NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 10-07143-BC

MEMBER:

Michael Salus (MYK)
 

CME RULE VIOLATIONS:

(Legacy) CME Rule 432. General Offenses (in part)

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.

CME 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.

CME Rule 531, Trading Against Customers’ Orders Prohibited

No person in possession of a customer order shall knowingly take, directly or indirectly, the opposite side of such order 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.

FINDINGS:

Pursuant to an offer of settlement in which Michael Salus (“Salus”) neither admitted nor denied the rule violations upon which the penalty is based, on May 7, 2013, a Panel of the CME Business Conduct Committee (“Panel”) found that on 15 occasions from January through May 2010, Salus placed orders on the CME Globex electronic trading platform and executed trades in Random Length Lumber futures for his own account prior to, and at better prices than, executable customer orders Salus had in his possession that he subsequently executed in the trading pit. Further, on 11 of these occasions Salus indirectly traded against his customer orders. The Panel concluded that Salus thereby violated CME Rules 432.B., 530, and 531.

PENALTY:

In accordance with the settlement offer, the Panel ordered Salus to disgorge profits in the amount of $3,982, and barred Salus for a period of three months from: (a) reapplying for membership at any exchange owned, controlled, or operated by CME Group Inc.; (b) affiliating with any Exchange Member as defined in Exchange Rule 400 related to business conducted on or subject to the Rules of the Exchange; and (c) directly or indirectly accessing, placing orders or executing trades on any trading or clearing platform owned, controlled, or operated by CME Group Inc., including, but not limited to, CME Globex. The bar shall begin running on the Effective Date below, and run through and including August 9, 2013.

EFFECTIVE DATE:

May 9, 2013