NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Prime Agricultural Investors, Inc.

CBOT RULE VIOLATIONS:

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 Prime Agricultural Investors, Inc. neither admitted nor denied the rule violations upon which the penalty is based, on September 30, 2022, a Panel of the Chicago Board of Trade (“CBOT”) Business Conduct Committee (“Panel”) found that between January 2018 and September 2019, a principal of Prime Ag successfully requested account changes and transfers for trades he executed for customers in the Soybean, Soybean Meal, Corn, and Wheat futures markets and various agricultural options markets wherein he allocated profitable trades from certain customer accounts and into his personal account, or, in other instances, where he allocated positions out of his personal account into a customer’s account, allowing him to avoid losses for his personal account.

As a result of Prime Ag failing to sufficiently review and monitor the numerous account changes and account transfer requests submitted by one of its principals, he was able, in some instances, to execute the account changes without the knowledge or permission of the account owners, and in other instances without providing the customers with complete and accurate details regarding the transfer, which disadvantaged customers in the amount of $463,459.65. The panel further found that Prime Ag failed to diligently supervise its employee by failing to implement sufficient procedures to review and monitor the accounts its employee traded on behalf of customers, enabling his conduct to persist.

The Panel concluded that Prime Ag thereby violated CBOT Rule 432.W.

PENALTY:

In accordance with the settlement offer, the Panel ordered Prime Ag to pay a fine in the amount of $100,000 in connection with this case and companion case CME 19-1238-BC ($30,000 of which is allocated to CBOT). Additionally, the Panel ordered Prime Ag and its employee who requested the cited account changes to jointly and severally pay restitution of $463,459.65 to the account owners disadvantaged as a result of the account change activity.