CME fines, bars trader for prearranging trades
International derivatives marketplace CME Group has issued a notice of disciplinary action against Abdul Majeed Lakhani.
A Panel of the CME Business Conduct Committee has issued a written decision finding that from April 27, 2021, through July 6, 2021, Abdul Majeed Lakhani, a non-member, prearranged 106 trades in Australian Dollar, British Pound, Canadian Dollar, Euro, and Japanese Yen options on futures between his personal trading account and an account over which he had trading authority.
The Panel found that Lakhani sustained substantial trading losses for the authorized account and engaged in prearranged trades in order to transfer money from his own account to the authorized account.
In determining that the trades were prearranged, the Panel considered that both accounts were controlled by Lakhani; the trades had short buy/sell order time differentials suggesting an intention to match opposite each other; the prices of all buy/sell orders matched; the quantities of the buy/sell orders matched 105 out of 106 times; the authorized account was the aggressor 97% of the time with a disproportionate amount of volume occurring between the two accounts relative to the marketplace as a whole; the trades occurred when market conditions were accommodating with wide bid/ask spreads; and there was a unidirectional transfer of funds flowing from Lakhani’s account to the authorized account.
Additionally, the Panel found that Lakhani failed and refused to meet with Market Regulation as required by Exchange rules.
Based on the evidence presented, the Panel determined that Lakhani prearranged the trades for the purpose of transferring equity between the two accounts and that he failed to appear for a scheduled staff interview.
Therefore, the Panel found Lakhani guilty of violating CME Rules 432.G. and 432.L.1.
Based on the record and the Panel’s findings, the Panel ordered Lakhani to pay a fine in the amount of $50,000. The Panel further barred Lakhani from (1) applying for membership at any CME Group exchange; (2) direct or indirect access and use of any trading floor, electronic trading platform or clearing platform owned or operated by any CME Group exchange; and (3) affiliation with, employment by, or association with a Member (as the term is defined in Rule 400) or affiliate Member of any CME Group exchange.
The bar will begin on the effective date (August 17, 2023) and continue for a period of two years after the fine is satisfied.