CME Group adopted amendments to its current rules governing disciplinary proceedings that, among other things, increase the monetary sanctioning authority of a Business Conduct Committee panel from US $1 million to US $5 million for each offense. In addition, the amendments eliminate the current authority of a respondent to a disciplinary proceeding to make a motion to dismiss prior to a formal hearing or to submit for consideration by a BCC panel, a settlement offer unsupported by CME Group Market Regulation staff. The amendments also empower a BCC panel to order a respondent, its legal counsel or other representative to pay out-of-pocket expenses in connection with such person’s “vexatious, frivolous or bad faith conduct during the course of an investigation or enforcement proceeding,” without a distinct hearing, and eliminate a BCC panel’s authority to issue a reprimand as one of many potential sanctions. Numerous other changes are also included in CME Group’s amendments that, absent objection by the Commodity Futures Trading Commission, will be effective December 14.
My View: In its submission to the CFTC of its proposed amendments to its current rules governing disciplinary proceedings, CME Group states that the changes “seek to update [its current provisions] to make the rules more applicable to the types of disciplinary cases going through the enforcement process while still maintaining a fair and efficient process for the resolution of disciplinary matters.” Although I truly believe this sentiment is sincere and that most of the amendments are likely reasonable under the circumstances, the sheer volume of proposed changes introduced during the busy holiday season makes comprehensive review challenging. Persons who trade on CME Group exchanges and may potentially be subject to disciplinary proceedings – whether members or non-members – should carefully consider the revised amendments promptly.