GELBER GROUP LLC
CME RULE VIOLATION:
Rule 432. GENERAL OFFENSES
It shall be an offense:
T. to engage in….uncommercial conduct.
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business related to the Exchange.
Pursuant to an offer of settlement in which Gelber Group LLC neither admitted nor denied the rule violations upon which the penalty is based, on November 15, 2011, a Panel of the CME Business Conduct Committee found that between January 11, 2010, and February 16, 2010, a Gelber proprietary trader entered E-mini Nasdaq 100 futures orders on CME Globex during the pre-opening state from which an Indicative Opening Price (“IOP”) is calculated that were not entered in good faith for the purpose of executing bona fide transactions once the market opened.  In a pattern of instances spanning several trade dates during this time period, orders were entered and eventually cancelled immediately prior to the lockdown period. As a result, this activity caused fluctuation in the publicly displayed pre-opening equilibrium price which otherwise would not have occurred.
Gelber did not adequately supervise its trader to prevent the non-bona fide order entry and order cancellation in the pre-opening state.
The Panel found that in so doing, Gelber violated CME Rules 432.T. and 432.W.
In accordance with the settlement offer and in consideration of other factors, including the cooperation provided to Exchange staff by Gelber, the Panel fined Gelber $75,000.
November 17, 2011
 Legacy Market Regulation Advisory Notice # RA1001-5 (“Improper Conduct with Respect to Pre-Opening Orders Entered on CME Globex”) (dated January 11, 2010) provided, in relevant part, that “[A]ll orders entered on Globex during the pre-opening are expected to be entered in good faith for the purpose of executing bona fide transactions.” Legacy Market Regulation Advisory Notice # RA1001-5 has been superseded by Market Regulation Advisory Notice # RA1103-5 (dated September 20, 2011).
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