CME RULE VIOLATION:
Rule 432. General Offenses
It shall be an offense:
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.
Pursuant to an offer of settlement in which Adam Cobb-Webb (“Webb”) neither admitted nor denied the rule violations upon which the penalty is based, on March 19, 2015, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found it had jurisdiction over Webb pursuant to Rules 400 and 402 as the conduct occurred while he was a CME member. The Panel further found that between April 3, 2014, and April 15, 2014, Webb prearranged the execution of numerous round-turn transactions in the British Pound futures, British Pound options, and Euro FX futures contract markets for the purpose of transferring funds between two accounts. The Panel also found that Webb was the beneficial owner of the two accounts, and that Webb entered the buy and sell orders with the knowledge and intent that the orders would match opposite one another. The Panel concluded that Webb thereby violated CME Rules 432.G. and 534.
In accordance with the settlement offer and after taking Webb’s financial condition into consideration when levying the sanction, the Panel ordered Webb to pay a fine to the Exchange in the amount of $5,000 and serve a 30 business day suspension from accessing any CME Group Inc. trading floor and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc., including CME Globex. The suspension shall run from March 23, 2015, through May 1, 2015, inclusive.
March 23, 2015
Register for regular updates here and manage your email preferences.