NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 10-07116-BC

MEMBER:

TROY MERTZ (TMZ)

CME RULE VIOLATIONS:

432. General Offences (Legacy)
B. It shall be an offense: to engage in fraud, bad faith, or in conduct or proceedings inconsistent with just and equitable principles of trade.

FINDINGS:

Following a full evidentiary hearing on the merits, on July 16, 2012, a Panel of the CME Business Conduct Committee (“Panel”) found that on May 6, 2010, Troy Mertz (“Mertz”) improperly assigned certain orders into his error account. The Panel found that CME rules allow assignments to error accounts only after a member makes an effort to resolve outtrades with the other party. Based on the evidence presented during the hearing, the Panel found that Mertz, while facing a windfall profit in his favor, made no effort to comply with the requirements of the rules. In doing so, the panel found Mertz guilty of violating CME Rule 432.B. because he engaged in conduct inconsistent with just and equitable principles of trade.

On September 13, 2012, an Appellate Panel of the CME Board of Directors denied Mertz's request to appeal the BCC's July 16, 2012, decision.  Subsequently, Mertz filed an appeal with the Commodity Futures Trading Commission ("CFTC") to set aside the BCC's decision.  On May 9, 2016, the CFTC issued its Opinion & Order affirming the BCC's decision.

PENALTY:

Based on the record and the Panel’s findings and conclusions, the Panel: (1) orders Mertz to pay a fine in the amount of $100,000; (2) orders Mertz to disgorge profits in the amount of $1,080,150; and (3) suspends Mertz’s membership privileges, access to the trading floor, and direct and indirect access to any electronic trading or clearing platform owned or controlled by CME Group for 30 business days, beginning November 5, 2012, and continuing through December 14, 2012, inclusive.

EFFECTIVE DATE:

November 5, 2012