NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 11-08466-BC

NON-MEMBER:

STEPHEN DUGGAN

EXCHANGE RULES:

Rule 533. Simultaneous Buy and Sell Orders for Different Beneficial Owners

On the Globex platform, opposite orders for different beneficial owners that are simultaneously placed by a party with discretion over both accounts may be entered into the Globex platform provided that one order is exposed for a minimum of 5 seconds in the case of futures orders or a minimum of 15 seconds in the case of options orders.

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

539.A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction…
  

Rule 432. General Offenses

It shall be an offense:
B.1. to engage in fraud or bad faith;
G. to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts;

FINDINGS:

Pursuant to an offer of settlement Stephen Duggan (“Duggan”) presented at a hearing on March 27, 2013 in which Duggan neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that between June 1, 2010 and June 2, 2011, Duggan executed numerous round-turn transactions on COMEX between his personal trading account and the account he traded for his employer. The Panel also found that during this same time period, Duggan executed numerous round-turn transactions on COMEX between his personal account and the accounts of two other traders working for the same employer. The purpose of some of these round-turn transactions was to move money from the employer’s accounts to Duggan’s personal account. The Panel further found that the trades between Duggan’s personal account and the accounts of other traders were prearranged and, in many cases, whether the trades were between his personal account and either his employer’s account or the accounts of other traders, five seconds did not elapse between the entry of the matching orders on Globex. As a result of these findings, the Panel determined that Duggan violated Exchange rules 533, 539.A., 432.B.1 and 432.G.

PENALTY:

In accordance with the settlement offer and the Panel’s findings, the Panel ordered that Duggan: (1) pay restitution to his employer in the amount of $20,037.50; (2) pay a fine to the Exchange in the amount of $110,000; (3) be barred for a period of two years from (a) applying 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, and run for a period of two years from full payment of the fine and restitution amounts.

EFFECTIVE DATE:

April 1, 2013