• #
      • CBOT-17-0806-BC
      • Effective Date
      • 20 February 2020
    • FILE NO.:                             

      CBOT 17-0806-BC



      CBOT RULE VIOLATIONS:                    

      Rule 432 General Offenses (in part)

      It shall be an offense:

      G.      To prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.

      L.2.    To fail to fully answer all questions or produce all books and records at such hearing or in connection with any investigation, or to make false statements.

      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.


      On August 20, 2019, a Panel of the Chicago Board of Trade (“CBOT”) Probable Cause Committee (“PCC”) charged non-member Bae Jun Seok (“Bae”) with violating CBOT Rules 432.G., 432.L.2., and 534 based on allegations that between July 7, 2017, and October 5, 2017, while trading on behalf of his personal account and the accounts of several non-members, Bae executed numerous non-competitive round-turn money pass transactions in the Corn, Soybean, and Wheat futures markets for the purpose of transferring equity between accounts. In addition, the Panel found that during the same time period, Bae entered matching buy and sell orders for different accounts with common beneficial ownership in the Corn, Soybean and Wheat futures market on Globex with the knowledge and intent that the orders would match opposite one another in order to negate market risk. Lastly, the Panel found that Bae failed to produce all records in connection with Market Regulation’s investigation.

      On January 27, 2020, a Hearing Panel Chair of the Chicago Board of Trade Business Conduct Committee (“BCC”) entered an order finding that Bae failed to answer the charges issued against him. In failing to answer the charges, the Hearing Panel Chair further ordered that Bae was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

      Pursuant to Rule 407.C., a penalty hearing was held before a Panel of the BCC (“Panel”) on February 4, 2020. The Panel found Bae guilty of committing the admitted charges.


      Based on the record and the Panel’s findings and conclusions, the Panel ordered Bae to pay a fine in the amount of $60,000, and to permanently bar Bae from access to any trading floor owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group.

      EFFECTIVE DATE:                                   

      February 20, 2020