NOTICE OF DISCIPLINARY ACTION

NON-MEMBER:

Chad Henderson

CME RULE VIOLATIONS:

Rule 432 General Offenses:

It shall be an offense:

B. 1. to engage, or attempt to engage, in fraud or bad faith.

Rule 576 Identification of Globex Terminal Operators (in part)

Each individual must use a unique operator ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using an operator ID other than the individual’s own unique operator ID.

FINDINGS:

Pursuant to an offer of settlement in which Chad Henderson neither admitted nor denied the rule violations or factual findings upon which the penalty is based, on September 30 2022, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that between January 2018, and September 2019, Henderson, a principal of an Introducing Broker, successfully requested account changes and transfers for trades he executed for customers in Live Cattle, Feeder Cattle, and Lean Hog futures markets and various agricultural options markets. Henderson allocated profitable trades from certain customer accounts and into his personal account or, in other instances, he allocated positions out of his personal account and into customers’ accounts, which allowed him to avoid losses for his personal account.

Henderson 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. Additionally, unrelated to the above activity, the Panel found that Henderson allowed others to enter an order using his unique operator ID.

The Panel concluded that Henderson thereby violated CME Rules 432.B.1. and 576.

PENALTY:

In accordance with the settlement offer, the Panel ordered Henderson to: pay a fine in the amount of $150,000 in connection with this case and companion case CBOT 19-1238-BC ($100,000 of which is allocated to CME); ordered Henderson and his employer to jointly and severally pay restitution of $463,459.65 to the account owners disadvantaged as a result of the account change activity; be permanently suspended from handling customer funds; and be permanently suspended from access to any trading floor owned or controlled by CME Group and from direct and indirect access to any designated contract market, derivatives clearing organization or swap execution facility owned or controlled by CME Group.