John T. Berg
CBOT RULE VIOLATION:
Rule 534 Wash Trades Prohibited
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
Pursuant to an offer of settlement in which John T. Berg (“Berg”) neither admitted nor denied the rule violation upon which the penalty is based, on May 27, 2015, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that it had jurisdiction over Berg pursuant to CBOT Rules 400 and 402 as the conduct occurred while Berg was a CBOT member, and that on 13 days between March 27, 2012, and February 25, 2014, Berg executed 39 wash trades totaling 1,324 Soybean and Wheat options on futures contracts on Globex . The matching buy and sell orders were entered with the knowledge and intent that the orders would match opposite one another. The purpose of these transactions was to move positions between his accounts. The Panel concluded that Berg thereby violated CBOT Rule 534.
In accordance with the settlement offer, the Panel ordered Berg to pay a fine of $25,000 and suspended Berg from all direct access to any trading floor or electronic trading or clearing platform owned or controlled by CME Group, including Globex, for a period of 10 business days, beginning on the effective date below and continuing through and including June 10, 2015.
May 29, 2015
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