UPDATE: CME Fines MF Global $495,000 Over Rogue Wheat Trades

CME Group Inc. (CME) fined brokerage MF Global Ltd. (MF) $495,000 related to rogue wheat futures trading that roiled the futures broker nearly two years ago.

The futures exchange operator's disciplinary action, announced Friday, follows a $10 million penalty assessed by U.S. futures regulators Thursday, tied to a series of risk-management failures at the company dating back to 2003.

New York-based MF Global neither admitted nor denied CME's findings that one of its traders violated exchange rules in accumulating an enormous position in May 2008 CBOT wheat futures in late February 2008.

The subsequent losses prompted a $141 million write-off for MF Global, sent its share price plunging 93% and led to the departure of U.K.-born Chief Executive Kevin Davis.

In a statement on the matter, CME officials said that MF Global failed to detect or prevent the trading activity, while its risk management and supervisory policies were less than adequate. Representatives of MF Global said that both the CME and CFTC penalties had been previously accounted for and would have no financial impact on the company.

CME's finding was contingent upon the CFTC decision, which called for MF Global to further tighten up risk controls and required an outside review of compliance practices.

The Chicago-based futures exchange operator issues similar disciplinary actions several times per month, and MF Global's penalty falls on the high side of the fines assessed.

Investors bid up MF Global shares as the company works toward settling its long-running regulatory issues, with the stock up 5.6% in midday trade at $6.75.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

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