MF GLOBAL INC.

BrokerCheck Report

MF GLOBAL INC.

Section Title

Report Summary

Registration and Withdrawal

Firm History

CRD# 6731

1

2

9

Firm Profile 3 - 8

Page(s)

Firm Operations 10 - 14

Disclosure Events 15

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MF GLOBAL INC.

CRD# 6731

SEC# 8-18104

Main Office Location

HUGHES HUBBARD & REED LLP, ONEBATTERY PARK PLAZANEW YORK, NY 10004

Mailing Address

HUGHES HUBBARD & REED LLP, ONEBATTERY PARK PLAZANEW YORK, NY 10004

Business Telephone Number

212-837-6000

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 37

Civil Event 1

Arbitration 3

Firm Profile

This firm is classified as a corporation.

This firm was formed in Delaware on 06/04/2001.

Its fiscal year ends in March.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

This brokerage firm is no longer registered withFINRA or a national securities exchange.

www.finra.org/brokercheck User Guidance

1©2022 FINRA. All rights reserved. Report about MF GLOBAL INC.


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This section provides information relating to the date the brokerage firm ceased doing business and the firm's financialobligations to customers or other brokerage firms.

Registration Withdrawal Information

10/31/2011

No

This firm terminated orwithdrew registration on:

Does this brokerage firm oweany money or securities toany customer or brokeragefirm?






This firm is classified as a corporation.

This firm was formed in Delaware on 06/04/2001.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in March.

MF GLOBAL INC.

SEC#

6731

8-18104

Main Office Location

Mailing Address

Business Telephone Number

Doing business as MF GLOBAL INC.

212-837-6000

HUGHES HUBBARD & REED LLP, ONE BATTERY PARK PLAZANEW YORK, NY 10004

HUGHES HUBBARD & REED LLP, ONE BATTERY PARK PLAZANEW YORK, NY 10004






This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

MF GLOBAL HOLDING USA INC

SHAREHOLDER

75% or more

No

Domestic Entity

09/2010

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


ABELOW, BRADLEY IRA

DIRECTOR AND EVP

Less than 5%

No

Individual

10/2010

Yes

1983124



Position


Position Start Date

CORZINE, JON STEVENS

PRESIDENT AND CEO

Less than 5%

Individual

10/2010

811812








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


FERBER, LAURIE RUTH

DIRECTOR

Less than 5%

No

Individual

12/2009

Yes

1687254



Position



Position Start Date


FORLENZA, PETER CHARLES

SENIOR VICE PRESIDENT

Less than 5%

No

Individual

01/2010

Yes

2366985



LOWERY-WHILLE, TRACY ANN

2872693








Firm Profile

Position



Position Start Date


CHIEF COMPLIANCE OFFICER AND SVP

Less than 5%

No

Individual

06/2009

No

2872693


Position



Position Start Date


MACDONALD, JOHN RANALD

DIRECTOR AND EVP

Less than 5%

No

Individual

10/2010

Yes

2540475



Position


Position Start Date


SERWINSKI, CHRISTINE ANN

CFO & FINOP & SVP

Less than 5%

Individual

09/2010

Yes

4169392









Firm Profile



No

Yes






This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

MF GLOBAL HOLDINGS LTD.

SHAREHOLDER

MF GLOBAL HOLDINGS USA INC.

75% or more

Yes

Domestic Entity

03/2011

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established









Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

The firm's registration was from 11/13/1972 to 06/05/2017.

This firm is no longer registered.






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: THE APPLICANT IS REGISTERED AS A FUTURES COMMISSIONMERCHANT WITH THE COMMODITY FUTURES TRADING COMMISSION(THE "CFTC") AND IS A MEMBER OF THE NATIONAL FUTURESASSOCIATION AND EVERY MAJOR US FUTURES EXCHANGE. THEAPPLICANT PROVIDES EXECUTION AND CLEARING SERVICES FOREXCHANGES-TRADED AND OTC DERIVATIVE PRODUCTS AND NON-DERIVATE FOREIGN EXCHANGE PRODUCTS.

This firm currently conducts 10 types of businesses.

