regulation Department whenever 

there is a material change to the information provided in the most recent 

application.”

70. As alleged in Paragraphs 15–41, Defendants submitted inaccurate, 

false, fictitious, or fraudulent information in connection with the 2017 Application 

and 2018 Application by overstating Easterday Ranches’ cattle inventory, 

purchases, and sales.

71. By submitting materially inaccurate, false, fictitious, or fraudulent 

statements in connection with the 2017 Application and the 2018 Application, 

Defendants violated CME Rule 559.

72. Because the exemptions from position limits granted by the CME in 

2017 and 2018 were based on inaccurate, false, fictitious, or fraudulent statements 

submitted by Defendants, those exemptions were not valid. 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.19 Page 19 of 24
1 

 2 

 3 

 4 

 5 

 6 

 7 

 8 

 9 

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

20 

73. Because the exemptions from position limits granted by CME in 2017 

and 2018 were not valid, Easterday Ranches violated CME position limits for feeder 

cattle in 2017 and live cattle in 2018. 

74. Each act of exceeding CME’s position limits including, but not limited 

to, those specifically alleged herein, constitutes a separate violation of Section 4a(e) 

of the Act.

75. As set forth in Paragraphs 13–41 above, Easterday controlled Easterday 

Ranches during the Relevant Period. Easterday failed to act in good faith and/or 

knowingly induced Easterday Ranches’ violations alleged herein during that time 

period. Easterday is therefore liable for Easterday Ranches’ violations of Section 

4a(e) as a controlling person pursuant to 7 U.S.C. § 13c(b). 

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that this Court, as 

authorized by Section 6c of the Act, 7 U.S.C. § 13a-1 (2018), and pursuant to the 

Court’s own equitable powers:

A. Find that Defendants Cody Easterday and Easterday Ranches 

violated Sections 4a(e), 6(c)(1), and 9(a)(4) of the Act, 7 U.S.C. §§ 6a(e), 9(1), 

and 13(a)(4) (2018), and Regulation 180.1(a)(1)–(3), 17 C.F.R. § 180.1(a)(1)–(3) 

(2020);

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.20 Page 20 of 24

VI. 
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

21

B. Enter an order of permanent injunction enjoining Defendants, their 

affiliates, agents, servants, employees, successors, assigns, attorneys, and all 

persons in active concert with them, who receives actual notice of such order by 

personal service or otherwise, from engaging in the conduct described above, in 

violation of 7 U.S.C. §§ 6a(e), 9(1), and 13(a)(4) and 17 C.F.R. § 180.1(a)(1)–

(3);

C. Enter an order of permanent injunction prohibiting Defendant Cody 

Easterday and any of his affiliates, agents, servants, employees, assigns, 

attorneys, and persons in active concert or participation with him, from directly 

or indirectly:

i. Trading on or subject to the rules of any registered entity (as that 

term is defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40) 

(2018));

ii. Entering into any transactions involving “commodity interests” (as 

that term is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2020)) for 

accounts held in the name of any Defendants or for accounts in 

which any Defendant has a direct or indirect interest;

iii. Having any commodity interests, traded on any Defendant’s 

behalf;

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.21 Page 21 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

22

iv. Controlling or directing the trading for or on behalf of any other 

person or entity, whether by power of attorney or otherwise, in any 

account involving commodity interests;

v. Soliciting, receiving, or accepting any funds from any person for 

the purpose of purchasing or selling any commodity interests;

vi. Applying for registration or claiming exemption from registration 

with the Commission in any capacity, and engaging in any activity 

requiring such registration or exemption from registration with the 

Commission, except as provided for in Regulation 4.14(a)(9), 

17 C.F.R. § 4.14(a)(9) (2020); and

vii. Acting as a principal (as that term is defined in Regulation 3.1(a), 

17 C.F.R. § 3.1(a) (2020)), agent, or any other officer or employee 

of any person registered, exempted from registration, or required 

to be registered with the Commission except as provided for in 

17 C.F.R. § 4.14(a)(9).

D. Enter an order directing Defendants, as well as any third-party 

transferee and/or successors thereof, to disgorge, pursuant to such procedure as the 

Court may order, all benefits received including, but not limited to, salaries, 

commissions, loans, fees, revenues, real and personal property and trading profits 

derived, directly or indirectly, from acts or practices which constitute violations of 

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.22 Page 22 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

23

the Act and the Regulations as described herein, including pre- and post-judgment 

interest;

E. Enter an order requiring Defendants, as well as any successors thereof, 

to make full restitution to every person or entity whose funds Defendants received or 

caused another person or entity to receive as a result of acts and practices that 

constituted violations of the Act and the Regulations, as described herein, and preand post-judgment interest;

F. Enter an order directing Defendants to pay a civil monetary penalty, 

assessed by the Court, in an amount not to exceed the penalty prescribed by Section 

6c(d)(1) of the Act, 7 U.S.C. § 13a-1(d)(1) (2018), as adjusted for inflation pursuant 

to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, 

Pub. L. 114–74, 129 Stat. 584 (2015), tit. VII, § 701, 129 Stat. 584. 599–600, see 

Regulation 143.8, 17 C.F.R. § 143.8 (2020), for each violation of the Act and 

Regulations, as described herein;

G. Enter an order requiring Defendants to pay costs and fees as permitted 

by 28 U.S.C. §§ 1920 and 2412(a)(2) (2018); and

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.23 Page 23 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL MONETARY PENALTIES, AND OTHER 

EQUITABLE RELIEF

24

H. Enter an Order providing such other and further relief as this Court may 

deem necessary and appropriate under the circumstances.

Dated: March 31, 2021 Respectfully submitted,

/s/ Benjamin E. Sedrish

Benjamin E. Sedrish 

Ashley J. Burden

Allison V. Passman

Commodity Futures Trading Commission

525 W. Monroe St., Ste. 1100

Chicago, IL 60661

Tel. (312) 596-0700

Fac. (312) 596-0714

bsedrish@cftc.gov

aburden@cftc.gov

apassman@cftc.gov

Case 4:21-cv-05050 ECF No. 1 filed 03/31/21 PageID.24 Page 24 of 24