NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 07-73161-BC

MEMBER:

RAYMOND S. CAHNMAN

CBOT RULE & REG. VIOLATIONS:

(legacy) Rule 501.00 Fictitious Transactions

It shall be an offense against the Exchange to create fictitious transactions or to give an order for the purchase or sale of futures or options the execution of which would involve no change in ownership, or to execute such an order with knowledge of its character.

Rule 534. Wash Sales Prohibited

No person shall place for the same beneficial owner buy and sell orders for the same product and expiration month . . . at or about the same time with the intent to avoid a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). . . .

Rule 432. General Offenses
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Y. to improperly use the Globex platform or any electronic trading or clearing platform owned or controlled by CME Group or permit the unauthorized use of such platforms.

FINDINGS:

Pursuant to an offer of settlement in which Raymond Cahnman neither admitted nor denied the rule violations upon which the penalty is based, on October 6, 2010, a Panel of the CBOT Business Conduct Committee found that on fifteen spot month trade dates between March 2007 and March 2008, Cahnman and one or more of his assistants entered opposing buy and sell orders into the e-cbot electronic trading platform or the CME Globex electronic trading platform between accounts under the same beneficial ownership for the purpose of transferring or liquidating open positions in 2-Year, 5-Year, 10-Year U.S. Treasury Note and 30-Year U.S. Treasury Bond futures. The positions transferred or liquidated were the result of various strategies that were segregated into separate accounts originally created to track profits arising from different strategies. CBOT rules and regulations in effect at the time required these positions to be offset through open auction or on e-cbot, or fulfilled through the normal delivery process. In so doing, the Panel found that Cahnman violated legacy CBOT Rule 501.00, Rule 534. and Rule 432.Y.

PENALTY:

In accordance with the settlement offer and inconsideration of Cahnman’s cooperation during the course of the investigation, the Panel fined Cahnman $30,000 and suspended his membership privileges, access to any CME Group trading floors, and direct access to any CME Group electronic trading or clearing platform for 10 business days, beginning October 7, 2010, and continuing through October 20, 2010, inclusive.

EFFECTIVE DATE:

October 8, 2010