CME RULE VIOLATIONS:
Rule 530. PRIORITY OF CUSTOMERS’ ORDERS
A member shall not buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority when he is in possession of an executable order for another person to buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option in the same product, regardless of the venue of execution. All contract months in a given futures product and all options on the futures product, in addition to any corresponding alternative sized (mini or micro) futures or options contracts on a given product, shall be considered the same product for the purposes of this rule.
Rule 531.A. Trading Against Orders Prohibited – General Prohibition
No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order for his personal account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority.
Pursuant to an offer of settlement in which Mark Hohman neither admitted nor denied the rule violations upon which the penalty is based, on August 18, 2011, a Panel of the CME Business Conduct Committee found that on thirty-one occasions between March 6 and November 26, 2008, while acting as a broker in the British Pound futures pit, Hohman executed customer orders and then shortly thereafter sold or bought back for his personal account a smaller quantity of the same product with the same expiration month at the same price as the customer order opposite the same local trader with whom he had just executed all or a portion of the customer order opposite. This allowed Hohman to indirectly take the opposite side of the customer orders. The Panel concluded that in so doing, Hohman violated CME Rule 531.
The Panel further found that on three occasions between July 2 and November 12, 2008, Hohman executed transactions on the CME Globex electronic trading platform for his personal account on the same side of the market as executable customer orders in his possession. The Panel concluded that in so doing, Hohman violated CME Rule 530.
In accordance with the settlement offer, the Panel ordered Hohman to pay a fine of $20,000, which includes disgorgement of profits Hohman realized. The Panel also barred Hohman for a period of two years from reapplying for membership, accessing the trading floor, and directly or indirectly accessing any electronic trading or clearing platform owned or controlled by CME Group, including CME Globex. The bar described above begins on the effective date below and continues through and includes August 22, 2013.
August 22, 2011
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