Dennis Davoren (BZZ)
CME RULE VIOLATIONS:
Rule 432.D. General Offenses
It shall be an offense to create or report a false or fictitious trade.
Rule 534. Wash Sales 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 Dennis Davoren neither admitted nor denied the rule violations upon which the penalty is based, on April 7, 2011, a Panel of the CME Business Conduct Committee found that on 52 trade dates between January 1 and December 31, 2008, while in the British Pound futures pit, Davoren and Brian Davoren executed 58 round-turn transactions sets in various British Pound futures contracts opposite one another. These transactions consisted of an initiating transaction opposite one another, which was executed openly and competitively in the pit, immediately followed by a liquidating transaction opposite one another, which was also executed openly and competitively in the pit. While each part of the round-turn transaction matched in quantity, the transactions typically consisted of one contract, and exceeded three contracts only on two occasions. The trades were executed for the sole purpose of creating an appearance of trading activity in the pit in the hope of attracting British Pound futures orders from the marketplace. The transactions were not executed with the intent to take bona fide market positions. The Panel found that, by engaging in this conduct, Davoren violated CME Rules 432.D. and 534.
In accordance with the settlement offer, the Panel ordered Davoren to cease and desist from the conduct found to be in violation of CME Rules 432.D. and 534.
April 19, 2011
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