Types of Business

Exchange member engaged in exchange commission business other than floor activities

Exchange member engaged in floor activities

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Mutual fund retailer

U S. government securities dealer

Municipal securities broker

Put and call broker or dealer or option writer

Private placements of securities

Other - STOCK BORROWING OR LOAN; SECURITY-FUTURES PRODUCTS; ELECTRONIC TRADING






Firm Operations

Clearing Arrangements

This firm does hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does not refer or introduce customers to other brokers and dealers.






Firm Operations

Industry Arrangements

This firm does not have books or records maintained by a third party.

This firm does not have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: REICH & TANG ASSET MANAGEMENT LLP

Business Address: 600 5TH AVE.8TH FLOORNEW YORK, NY 10020

Effective Date: 08/09/1996

Description: THE FIRM SWEEPS EXCESS RETAIL CUSTOMER FUNDS INTO A REICH &TANG MONEY MARKET FUND FOR INTEREST BEARING PURPOSES.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is not, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 37 0

Civil Event 0 1 0

Arbitration N/A 3 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 37

Reporting Source: Regulator

Allegations: THAT MF GLOBAL DID NOT EMPLOY AT LEAST ONE PERSON DESIGNATEDTO ACT IN A SUPERVISORY CAPACITY WHO WAS REGISTERED AS ANAGENT IN SOUTH DAKOTA, IN VIOLATION OF ARSD 20:08:03:01(2)(B)(I).

Current Status: Final






Initiated By: SOUTH DAKOTA

Principal Sanction(s)/ReliefSought:

Revocation

Other Sanction(s)/ReliefSought:

Date Initiated: 07/11/2012

Docket/Case Number: NA

URL for Regulatory Action:

Principal Product Type: No Product

Other Product Type(s):

Allegations: THAT MF GLOBAL DID NOT EMPLOY AT LEAST ONE PERSON DESIGNATEDTO ACT IN A SUPERVISORY CAPACITY WHO WAS REGISTERED AS ANAGENT IN SOUTH DAKOTA, IN VIOLATION OF ARSD 20:08:03:01(2)(B)(I).

Resolution Date: 12/31/2012

Resolution:

Other Sanctions Ordered:

Sanction Details: TERMINATED, FAILURE TO RENEW ON 12-31-12.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered:

Other

Disclosure 2 of 37

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Initiated By: ILLINOIS

Allegations: DESCRIBE THE ALLEGATIONS RELATED TO THIS REGULATORY ACTION: ONOR ABOUT 11/02/2011 RESPONDENT'S PARENT ENTITIES,MF GLOBALHOLDINGS, LTD. & MF GLOBAL FINANCE USA, INC.,FILED FOR PROTECTIONUNDER CHAPTER 11 OF THE FEDERAL BANKRUPTCY ACT,UNITED STATESBANKRUPTCY COURT, SOUTHERN DISTRICT OF NEWYORK,DOCKET#11015059 & #11015058 RESPECTIVELY.








Other


CANCELLATION


Docket/Case Number: 1100471

URL for Regulatory Action:

Principal Product Type: Other



Resolution:

Other Sanctions Ordered: THAT IT IS IN THE PUBLIC INTEREST TO ENTER AN ORDER WHICHCANCELS THE DEALER REGISTRATION OF THE RESPONDENT IN THESTATE OF ILLINOIS.

Sanction Details: N/A

Regulator Statement THE DEPARTMENT HAS DETERMINED THAT THE RESPONDENT HASCEASED TO DO BUSINESS AS A DEALER IN THE STATE OF ILLINOIS ANDHAS ENTERED AN ORDER WHICH CANCELS THE DEALER REGISTRATION.IFYOU HAVE QUESTIONS CONTACT ENFORCEMENT ATTORNEY DANIELTUNICK @312/793-4433.


No

Sanctions Ordered:

Order

Disclosure 3 of 37

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Reporting Source: Firm

Allegations: ALLEGED VIOLATIONS OF CBOT RULES 432.W, 432.Y AND 576 REGARDINGFAILURE TO DETECT OR PREVENT AP'S EXCESSIVE TRADING IN HISPERSONAL TRADING ACCOUNT, FAILURE TO PROVIDE APPROPRIATESUPERVISORY TRAINING AND ADEQUATELY ENFORCE ITS OWNSUPERVISORY AND RISK MANAGEMENT POLICIES WITH RESPECT TO ABRANCH OFFICE; AND FAILURE TO MAINTAIN PROPER TAG50REGISTRATION OF GLOBEX TERMINAL OPERATORS.







