COMEX RULE VIOLATION: 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, Jawahar Lal (“Lal”) presented at a hearing on September 17, 2014, in which Lal neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the Commodity Exchange Business Conduct Committee (“BCC”) found it has jurisdiction over Lal pursuant to COMEX Rules 400 and 418 and that between November 21, 2012 and December 20, 2012, Lal and another ARS International FZE (“ARS”) trader entered a series of wash trades in Silver options between accounts with the same beneficial owner.
The Panel found that as a result, Lal violated Rule 534.
In accordance with the settlement offer, the Panel ordered Lal to pay a fine to the Exchange in the amount of $5,000 and serve a 15 business day suspension from membership privileges on any CME Group Inc. exchange, access to all CME Group Inc. trading floors and direct or indirect access to all electronic trading and clearing platforms owned or operated by CME Group Inc., including Globex. The suspension will run from September 19, 2014 through, and including, October 9, 2014.
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