NOTICE OF DISCIPLINARY ACTION

MEMBER:

Riceland Foods, Inc.

CBOT 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.

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

It shall be an offense:

W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

FINDINGS:

Pursuant to an offer of settlement in which Riceland Foods, Inc. neither admitted nor denied the rule violations upon which the penalty is based, on April 20, 2022, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that on five days between February 2020, and June 2020, an employee of Riceland, while using Trading at Settlement transactions, placed opposing buy and sell orders for Soybean futures contracts with brokers at three different firms for Riceland’s accounts. The orders traded against each other in part, and the Riceland employee knew or reasonably should have known that the execution of the orders would result in a prohibited wash result. The purpose of these transactions was to open simultaneous long and short hedges in two different Riceland accounts. Additionally, the Panel found that Riceland failed to diligently supervise its employees by not properly advising and training them as to Exchange rules and Market Regulation Advisory Notices (“MRANs”) pertaining to wash trades.

The Panel concluded that Riceland thereby violated CBOT Rules 534 and 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Riceland to pay a fine in the amount of $35,000.