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      • CBOT 14-9910-BC
      • Effective Date
      • 17 April 2015

      Lakeview Energy LLC


      Rule 538.H. – Documentation

      Parties to any EFRP transaction must maintain all documents relevant to the Exchange contract and the cash, OTC swap, OTC option, or other OTC derivatives, including all documents customarily generated in accordance with relevant market practices and any documents customarily generated in accordance with relevant market practices and any documents reflecting payment and transfer of title. Any such documents must be provided to the Exchange upon request, and it shall be the responsibility of the carrying clearing member firm to provide such requested documentation on a timely basis.

      EXCHANGE RULE: Rule 534. – Wash Trades Prohibited

      No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition of wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.


      Pursuant to an offer of settlement that Lakeview Energy (“Lakeview”) presented at a hearing on April 15, 2015 in which Lakeview neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the CBOT Business Conduct Committee (“Panel”) found that Lakeview is subject to the jurisdiction of the Exchange pursuant to Rule 418 and that on December 27, 2013, Lakeview entered into several EFRP transactions in which Lakeview was on both sides of the transactions. The transactions were done for the purpose of moving positions between the accounts of two of Lakeview’s wholly owned subsidiaries, Plymouth Energy LLC (“Plymouth”) and CE Acquisition CO LLC (“CE Acquisition”), but were executed in a manner that resulted in improper wash trades. The Panel also found that the transactions did not contain documentation of either the physical legs of the transactions or the corresponding cash positions and, thus, were not bona fide EFRP transactions.

      The Panel found that as a result of the foregoing, Lakeview violated Exchange Rule 534 and Legacy Exchange Rule 538.H.


      In accordance with the settlement offer, the Panel ordered Lakeview to pay a fine to the Exchange in the amount of $10,000.


      April 17, 2015