• NOTICE OF DISCIPLINARY ACTION

      • #
      • CBOT-15-0160-BC-3
      • Effective Date
      • 26 September 2018
    • FILE NO.:

      CBOT 15-0160-BC

      MEMBER:

      Peter Grady

      CBOT RULE VIOLATIONS:

      Rule 432 (“General Offenses”) (in relevant part)

      It shall be an offense:

      H. to… attempt to engage in, the manipulation of prices of Exchange futures or options contracts;

      J. to knowingly disseminate …false, misleading or inaccurate information concerning crop or market information or conditions that affect or may affect the price of any Exchange futures or options contract or spot transaction in the underlying commodity;

      FINDINGS:

      Pursuant to an offer of settlement in which Peter Grady (“Grady”) neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on September 18, 2018, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that in March 2015, Grady participated in a strategy in which certificates were acquired and wheat was loaded out for delivery by his employer in order to send false or misleading signals to the market of demand, in an attempt to manipulate the price of Wheat futures contracts and benefit his employer’s futures and options positions at CBOT.

      Specifically, the Panel found that prior to March 2015, Grady knew that his employer held 134 Soft Red Winter Wheat certificates (“SRW certificates”). On March 3, 2015, 250 SRW certificates (1.25 million bushels) of 3 part per million vomitoxin SRW certificates were registered for delivery against CBOT futures, bringing the total amount of registered certificates to 384. Between March 5 and 10, 2015, Grady assisted his employer in acquiring all 250 remaining SRW certificates and, therefore, his employer held all 384 SRW certificates. While Grady knew that the remaining SRW certificates were being acquired, he, on behalf of his employer, entered into a large speculative position using futures and options.

      From March 6 through March 11, 2015, Grady was complicit in the strategy to cancel all SRW certificates for load out in an attempt to send a false or misleading signal of demand to the market. Grady’s strategy was devised primarily to benefit his employer’s futures and options positions.

      The Panel concluded that Grady thereby violated CBOT Rules 432.H. and 432.J.

      PENALTY:

      In accordance with the settlement offer and after considering the $250,000 fine ordered to be paid to the Commodity Futures Trading Commission in a related matter against Grady, the Panel ordered Grady to pay a fine of $250,000 to the Exchange 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 suspended for a period of nine months. The suspension shall run from September 26, 2018, through June 26, 2019.

      EFFECTIVE DATE:

      September 26, 2018