NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 08-03923-BC

MEMBER:

BRIAN DAVOREN

CME RULE VIOLATIONS:

Rule 530. PRIORITY OF CUSTOMERS’ ORDERS

A member shall not buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority when he is in possession of an executable order for another person to buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option in the same product, regardless of the venue of execution. All contract months in a given futures product and all options on the futures product, in addition to any corresponding alternative sized (mini or micro) futures or options contracts on a given product, shall be considered the same product for the purposes of this rule.

Rule 531.A. Trading Against Orders Prohibited – General Prohibition

No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order for his personal account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority.

FINDINGS:

Pursuant to an offer of settlement in which Brian Davoren neither admitted nor denied the rule violations upon which the penalty is based, on June 22, 2011, a Panel of the CME Business Conduct Committee found that on several occasions between August 1 and November 14, 2008, while acting as a broker in the British Pound futures pit, Davoren executed customer orders and then shortly thereafter sold or bought back for his personal account a smaller quantity of the same product with the same expiration month at the same price as the customer order opposite the same local trader with whom he had just executed all or a portion of the customer order opposite thereby allowing Davoren to indirectly take the opposite side of the customer order. The Panel concluded that in so doing, Davoren violated CME Rule 531.

The Panel further found that on November 5, 2008, Davoren executed a transaction on the CME Globex electronic trading platform for his personal account on the same side of the market as executable customer orders in his possession. The Panel concluded that in so doing, he violated CME Rule 530.

 

PENALTY:

In accordance with the settlement offer, the Panel ordered Davoren to pay a fine of $10,000, which includes disgorgement of profits Davoren realized. The Panel also suspended Davoren’s membership privileges, access to any CME Group trading floor, and direct access to any CME Group electronic trading or clearing platform for 15 business days beginning on the effective date below and continuing through and including July 15, 2011.

EFFECTIVE DATE:

June 24, 2011