NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Oscar Gruss & Son Incorporated

CME RULE VIOLATIONS:

Rule 432. General Offenses (In 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.

Rule 526. Block Trades (In Part)

F. Unless otherwise agreed to by the principal counterparties to the block trade, the seller, or, in the case of a brokered transaction, the broker handling the block trade, must ensure that each block trade is reported to the Exchange within the time period and in the manner specified by the Exchange. The report must include the contract, contract month, price, quantity of the transaction, the respective clearing members, the time of execution, and, for options, strike price, put or call and expiration month. The Exchange shall promptly publish such information separately from the reports of transactions in the regular market.

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.

FINDINGS:

Pursuant to an offer of settlement in which Oscar Gruss & Son Incorporated neither admitted nor denied the rule violations upon which the penalty is based, on April 19, 2023, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on July 26, 2021, an employee of Oscar Gruss brokered a block trade in E-Mini S&P 500 Put options and failed to accurately and timely report the execution time to the Exchange in violation of CME Rule 526.F. Additionally, the Panel found that the block trade was executed between accounts with common beneficial ownership. Even though the Oscar Gruss employee received simultaneous buy and sell orders from the same customer, he failed to inquire whether the orders were for accounts with common beneficial ownership. Therefore, the Panel found that Oscar Gruss violated CME Rule 534. Finally, the Panel found that Oscar Gruss failed to provide clear and accurate guidance to its employee regarding the execution of block trades and wash transactions and, in failing to diligently supervise its employee, violated CME Rule 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Oscar Gruss to pay a fine in the amount of $30,000.