NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 08-00168-BC

NON-MEMBER:

Craig Pavelkis

CBOT RULE VIOLATIONS:

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

A. General Prohibitions
No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. (Block Trades and EFP Transactions) and C. (Pre-Execution Communications Regarding Globex Trades in Interest Rate, Ethanol and Dow Options). . .

(Legacy) Rule 432. General Offenses

L.1. It shall be an offense to fail to appear before the Board, Exchange staff or any investigative or hearing committee at a duly convened hearing or in connection with any investigation.

FINDINGS:

On September 1, 2011, a panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“BCC”) took disciplinary action against Craig Pavelkis, a former clerk to a CBOT member on the trading floor. On July 26, 2011, a Hearing Panel Chair of the CBOT BCC found that Pavelkis had failed to file an answer to a charges issued against him by a panel of the CBOT Probable Cause Committee. The Hearing Panel Chair accordingly ruled that the charges issued were deemed admitted, and through this admission, Pavelkis had forfeited his right to a hearing on the merits of the charges. Pursuant to CBOT Rules 407 and 408, a penalty hearing was held before a Panel of the CBOT BCC related to these admitted charges. The Panel found Pavelkis guilty of participating in or facilitating the prearrangement and noncompetitive execution of three customer orders between September 10 and 18, 2008, in the Dow Jones Industrial Average Index futures pit. The Panel also found Pavelkis guilty of failing to appear before Exchange staff in connection with its investigation into this matter. The Panel found that in doing so, Pavelkis violated CBOT Rule 539.A. and legacy CBOT Rule 432.L.1.

PENALTY:

Based on the record and the Panel’s findings and conclusions, the Panel fined Pavelkis $50,000 and ordered that he be barred for a period of five years from the date his fine is paid in full from: (1) applying for membership at any exchange owned, controlled, or operated by CME Group Inc.; (2) affiliating with any exchange Member, as defined in CBOT Rule 400, related to business conducted on or subject to the rules of the Exchange; (3) directly or indirectly accessing, placing orders, or executing trades on any trading or clearing platform owned, controlled, or operated by CME Group Inc., including, but not limited to, the CME Globex electronic trading platform; and (4) accessing any trading floor owned or controlled by CME Group Inc.
 

EFFECTIVE DATE:

October 5, 2011