• NOTICE OF DISCIPLINARY ACTION

      • #
      • CBOT-17-0675-BC
      • Effective Date
      • 29 November 2018
    • FILE NO.:

      CBOT 17-0675-BC

      NON-MEMBER:

      Gregory Kofford

      CBOT RULE VIOLATIONS:

      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.

      Rule 576. Identification of Globex Terminal Operators

      Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. 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.

      FINDINGS:

      Pursuant to an offer of settlement in which Gregory Kofford (“Kofford”) neither admitted nor denied the rule violations upon which the penalty is based, on November 27, 2018, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”) found that on three dates in October of 2016, Kofford entered several matching buy and sell orders on the CBOT Globex trading platform in the U.S. Treasury Bond options and Corn options markets on behalf of accounts with common beneficial ownership. The matching buy and sell orders were entered in such a manner that Kofford knew or reasonably should have known that the orders would match and thereby avoid taking a bona fide market position exposed to market risk. Additionally, the Panel found that Kofford entered half of these orders using a unique Tag50 user ID other than his own. The Panel concluded that Kofford thereby violated CBOT Rules 534 and 576.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Kofford to pay a $25,000 fine and to have his access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc., including CME Globex, suspended for 15 business days. The suspension shall run from the effective date below through December 19, 2018, inclusive.

      EFFECTIVE DATE:

      November 29, 2018