Initiated By: CHICAGO MERCANTILE EXCHANGE ("CME")


Civil and Administrative Penalt(ies) /Fine(s)


CEASE AND DESIST VIOLATING CBOT RULES 432.W, 432.Y AND 576;PROVIDE THE CME WITH WRITTEN POLICIES AND PROCEDURES FORCOMPLYING WITH CBOT RULE 576; SATISFY UNDERTAKINGS IDENTIFIED INTHE FIRM'S SETTLEMENT WITH THE CFTC IN MATTER 10-03 AND PROVIDETHE CME WITH THE WRITTEN REPORTS FILED WITH THE CFTC INCONNECTION WITH THE UNDERTAKINGS IN THE FIRM'S SETTLEMENTWITH THE CFTC IN MATTER 10-03.


Docket/Case Number: CBOT 08-00119-BC, CBOT 08-02817-CTRER-BC AND CBOT 08-05021-CTRER-BC



ALLEGED VIOLATIONS OF CBOT RULES 432.W, 432.Y AND 576 REGARDINGFAILURE TO DETECT OR PREVENT AP'S EXCESSIVE TRADING IN HISPERSONAL TRADING ACCOUNT, FAILURE TO PROVIDE APPROPRIATESUPERVISORY TRAINING AND ADEQUATELY ENFORCE ITS OWNSUPERVISORY AND RISK MANAGEMENT POLICIES WITH RESPECT TO ABRANCH OFFICE; AND FAILURE TO MAINTAIN PROPER TAG50REGISTRATION OF GLOBEX TERMINAL OPERATORS.


Resolution:

Other Sanctions Ordered: CEASE AND DESIST VIOLATING CBOT RULES 432.W, 432.Y AND 576;PROVIDE THE CME WITH WRITTEN POLICIES AND PROCEDURES FORCOMPLYING WITH CBOT RULE 576; SATISFY UNDERTAKINGS IDENTIFIEDTHE FIRM'S SETTLEMENT WITH THE CFTC IN MATTER 10-03 AND PROVIDETHE CME WITH THE ANY WRITTEN REPORTS FILED WITH THE CFTC INCONNECTION WITH THE UNDERTAKINGS IN THE FIRM'S SETTLEMENTWITH THE CFTC IN MATTER 10-03

Sanction Details: FINE OF $495,000.00 WAS PAID BY FIRM.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM SETTLEDA CME DISCIPLINARY MATTER IN CONNECTION WITH THE FIRM'SDISCLOSURE OF TRADING LOSSES BY AN AP IN HIS PERSONAL FUTURESTRADING ACCOUNT, WHICH WAS ALSO THE SUBJECT OF A CFTCADMINISTRATIVE MATTER. THE FIRM AGREED TO PAY A FINE OF$495,000.00 AND TO PROVIDE WRITTEN POLICIES AND PROCEEDURES TOTHE CME AS WELL AS SATISFY VARIOUS UNDERTAKINGS IDENTIFIED INTHE FIRM'S SETTLEMENT WITH THE CFTC.

Sanctions Ordered: Monetary/Fine $495,000.00

Settled

Disclosure 4 of 37

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Disclosure 4 of 37


Initiated By: CHICAGO MERCANTILE EXCHANGE


Other


FINE


Docket/Case Number: 04-471-060710



Allegations: ALLEGED THAT IN 2010 FIRM VIOLATED NYMEX RULE 536.A. WITHRESPECT TO TIME STAMPING OF ORDERS AND/OR PROPER NOTATION OFACCOUNT IDENTIFIERS.



Resolution:


Sanction Details: FIRM PAID FINE OF $2,500.00


Other

Disclosure 5 of 37

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Other


Docket/Case Number: 10-04957



Allegations: TRADE DATA FOR TWO TRADE DATES IN MARCH 2010 REFLECTED ANUNACCEPTABLE CTR ERROR IN VIOLATION OF CBOT RULE 536.F.








Other


MONETARY FINE


Resolution:




Decision

Disclosure 6 of 37

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Other


MONETARY FINE





Allegations: TRADE DATA FOR TWO DATES IN MARCH 2010 REFLECTED ANUNACCEPTABLE CTR ERROR RATE IN VIOLATION OF CME RULE 536.F.



