NOTICE OF DISCIPLINARY ACTION

FILE NO.:

CME 11-8390-BC

NON-MEMBER:

Lam Wai Yip Thompson

CME RULE VIOLATIONS:

Rule 432. General Offenses (in part)

It shall be an offense:

B. (Legacy Rule) to engage in fraud, bad faith or in conduct or proceedings inconsistent with just and equitable principles of trade;
G. (Effective November 29, 2010) to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts;
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange.

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited (in part)

C. Pre-Execution Communication Regarding Globex Trades

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform...under the following circumstances:

3. In the case of futures orders, the first party’s order must be entered into the Globex platform first and the second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

FINDINGS:

On October 15, 2013, in accordance with Chicago Mercantile Exchange (“CME”) Rule 407.C., a Hearing Panel Chair of the CME Business Conduct Committee (“BCC”) found that Lam Wai Yip Thompson had failed to answer charges issued against him by the CME Probable Cause Committee. The Hearing Panel Chair accordingly ruled that the charges issued were deemed admitted, and through this admission, Lam had forfeited his right to a hearing on the merits of the charges.

On March 25, 2014, a penalty hearing was held before a Panel of the CME BCC related to these admitted charges. The Panel found Lam guilty of having executed 18 prearranged transactions in which he waited less than five seconds before entering his matching order; engaging in one or more transactions that resulted in the defrauding of money from two market participants; pre-arranging the execution of one or more transactions between November 29, 2010 and June 2011, for the purpose of transferring equity from the accounts of two market participants to his own account; and pre-arranging the execution of one or more transactions between February 2008 and June 2011, for the purpose of transferring equity from the accounts of two market participants to his own account. The panel found that in so doing, Lam violated CME Rules 539, 432.B., 432.G., and 432.Q.

PENALTY:

Based on the record and the Panel’s findings and conclusions, the Panel ordered that Lam be permanently barred from (1) membership and privileges at any CME Group exchange; (2) direct or indirect access and use of any CME Group trading floor, electronic trading or clearing platform owned or operated by any CME Group exchange; and (3) affiliation with, employment by, or association with a broker association, guaranteed introducing broker, Member or affiliate of a Member registered with any CME Group exchange, trading platform or clearing platform.

EFFECTIVE DATE:

April 28, 2014