Hillary Rodham cattle futures controversy

In 1978 and 1979, lawyer and First Lady of Arkansas Hillary Rodham Clinton engaged in a series of trades of cattle futures contracts. Her initial $1,000 investment had generated nearly $100,000 when she stopped trading after ten months. In 1994, after Clinton had become First Lady of the United States, the trading became the subject of considerable controversy regarding the likelihood of such a spectacular rate of return, possible conflict of interest, and allegations of disguised bribery.

Clinton had no experience in such financial instruments.Bill Clinton's salary as Arkansas Attorney General and then Governor of Arkansas was modest and Clinton later said she had been interested in building a financial cushion for the future. The Clintons' combined income in 1978 from the governorship and Rose Law Firm amounted to $51,173, equivalent to $187,900 in 2016 (by whos metric?]. James Blair was a friend, lawyer, outside counsel to Tyson Foods, Arkansas' largest employer, and had been doing so well trading commodities futures that he encouraged friends and family to enter the market too. Blair in turn traded through, and relied upon cattle markets expertise from, broker Robert L. "Red" Bone of Refco, a former Tyson executive and professional poker player who was a World Series of Poker semifinalist. In October 1978, when Bill Clinton was Attorney General and on the verge of being elected Governor, Clinton opened a trading account, although Blair made most of the trades.

By January 1979, Clinton was up $26,000; but later, she would lose $16,000 in a single trade. At one point she owed in excess of $100,000 to Refco as part of covering losses, but no margin calls were made by Refco against her. Near the end of the trading, Blair correctly sold short and gave her a $40,000 gain in one afternoon. In July 1979, once she became pregnant with Chelsea Clinton, "I lost my nerve for gambling [and] walked away from the table $100,000 ahead." She briefly traded sugar futures contracts and other non-cattle commodities in October 1979, but more conservatively, through Stephens Inc. During this period she made about $6,500 in gains (which she failed to pay taxes on at the time, consequently later paying some $14,600 in federal and state tax penalties in the 1990s). Once her daughter was born in February 1980, she moved all her commodities gains into U.S. Treasury Bonds.

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