NOTICE OF DISCIPLINARY ACTION

MEMBER:

Robert Wharton

CME RULE VIOLATIONS:

Rule 534 (“Wash Trades Prohibited”) (in part)

No person shall place or accept buy and sell orders in the same product and expiration month . . . where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition should also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement in which Robert Wharton (“Wharton”) neither admitted nor denied the rule violations upon which the penalty is based, on December 16, 2015, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that it had jurisdiction over Wharton pursuant to Rules 400 and 402 as the conduct occurred while Wharton was a CME member. The Panel also found that on August 14, 2012, Wharton executed two customer orders in the pit to buy and sell 250 expiring Live Cattle futures contracts for the same customer account. The purpose of the orders was to freshen long futures position dates. Wharton knew or reasonably should have known that the purpose of such offsetting orders was to avoid taking a bona fide market position exposed to market risk. The Panel concluded that Wharton thereby violated CME Rule 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Robert Wharton to pay a fine of $20,000 and suspended his direct access to any trading floor or electronic trading or clearing platform owned or operated by CME Group, including Globex, for 10 business days. Wharton’s suspension will run from December 18, 2015, to January 4, 2016, inclusive.

EFFECTIVE DATE:

December 18, 2015