NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Don Kuster

CME RULE VIOLATION:

Rule 432 (“General Offenses”) (in part)

It shall be an offense:

B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade.

FINDINGS:

Pursuant to an offer of settlement in which Don Kuster (“Kuster”) neither admitted nor denied the rule violations upon which the penalty is based, on July 22, 2015, a Panel of the CME Business Conduct Committee found that it had jurisdiction over Kuster pursuant to Rules 400 and 402 as the conduct occurred while Kuster was an employee of a CME member, and that on one or more occasions on December 28, 2012, and January 2, 2013, Kuster caused trades to be executed in user-defined covered option instruments on the Globex electronic trading platform in which the trades were over-allocated futures at favorable prices. After confirming the source and nature of the over-allocations, Kuster contacted the Exchange to report the issue after execution of these trades. The over-allocation of futures was accomplished through dividing the total quantity intended to be sold into a series of two-lot sell orders rather than entering a single sell order for the entire quantity. Because the delta of the two-lot orders in each instance only marginally exceeded .50, entering the sell orders in this manner caused the trades to be allocated nearly twice as many futures as they otherwise would have received. The Panel concluded that Kuster thereby violated CME Rule 432.B.2.

PENALTY:

In accordance with the settlement offer, the Panel ordered Kuster to pay a fine of $15,000.

EFFECTIVE DATE:

July 24, 2015