CME Fines Vice Chairman's Firm For Trades Made By Brother

CME Group Inc. (CME) said Monday that it had disciplined a proprietary trading firm co-headed by the exchange operator's vice chairman, Charles Carey, for alleged trading activity carried out by his brother, James.

Chicago's Henning & Carey Trading Co. was fined $35,000 by CME last week for allegedly failing to supervise James Carey, who was found by the exchange to have assumed another user's identity to carry out prohibited trades, according to a notice issued by CME on Monday.

The actions come as trading activity on CME's markets has drawn the eye of regulators--earlier this month, a number of test orders mistakenly were placed into live trading on CME's electronic platform for a brief period. The Commodity Futures Trading Commission is examining the mishap, which prompted CME to apologize to customers and take steps to compensate losses.

According to Monday's CME notice, James Carey, a clerk with Henning & Carey, used a user ID other than his own to access CME's electronic Globex marketplace. He proceeded to enter buy and sell orders that matched up with one another, giving the appearance of fictitious trading activity and violating CME rules against such "wash trades."

Henning & Carey, a member firm at CME, was cited for compliance failures in not catching James Carey's alleged trading activity and ordered to tighten up supervision and training of employees. The firm was also fined $35,000.

James Carey was issued a $15,000 fine and barred from accessing CME's derivatives markets for 20 business days. Neither James Carey nor his employer admitted or denied CME's findings.

A CME spokesman declined further comment on the matter. "As a policy, we do not comment any further on any disciplinary action by the exchange," he said.

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

CME (NASDAQ:CME)
Historical Stock Chart
From May 2024 to Jun 2024