NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Roy E. Abbott Futures Inc.

CME RULE VIOLATION:

Rule 432 General Offenses

It shall be an offense:

W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

FINDINGS:

Pursuant to an offer of settlement in which Roy E. Abbott Futures Inc. (“RAF”) neither admitted nor denied the rule violations upon which the penalty is based, on May 18, 2021, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that between November 21, 2012, and August 1, 2019, a broker employed by RAF, an introducing broker, successfully requested account changes for trades he executed for customers in the E-Mini S&P 500, the E-Mini NASDAQ-100, and Lean Hog futures markets wherein certain accounts that he traded on behalf of customers were the recipients of profitable trades that he initially executed in other accounts he traded. As a result of RAF failing to sufficiently review and monitor the numerous account changes and account change requests submitted by its employee, the RAF broker was able to execute the account changes without the knowledge or permission of the account owners, causing the accounts to experience $197,938.73 in losses. The Panel further found that RAF’s failure to implement sufficient procedures to monitor the accounts its employee traded on behalf of customers and failure to diligently supervise its employee thereby enabled its employee’s conduct to persist.

The Panel concluded that RAF thereby violated CME Rule 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered RAF to pay a fine of $75,000 in connection with this case and companion case CBOT 19-1183-BC ($25,000 of which is allocated to CME). Additionally, the Panel ordered Roy E. Abbott Futures Inc. and its employee who requested the cited account changes to jointly and severally pay restitution of $197,938.73 to the account owners who experienced losses as a result of the account change activity.