Resolution:




Decision

Disclosure 7 of 37

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Initiated By: INTERNATIONAL SECURITIES EXCHANGE


Restitution



Docket/Case Number: 2008-133, 2008-149, 2008-200, 2009-032, 2009-095, 2009-150, 2009-156, 2009-225, 2009-255, 2010-021, 2010-068

Principal Product Type: Options


Allegations: BETWEEN THE FIRST QUARTER OF 2008 & THE FIRST QUARTER OF 2010,MF GLOBAL IMPROPERLY UTILIZING THE SOLICITED ORDER MECHANISMBY FLIPPING THE SOLICITED & UNSOLICITED SIDES OF 48 CROSSINGORDERS IT HAD REPRESENTED AS AGENT, THEREBY FAILING TOPROPERLY ENTER AND EXPOSE SUCH ORDERS. IN DOING SO THEYVIOLATED RULES 716(E) & 717 (E). ALSO, DURING THE ABOVEREFERANCED REVIEW PERIOD, MF GLOBAL ENTERED SEVE ORDERS,TOTALLING 38,764 CONTRACTS WITH THE INCORRECT ACCOUNT TYPETHEREBY VIOLATING RULE 712(A). FINALLY, MF GLOBAL FAILED TOREASONABLY SUPERVISE ITS EMPLOYEES TO ENSURE COMPLIANCEWITH ISE RULES REGARDING THE PROPER ENTRY & EXPOSURE OFORDERS. THIS IS IN VIOLATION OF ISE RULE 401.



Resolution:


Sanction Details: A $95,000 FINE AND RESTITUTION PAYMENT OF UNPAID EXECUTION FEESDUE TO THE EXCHAGE IN THE AMMOUNT OF $6,977.52

Sanctions Ordered: Monetary/Fine $95,000.00Disgorgement/Restitution

Acceptance, Waiver & Consent(AWC)

iReporting Source: Firm

Allegations: ALLEGED THAT DURING THE PERIOD BETWEEN THE FIRST QUARTER 2008AND THE FIRST QUARTER OF 2010, THE FIRM IMPROPERLY UTILIZED THESOLICITED ORDER MECHANISM OR OTHERWISE FAILED TO PROPERLYENTER AND EXPOSE ORDERS IT HAD REPRESENTED AS AGENT, IN THATFOR 48 SEPARATE CROSSING ORDERS, IT REPRESENTED A SOLICITEDORDER AS UNSOLICITED AND AN UNSOLICITED ORDER AS SOLICITED("FLIPPING") WHICH FAILED TO EXPOSE THE UNSOLICITED ORDER TO THEMARKET FOR THE OPPORTUNITY FOR PRICE IMPROVEMENT; THE FIRMENTERED SEVEN ORDERS ON THE EXCHANGE, TOTALING 38,764CONTRACTS WITH INCORRECT INFORMATION REGARDING ACCOUNTTYPE; AND THE FIRM FAILED TO REASONABLY SUPERVISE ITSEMPLOYEES TO ASSURE COMPLIANCE WITH THE APPLICABLE ISE RULESREGARDING ACCURATE IDENTIFICATION OF ACCOUNT TYPE FOR ORDERSENTERED ON THE EXCHANGE AND THE PROPER ENTRY AND EXPOSUREOF ORDERS IT HAD REPRESENTED AS AGENT ON THE EXCHANGE







Initiated By: INTERNATIONAL SECURITIES EXCHANGE INC.




RESTITUTION PAYMENT OF UNPAID EXECUTION FEES DUE THE ISE IN THEAMOUNT OF $6,977.52.


