International derivatives marketplace CME Group has issued a notice of disciplinary action against Andrew Middlebrooks.
The Chief Regulatory Officer of CME Group’s Market Regulation Department issued charges against Andrew Middlebrooks for violating Rules 432.W. and 576, based on allegations that Middlebrooks failed to diligently supervise his employee in the conduct of his business relating to the Exchange and permitted the employee to enter orders for E-mini Russell 2000 Index and E-mini Nasdaq futures on Globex with Middlebrooks’s Operator ID.
Specifically, from at least May 4, 2021, through July 22, 2021, Middlebrooks failed to have appropriate policies and procedures in place to prohibit employees from frontrunning orders, so as to enter orders for personal accounts before entering larger aggressor orders on behalf of the employer’s account on the same side of the markets.
On July 23, 2024, a Hearing Panel Chair of the CME Business Conduct Committee (BCC) first determined that Middlebrooks, having failed to submit a written answer to the charges issued against him, was deemed to have admitted the charges. Middlebrooks therefore waived his right to a hearing on the merits of the charges. Pursuant to CME Rule 408.F., a BCC Panel then found Middlebrooks guilty of committing the admitted charges and held a penalty hearing thereafter.
Based on the record and the Panel’s findings and conclusions, the Panel ordered Middlebrooks to pay a fine in the amount of $100,000, and be suspended from direct 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 for a period of five years, beginning on the effective date and continuing for five years from the date that the ordered fine is paid.
The effective date of the disciplinary notice is August 12, 2024.
