NOTICE OF DISCIPLINARY ACTION

MEMBER:                   

Wells Fargo Commodities, LLC

CME RULE VIOLATIONS:             

Rule 539 Prearranged, Pre-Negotiated and Noncompetitive Trades

Prohibited (in part)

C. Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

2. Parties to pre-execution communications shall not (i) disclose to a non-party the details of such communications or (ii) enter an order to take advantage of information conveyed during such communications except in accordance with this rule.

Rule 433 Strict Liability for the Acts of Agents

Pursuant to Section 2(a)(1)(B) of the Commodity Exchange Act, and notwithstanding Rule 432.W., the act, omission, or failure of any official agent, or other person acting for any party within the scope of his employment or office shall be deemed the act, omission or failure of the party, as well as of the official, agent or other person who committed the act.

FINDINGS:                    

Pursuant to an offer of settlement in which Wells Fargo Commodities  (“WFC”) neither admitted nor denied the rule violations upon which the penalty is based, on March 4, 2021, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on November 4 and 5, 2019, a trader employed by WFC engaged in pre-execution communications with a broker about the sale of Cash Settled Cheese futures strip orders and then traded in such futures, prior to executing the cross trade, to take advantage of the information conveyed during the pre-execution communications. The Panel further found that WFC profited $8,600 as a result of the trader purchasing the outright futures contracts.

The Panel concluded that, pursuant to CME Rule 433, WFC is strictly liable for the acts of its employee whose conduct violated CME Rule 539.C.2.

PENALTY:                   

In accordance with the settlement offer, the Panel ordered WFC to disgorge total profits in the amount of $8,600.

EFFECTIVE DATE:

March 8, 2021