CME RULE VIOLATIONS:
Rule 432. General Offenses
It shall be an offense:
B. 1. To engage in fraud or bad faith;
2. To engage in conduct or proceedings inconsistent with just and equitable principles of trade;
G. To prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.
Rule 532. Disclosing Orders Prohibited
With the exception of transactions executed in accordance with the requirements of Rules 526, 538, 539 and 549, no person shall disclose another person’s order to buy or sell except to a designated Exchange official or the CFTC, and no person shall solicit or induce another person to disclose order information. No person shall take action or direct another to take action based on non-public order information, however acquired.
Rule 576. Identification of Globex Terminal Operators
Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.
On March 24, 2015, a Panel of the Chicago Mercantile Exchange (“CME”) Probable Cause Committee (“PCC”) charged non-member Aaron Wilkey (“Wilkey”) with violating CME Rules 432.B.1, 432.B.2, 432.G., 532, and 576 based on allegations that on multiple occasions between December 2012 and April 2013, Wilkey executed numerous noncompetitive transactions over the CME Globex electronic trading platform in Feeder Cattle futures between his wife Melissa Wilkey’s account and seven accounts over which he had control for the purpose of transferring equity from seven accounts to his wife’s account. Specifically, by executing these round turn transactions, Wilkey transferred $23,000 from the seven accounts to Melissa Wilkey’s account. Moreover, Wilkey effectuated the transfer of an additional $40,925 to Melissa Wilkey’s account by initiating trades in Melissa Wilkey’s account in the open market and offsetting them opposite an account that he controlled. The Panel further found that Wilkey entered orders on behalf of the other accounts using a user ID other than his own.
On August 10, 2015, and in accordance with Rule 407.C., a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) found that Wilkey had failed to answer the charges issued against him by the CME PCC. The Hearing Panel Chair accordingly ruled that the charges issued were deemed admitted, and through this admission Wilkey had waived his right to a hearing on the merits of the charges.
On November 2, 2015, a Panel of the CME BCC found that Wilkey committed the violations contained in the admitted charges, and subsequently held a penalty hearing.
Based on the record and the Panel’s findings and conclusions, the Panel ordered that Wilkey be barred permanently from (1) applying for membership at any CME Group exchange; (2) direct or indirect access and use of any 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. The Panel further ordered Wilkey to pay a fine of $100,000, and ordered him and Melissa Wilkey, jointly and severally, to pay $23,000 in restitution and $40,925 in disgorgement.
March 1, 2016
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