CME RULE VIOLATIONS:
Rule 432 GENERAL OFFENSES
It shall be an offense:
B. to engage in fraud, bad faith or in conduct or proceedings
inconsistent with just and equitable principles of trade;
C. to engage in dishonorable or uncommercial conduct;
G. to prearrange the execution of transactions in Exchange products for
the purpose of transferring equity between accounts;
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.
Pursuant to an offer of settlement in which Umar Ali (“Ali”) neither admitted nor denied the rule violations upon which the penalty is based, on August 2, 2012, a panel of the CME Business Conduct Committee (the “Panel”) found that between at least September 2009 and October 2010 (“Relevant Period”) Ali, acting as a full CME member floor clerk for a CME member trader (“the Member”) in the Lean Hogs futures pit, executed numerous unauthorized noncompetitive round-turn transactions over the CME Globex electronic trading platform for an account owned by the Member opposite his personal trading account, for the purpose of moving money from the Member’s account to Ali’s personal account. In so doing, Ali violated CME Rules 432.G. and 432.C.
The Panel further found that, during the Relevant Period, Ali knowingly and intentionally engaged in a scheme whereby he fraudulently allocated unfavorably priced trades executed for his personal account to a trading account owned by the Member. In particular Ali allocated unfavorably priced Lean Hog futures trades to the Member’s account by requesting the change via the clearing firm. Ali attempted to conceal the allocated trades by entering unauthorized offsetting transactions in the Member’s account. In so doing, Ali violated CME Rules 432.B., 432.C. and 432.Q.
The Panel found that as a result of this scheme, Ali caused losses of not less than $267,000.
In accordance with the settlement offer, the Panel ordered Ali to: (i) pay a fine of $100,000; (ii) pay restitution of $267,050; and (iii) serve a 25 year bar from (1) applying for membership at any exchange owned, controlled, or operated by CME Group Inc., (2) affiliating with any exchange Member, as defined in CME Rule 400, related to business conducted on or subject to the rules of the Exchange, and (3) directly or indirectly accessing, placing orders, or executing trades on any trading or clearing platform owned, controlled, or operated by CME Group Inc., including, but not limited to, the CME Globex electronic trading platform.
August 6, 2012
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