Focus and Vision General Trading LLC and a trader it employed, Vivek Jain, agreed to resolve a disciplinary action brought by the Commodity Exchange, Inc. related to alleged spoofing-type trading activities from January to June 2015. According to COMEX, during this time, Mr. Jain on multiple occasion entered layering orders involving gold futures on one side of the market to encourage market participants to trade against his smaller order resting on the other side of the market. To resolve this matter Mr. Jain, who was charged with violating COMEX’s prohibition against disruptive trading practices, agreed to pay a fine of US $25,000 and not trade on any CME Group exchange market for 20 business days. Focus, which was charged with failure to supervise, consented to pay a fine of US $30,000. Separately, Gyuris Zoltan agreed to pay an aggregate fine of US $20,000 and serve a 10-business-day trading suspension from all CME Group exchanges to resolve disciplinary actions brought by the Chicago Board of Trade and the Chicago Mercantile Exchange that, on one or more occasions from August 2015 through December 2015, he placed orders during pre-opening sessions to test the connectivity and latency of his front-end trading sessions and not to execute bona fide orders. Similarly, Kyu-Sung Kim agreed to pay a fine of US $15,000 and serve a 15-business-day trading suspension from all CME Group exchanges to settle charges that he entered orders on various occasions between July and December 2015 to assess market depth without the intent to consummate trades. Mr. Zoltan and Mr. Kim were charged with engaging in disruptive trading practices. Finally, Rosenthal Collins Capital Markets LLC consented to pay a fine of US $250,000 and disgorgement of US $467,555 to resolve charges by CME that its traders engaged in wash sales in order to obtain monthly trade-fee credits in connection with a CME market maker program for Eurodollar Pack and Bundle futures in 2014 and 2015. The Commodity Futures Trading Commission resolved an enforcement action against Rosenthal Collins for the same infraction earlier this month. To settle that matter, the firm agreed to pay a fine of US $5 million. (Click here for details of this action in the article “Trading Firm and Individual Trader Settle CFTC Allegations of Engaging in Wash Sales to Obtain Exchange Fee Rebates” in the July 9, 2017 edition of Bridging the Week.)

Compliance Weeds: Last year, CME Group exchanges brought and settled disciplinary actions against Geneva Trading USA, LLC and two of its employees – Krzysztof Marzec and Robert Kimmons – for engaging in alleged spoofing-type activities on the New York Mercantile Exchange, Inc. and the Commodity Exchange, Inc. from March 2013 through July 2013. To resolve the matter, Geneva Trading agreed to disgorge aggregated COMEX and NYMEX trading profits of US $91,241. For the actions of its two traders, Geneva Trading was charged by the CME Group exchanges with violating just and equitable principles of trades and related violations, but solely on a strict liability basis. The firm was not charged with failure to supervise, and it was not assessed a fine. The disciplinary actions against Focus and General Trading and Geneva Trading suggest that, although a firm may be held strictly liable for the allegedly wrongful acts of its employees under CME Group rules, where the firm has and enforces robust policies and procedures governing the conduct, CME Group might consider it appropriate solely to require the firm to return any profits attributable to employees’ improper conduct. In such instances, the firm should not necessarily be charged with failure to supervise and subject to a fine or other sanctions. This would be the case despite the employees not following such policies and procedures! If a firm does not have or does not enforce robust policies, however, a fine should not be unexpected. (Click here for background on the disciplinary action against Geneva Trading in the article “CME Group Settles With Trading Firm for Spoofing-Type Offenses, Holding It Strictly Liable for Acts of Agents; Orders Disgorgement of Profits” in the October 9, 2016 edition of Bridging the Week.)