Cboe Exchange Inc has posted a notice of disciplinary action as to Akuna Securities LLC and Thomas G. Seewald.

Akuna and Seewald have submitted Letter of Consent for the purpose of proposing a settlement of the alleged rule violations. The firm and Seewald neither admit nor deny that violations of Exchange Rules have been committed.

During all relevant periods herein, Akuna was acting as a registered Broker-Dealer and was an Exchange Trading Permit Holder registered to conduct business on the Exchange. Seewald was an associated person of Akuna. Seewald has been registered on behalf of Akuna with Cboe as a General Securities Representative (GS) since December 2015 and a Securities Trader (TD) since January 2016.

At approximately 14:54:41 on March 14, 2019, Akuna received a solicitation regarding an order to purchase 4,000 Standard & Poor’s 500 Index weekly option contracts (“SPXW”) March 2650 put options contracts for $0.15 (the “Solicited Order”).

At approximately 14:55:05, with knowledge of all the material terms and conditions of the Solicited Order, and prior to the public disclosure of the terms and conditions of the Solicited Order, Seewald, on behalf of Akuna, submitted an immediate-or-cancel order to purchase 375 SPXW March 2655 put options contracts for $0.15, thereafter receiving a partial fill on 265 contracts.

These acts and practices constitute violations of Exchange Rules 4.1 and 6.9(e) by Akuna and Seewald, in that on or about March 14, 2019, Seewald, on behalf of Akuna, with knowledge of all the material terms and conditions of the Solicited Order, and prior to the public disclosure of the terms and conditions of the Solicited Order, purchased 265 SPXW March 2655 put options contracts for $0.15.

While Akuna had written supervisory procedures (“WSPs”) in place as of March 2019, the firm failed to establish, maintain, and enforce WSPs, and a supervisory system, reasonably designed to prevent and detect violations of the rules of the Exchange relating to solicited transactions and potential frontrunning activity. In particular, the firm’s internal supervision tool failed to identify the activity described above because it did not capture sufficient audit trail information to ensure compliance with the rule and did not identify options on the same underlying security with different strike prices or expiration dates at that time.

These acts, practices and conduct constitute violations of Exchange Rule 4.24 by Akuna, in that on or about March 14, 2019, the firm failed to establish, maintain, and enforce WSPs, and a supervisory system, reasonably designed to prevent and detect violations of the rules of the Exchange relating to solicited transactions and potential frontrunning activity.

In light of the alleged rule violations described above, Akuna and Seewald consented to the imposition of a censure of Akuna and Seewald, as well as a joint and several fine of Akuna and Seewald in the amount of $105,000.