EXCHANGE RULE VIOLATION: 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 trades or 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.
Pursuant to an offer of settlement in which John Dudek (“Dudek”) neither admitted nor denied the rule violation upon which the penalty is based, on March 12, 2020, a Panel of the COMEX Business Conduct Committee (the “Panel”) found that on multiple dates in July and August 2018, Dudek executed opposing buy and sell orders for a large volume of Copper futures between accounts for which there was common beneficial ownership on both sides of the transactions. Dudek placed the opposing buy and sell orders with the knowledge and intent that the orders would trade opposite one another. The purpose of these transactions was to transfer positions from a dormant account to an active account. The Panel concluded that Dudek thereby violated Exchange Rule 534.
In accordance with the settlement offer, the Panel ordered Dudek to pay a fine of $30,000, and to serve a 20 business-day trading suspension 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. The suspension shall run from March 16, 2020 through and including April 13, 2020.