CME RULE VIOLATIONS:
Rule 432 (“General Offenses”) (in part):
It shall be an offense:
B. 1. to engage in fraud or bad faith;
C. to engage in dishonest conduct;
G. to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.
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.
On April 3, 2014, a Panel of the Chicago Mercantile Exchange (“CME”) Probable Cause Committee (“PCC”) charged non-member Kashif Siddiqui with violating CME Rules 432.B.1., 432.C., 432.G., and 534., based on allegations that between July 25, 2011, and August 25, 2011, Siddiqui orchestrated and prearranged several round-turn transactions in the New Zealand Dollar futures market in order to transfer $64,930 from another non-member’s account to his own account, and that during March through July 2011 Siddiqui placed buy and sell orders in the same Equity and FX futures and options on futures products and expiration months where Siddiqui knew or reasonably should have known that the purpose of the buy and sell orders was to avoid taking a bona fide market position exposed to market risk.
On September 25, 2014, a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) entered an order finding that Siddiqui failed to answer the charges issued against him. In failing to answer the charges, the Hearing Panel Chair further ordered that Siddiqui was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
Pursuant to CME Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on October 9, 2014. The Panel found Siddiqui guilty of committing the admitted charges.
Based on the record and the Panel’s findings and conclusions, the Panel barred Siddiqui permanently from (1) membership and privileges at any CME Group Exchange, (2) direct or indirect access and use of any CME Group trading floor, electronic trading platform or clearing platform owned or operated by any CME Group exchange, and (3) affiliation with, employment by, or association with a Member (as this term is defined in Rule 400) or affiliate of a Member of any CME Group exchange.
November 11, 2014
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