NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 09-06439-MS-BC

 

MEMBER FIRM:

MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
 

CME RULE VIOLATION:

538. EXCHANGE OF FUTURES FOR RELATED POSITIONS

FAQ Related to CME and CBOT Rule 538
Q21: Must transactions executed as EFRPs be reflected as such on customer statements?

A21: Yes, FCMs must identify EFRP transactions on confirmation and monthly account statements delivered to customers.

FINDINGS:

Pursuant to an offer of settlement in which Merrill Lynch, Pierce, Fenner & Smith, Inc. (“Merrill’) neither admitted nor denied the findings, on June 22, 2010, a Panel of the CME Business Conduct Committee found that on September 23, 2009, Merrill failed to designate a transaction as an EFRP on a customer statement as required by the Exchange. This was the second occurrence of the lack of a required EFRP designation on a customer statement within a 12 month period. The panel found that in so doing, Merrill violated CME Rule 538.

PENALTY:

In accordance with the settlement offer, the Panel fined Merrill $3,000.

EFFECTIVE DATE:

June 24, 2010