CBOT RULE VIOLATIONS:
Rule 432. (“General Offenses”) (in part):
It shall be an offense:
L. (1) to fail to appear before the Board, Exchange staff or any investigative or hearing committee at a duly convened hearing, scheduled staff interview or in connection with any investigation.
Rule 575. Disruptive Practices Prohibited (in part):
All orders must be entered for the purpose of executing bona fide transactions. Additionally, all non-actionable messages must be entered in good faith for legitimate purposes.
A. No person shall enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution.
On June 28, 2017, a Panel of the Chicago Board of Trade (“CBOT”) Probable Cause Committee (“PCC”) charged non-member Wen-Hsiung Cheng (“Cheng”) with violating CBOT Rules 432.L. and 575.A. based on allegations that between October 1, 2014, and May 20, 2015, Cheng entered orders in Oats and Rough Rice (“Rice”) futures markets on Globex during the pre-opening session that were not made in good faith for the purpose of executing bona fide transactions which caused fluctuations in the publicly displayed Indicative Opening Price (“IOP”), and that Cheng failed to appear at a scheduled interview with Market Regulation in connection with its investigation.
On October 4, 2017, a Hearing Panel Chair of the CBOT Business Conduct Committee (“BCC”) entered an order finding that Cheng failed to answer the charges issued against him. In failing to answer the charges, the Hearing Panel Chair further ordered that Cheng was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
Pursuant to CBOT Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on October 18, 2017. The Panel found Cheng guilty of committing the admitted charges.
Based on the record and the Panel’s findings and conclusions, the Panel ordered Cheng to pay a fine in the amount of $50,000, and barred Cheng for a period of five years 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 3, 2017