NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

MARK MILLER

EXCHANGE RULES:

CME RULE 432. GENERAL OFFENSES

It shall be an offense:

B.1. to engage in fraud or bad faith;

B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade;

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

T. to engage in dishonorable or uncommercial conduct.

FINDINGS:

Pursuant to an offer of settlement Mark Miller (“Miller”) presented at a hearing on June 25, 2020, in which Miller neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the CME Business Conduct Committee (“Panel”) found that on multiple dates during the time period from June 1, 2015 through June 30, 2016 (“relevant time period”), Miller, the primary trader and a principal for Foremost Trading, LLC (“Foremost”), engaged in dishonorable and uncommercial conduct inconsistent with just and equitable principles of trade in the Australian Dollar FX futures, British Pound FX futures and options, Japanese Yen FX futures and options, E-mini Nasdaq futures and options, and E-mini S&P futures and options. Miller engaged in over three hundred “matched” trades across all four CME Group Designated Contract Markets, which were trades in which Miller’s Tag 50 IDs were on both sides of the market and the trade involved a full or partial match between two separate orders on opposite sides of the market. These matched trade instances typically involved a customer account (“Customer A”) over which Miller had Power of Attorney on one side of the trade and one of Foremost’s proprietary accounts on the opposite side. Many of these trades occurred in options markets with extremely low liquidity to ensure the match between these accounts.

The Panel found that on multiple occasions, the matched trades consisted of Miller pre-arranging round-turn transactions between a Foremost account and Customer A’s account for the purpose of transferring equity from Customer A’s account to Miller’s Foremost account(s), which resulted in the Foremost’s account receiving advantageous prices.

The Panel also found that on several instances, Miller engaged in improper trade moves. Specifically, Miller requested that Foremost’s non-clearing Futures Commission Merchant allocate several profitable trades executed from Customer A’s account to a Foremost Error account, when there was no evidence of a bona fide trade error. The purpose of these trade moves was to benefit the Foremost accounts. As a result of these trade moves, Customer A’s account sustained financial loss and Foremost’s account received the financial profit. The Panel further found that during the relevant time period, Miller’s trading disadvantaged Customer A’s account in the amount of $479,858.93.

The Panel found that as a result, Miller violated CME Rules 432.B.1., 432.B.2., 432.G. and 432.T.

PENALTY:

In accordance with the settlement offer, the Panel ordered Miller to pay a fine in the amount of $200,000 ($100,000 of which is payable to CME), and that Miller and Foremost jointly and severally pay restitution in the amount of $479,858.93 ($400,031.79 of which is attributed to activity on CME). The Panel also barred Miller 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 for two years, beginning on the effective date and continuing through and including July 6, 2022. Further, the Panel permanently barred Miller from: (1) trading on a discretionary basis for or on behalf of any person or entity, whether by power of attorney or otherwise; and (2) entering customer orders in a brokerage capacity on any CME Group Inc. Exchange.

The suspension shall run from July 6, 2020 through July 6, 2022, inclusive.

Please see companion cases CBOT/NYMEX/COMEX 16-0484-BC.