• NOTICE OF DISCIPLINARY ACTION

      • #
      • CBOT-15-0089-BC
      • Effective Date
      • 25 May 2018
    • FILE NO.:

      CBOT 15-0089-BC

      MEMBER:

      Thomas Lindstrom

      CBOT RULE VIOLATIONS:

      Rule 432. General Offenses (in part)

      It shall be an offense:

      B.1. to engage in fraud or bad faith;

      Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;

      T. to engage in dishonorable or uncommercial conduct.

      FINDINGS:

      Pursuant to an offer of settlement in which Thomas Lindstrom (“Lindstrom”) neither admitted nor denied the rule violations upon which the penalty is based, on May 23, 2018, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that between August 1, 2014, and January 27, 2015, Lindstrom purchased 1,751,932 deep out-of-the-money options on 10-Year T-Note futures contracts. Lindstrom established a pattern of trading activity in which he purchased these options, which had the effect of artificially inflating the value of the account and, in turn, avoiding maintenance margin beyond what his employer imposed upon his trading account. When marked to market, these options were valued well below one tick, and consequently such purchases created temporary theoretical profit until the option expired. Lindstrom’s trading in this manner hid losses from his employer.

      The Panel concluded that Lindstrom thereby violated CBOT Rules 432.B.1., 432.Q., and 432.T.

      PENALTY:

      In accordance with the settlement offer, the Panel permanently barred Lindstrom from accessing any CME Group Inc. trading floor and all direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc. and from having any business affiliation with, being employed by or having a financial or beneficial interest in a Member or broker association.

      EFFECTIVE DATE:

      May 25, 2018