NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CBOT 12-8931-BC

MEMBER:

Eric Alan Gichner

CBOT RULE VIOLATIONS:

Rule 432. General Offenses

It shall be an offense:

B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade;

Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;

T. to engage in dishonorable or uncommercial conduct.

FINDINGS:

Pursuant to an offer of settlement in which Eric Gichner neither admitted nor denied the rule violations upon which the penalty is based, on April 30, 2014, a Panel of the CBOT Business Conduct Committee (“BCC” or “Panel”) found that it had jurisdiction over Gichner pursuant to CBOT Rules 400 and 402 as he is a CBOT member. The Panel also found that during January through August 2012, Gichner engaged in a pattern of activity wherein he entered large orders in the E-mini Dow Jones Industrial Average Index Futures market (“E-mini Dow”) without the intent to trade. The Panel specifically found that Gichner established a long (short) position in the E-mini Dow on the CME Globex electronic trading platform (“Globex”). Gichner subsequently entered multiple large-lot buy (sell) orders outside of the best bid (offer) and passive liquidating orders to sell (buy) on Globex. Gichner then fully canceled the large orders he placed on the same side of his existing position, often approximately one second or less after his resting, passive liquidating orders began trading. Gichner entered these large orders for the purpose of obtaining fills on his smaller liquidating orders already resting on the other side of the order book, and/or in an attempt to encourage interest in the market.

In determining Gichner’s intent to trade the large orders that were fully canceled, the Panel took into consideration the significant imbalance these orders created between the volume on the bid and offer, the percentage of large orders canceled, and the exposure time of the fully canceled orders.

The Panel found that as a result Gichner violated CBOT Rules 432.B.2., 432.Q., and 432.T.

PENALTY:

In accordance with the settlement offer, the Panel fined Gichner $65,000 and suspended his membership privileges, access to any CME Group trading floor, and direct or indirect access to any CME Group electronic trading or clearing platform for 12 months, beginning on the effective date below and continuing through and including May 1, 2015.

EFFECTIVE DATE:

May 2, 2014