Franco Della Pina
CME RULE VIOLATIONS:
RULE 432. GENERAL OFFENSES (in part)
It shall be an offense:
B. 1. To engage in fraud or bad faith.
C. To engage in dishonest conduct.
G. to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.
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 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.
Following an evidentiary hearing on the merits on August 16, 2017, a Panel of the CME Business Conduct Committee (“Panel”) issued a written decision finding that between July and November 2014, Franco Della Pina (“Della Pina”), while trading for the benefit of his account and the account of another non-member, executed multiple round-turn transactions in E-mini S&P Futures on the CME Globex electronic platform for the purpose of transferring $26,925 to his personal account from a friend’s account and another non-member’s account he controlled.
Della Pina executed the money pass transactions in back month contracts, almost exclusively with the other accounts at issue, and with a short time differential between order entry by the different accounts. Moreover, the Panel considered that the money pass transactions resulted in the unidirectional transfer of funds to Della Pina’s account or the account over which he had control, and that Della Pina’s account ultimately profited from the transactions. The Panel further found that the accounts were opened shortly before the violative activity started, and were closed shortly after it ended. Based on these facts, the Panel determined that the trading was coordinated, and prearranged for the purpose of transferring equity between accounts. Collectively, the Panel found that Della Pina engaged in money pass transactions designed to move money into his personal account, and that in doing so he engaged in bad faith and dishonest conduct in violation of CME Rules 432.G., 432.B.1. and 432.C.
In addition, the Panel found that between April 2014 and July 2014, Della Pina executed trades in E-Mini S&P Futures on the CME Globex electronic platform, for an account over which he maintained control where there was common beneficial ownership on both sides of the transactions. Della Pina placed the orders with the knowledge and intent that the orders would trade opposite one another. The Panel found that this conduct violated CME Rule 534.
The Panel also found that by failing to appear before Exchange staff for an interview in connection with the investigation, and failing to answer questions from Market Regulation staff, either in person or in writing, Della Pina violated CME Rule 432.L.1.
The Panel ordered Della Pina to: 1) pay a $100,000 fine; 2) pay disgorgement in the amount $25,200; 3) pay restitution in the amount of $1,725; 4) be permanently barred from applying for membership at any CME Group exchange, from direct or indirect access and use of any trading floor, electronic platform or clearing platform owned or operated by any CME Group exchange, and 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 6, 2017