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.
Pursuant to an offer of settlement in which Drew Heynen (“Heynen”) 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 Heynen was subject to the jurisdiction of the Exchange pursuant to Rules 402 and 418. The Panel also found that on several occasions in December 2012, Heynen executed customer orders on the CME Globex trading platform in the expiring Live Cattle futures contract where there was common beneficial ownership on both sides of the transactions. In each instance, Heynen entered customer orders on one side of the market that traded opposite opposing orders placed by a colleague for the same customer on the other side of the market. The orders traded entirely against opposing orders placed for an account with common beneficial ownership. Heynen entered the orders for the purpose of freshening long futures position dates for customers, and he knew or reasonably should have known that the orders he placed would trade opposite orders placed for accounts with common beneficial ownership. The Panel concluded that Heynen thereby violated CME Rule 534.
In accordance with the settlement offer, the Panel ordered Drew Heynen to pay a fine of $10,000 and suspended his direct access to any trading floor or electronic trading or clearing platform owned or operated by CME Group, including Globex, for 15 business days. Heynen’s suspension will run from January 12, 2016, to February 2, 2016, inclusive.
December 18, 2015