NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 11-8452-BC

MEMBER:

BARRY SCHMIDT

CME RULE VIOLATIONS:

Rule 432 – GENERAL OFFENSES
It shall be an offense to:
B.2. engage in conduct or proceedings inconsistent with just and equitable principles of trade.

Rule 539 – PREARRANGED, PRE-NEGOTIATED AND NONCOMPETITIVE TRADES PROHIBITED
A. No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction. . .

Rule 576 – IDENTIFICATION OF GLOBEX TERMINAL OPERATORS
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 Barry Schmidt (“Schmidt”) neither admitted nor denied the rule violations upon which the penalty is based, on January 24, 2013, a Panel of the CME Business Conduct Committee (the “Panel”) found that on eight trade dates from February through April 2011, Schmidt engaged in the noncompetitive execution of customer orders of July – December 2012 Corn futures spreads over the CME Globex electronic trading platform (“Globex”). During the relevant period, Schmidt was in possession of standing discretionary orders to sell for Customer Account A and buy for Customer Account B. With the understanding that he would benefit on each occasion, Schmidt prearranged trades for his personal account directly opposite Customer Account A (Customer Account B). Schmidt then offset his position by prearranging trades for his personal account opposite Customer Account B (Customer Account A) and as a result, Schmidt profited in the amount of $21,637.
The Panel further found that on four of the eight trade dates, Schmidt entered orders over Globex for the customer’s account using a Tag 50 ID other than his own.
The Panel found that in so doing, Schmidt violated CME Rules 432.B.2., 539.A., and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Schmidt to: (i) disgorge $21,637 to CME; and (ii) serve a suspension for a period beginning on the effective date of the Panel’s decision and lasting five (5) years from the date the disgorgement is paid in full; a denial of membership privileges and access to all CME Group Inc. trading floors, including direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group, including, but not limited to CME Globex, CME ClearPort and CME Direct.

EFFECTIVE DATE:

January 28, 2013