NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 10-04708-BC

MEMBER:

CRAIG ALLEN TAFFEL

CBOT RULE VIOLATIONS:

Rule 432.Y. General Offenses

It shall be an offense:
…
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.

Rule 501. Employees of Members (in part)

Members shall register with the Exchange all persons whom they wish to employ on the trading floor. Such employees may act as runners, communicators, clerks and broker assistants. Such employees shall not be permitted to solicit customers or benefit from the production of orders. Such employees shall not trade or have any interest in an account trading in any CBOT or CME futures or options contracts. Employees must wear a prescribed identification badge. Any member permitting trading by such employee shall be guilty of an offense against the Exchange.

Rule 576. Identification of Globex Terminal Operators

Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event, may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual’s own unique user ID.

FINDINGS:

Pursuant to an offer of settlement in which CBOT member Craig Taffel (“Taffel”) neither admitted nor denied the rule violations upon which the penalty is based, on November 10, 2011, a Panel of the CBOT Business Conduct Committee found that in or before 2008 and through February 2010, Taffel allowed three non-member employees of his institutional customers and a forth non-member to place personal trades that cleared in Taffel’s personal account. Taffel would then absorb trading losses from those trades or distribute profits to these non-members. Taffel also improperly allowed two non-member employees working at his trading desk on the CBOT trading floor to enter and execute trades on the Exchange’s electronic trading platform using his unique terminal operator ID during the same time frame. Because this trading activity was not disclosed to the Exchange, the individuals avoided paying the required fees, as well as abiding by other regulatory, risk and clearing requirements. The Panel concluded that, in so doing, Taffel violated CBOT Rules 432.Y., 501., and 576.

PENALTY:

In determining an appropriate sanction, the Panel took into consideration that the Commodity Futures Trading Commission (“CFTC”) accepted Taffel’s offer to settle related proceedings against him, and evidence that there was no discernable customer harm. After considering this and all of the issues discussed above, the Panel suspended Taffel’s membership privileges, access to any CME Group trading floor, and direct and indirect access to any CME electronic trading or clearing platform for 10 business days beginning on the effective date below and continuing through and including November 28, 2011.
 

EFFECTIVE DATE:

November 14, 2011