Docket/Case Number: 2008-133, 2008-149, 2008-200, 2009-032, 2009-095, 2009-150, 2009-156, 2009-225, 2009-255, 2010-021, 2010-068



Allegations: ALLEGED THAT DURING THE PERIOD BETWEEN THE FIRST QUARTER 2008AND THE FIRST QUARTER OF 2010, THE FIRM IMPROPERLY UTILIZED THESOLICITED ORDER MECHANISM OR OTHERWISE FAILED TO PROPERLYENTER AND EXPOSE ORDERS IT HAD REPRESENTED AS AGENT, IN THATFOR 48 SEPARATE CROSSING ORDERS, IT REPRESENTED A SOLICITEDORDER AS UNSOLICITED AND AN UNSOLICITED ORDER AS SOLICITED("FLIPPING") WHICH FAILED TO EXPOSE THE UNSOLICITED ORDER TO THEMARKET FOR THE OPPORTUNITY FOR PRICE IMPROVEMENT; THE FIRMENTERED SEVEN ORDERS ON THE EXCHANGE, TOTALING 38,764CONTRACTS WITH INCORRECT INFORMATION REGARDING ACCOUNTTYPE; AND THE FIRM FAILED TO REASONABLY SUPERVISE ITSEMPLOYEES TO ASSURE COMPLIANCE WITH THE APPLICABLE ISE RULESREGARDING ACCURATE IDENTIFICATION OF ACCOUNT TYPE FOR ORDERSENTERED ON THE EXCHANGE AND THE PROPER ENTRY AND EXPOSUREOF ORDERS IT HAD REPRESENTED AS AGENT ON THE EXCHANGE


Resolution:

Other Sanctions Ordered: RESTITUTION PAYMENT OF UNPAID EXECUTION FEES DUE THE ISE IN THEAMOUNT OF $6,977.52.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE ENTRY OF FINDINGS BY THE ISE, A FINE OF$95,000.00 AND RESTITUTION PAYMENT OF UNPAID EXECUTION FEES DUETHE ISE IN THE AMOUNT OF $6,977.52.



Disclosure 8 of 37

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Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES

Allegations: SEC RULE 17A-3, NASD RULES 2110, 3010, 3110, 6230(A), 6230(C)(8) - MFGLOBAL INC. FAILED TO REPORT TO THE TRADE REPORTING ANDCOMPLIANCE ENGINE (TRACE) THE CORRECT TIME OF TRADE EXECUTIONFOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES. THE FIRM FAILEDTO REPORT TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES TO TRACEWITHIN 15 MINUTES OF EXECUTION. THIS CONDUCT CONSTITUTESSEPARATE AND DISTINCT VIOLATIONS OF NASD RULE 6230(A) AND APATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONALCIRCUMSTANCES IN VIOLATION OF NASD RULE 2110. THE FIRM FAILED TOSHOW THE CORRECT TIME OF EXECUTION ON ITS TRADE BLOTTER FORTRANSACTIONS FOR THE ACCOUNT OF THE FIRM WITH ANOTHERBROKER OR DEALER. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND NASD RULESCONCERNING TRACE REPORTING.



Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $11,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING TRACEREPORTING WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BYTHE NAC.


No

Sanctions Ordered: CensureMonetary/Fine $11,000.00






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2008013307501


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $11,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING TRACEREPORTING WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BYTHE NAC.


Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)


Censure


FINE OF $11,000 AND FIRM REQUIRED TO REVISE ITS WRITTENSUPERVISORY PROCEDURES REGARDING TRACE REPORTING




Other Product Type(s): TRACE-ELIGIBLE SECURITIES

Allegations: ALLEGED THAT DURING THE FIRST QUARTER OF 2008, THE FIRM FAILEDTO REPORT TO TRACE THE CORRECT TIME OF TRADE EXECUTIONS INTRACE-ELIGIBLE SECURITIES; FAILED TO REPORT TRANSACTIONS INTRACE-ELIGIBLE SECURITIES TO TRACE WITHIN 15 MINUTES OFEXECUTION; FAILED TO SHOW THE CORRECT TIME OF EXECUTION ON ITSTRADE BLOTTER FOR TRANSACTIONS FOR THE ACCOUNT OF THE FIRMWITH ANOTHER BROKER OR DEALER; AND THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS ANDNASD RULES CONCERNING TRACE REPORTING.



Resolution:

Other Sanctions Ordered: UNDERTAKING TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESWITH RESPECT TO TRACE REPORTING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A CENSURE, FINE OF $11,000.00 AND UNDERTAKING TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES WITH RESPECT TO TRACEREPORTING









WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A CENSURE, FINE OF $11,000.00 AND UNDERTAKING TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES WITH RESPECT TO TRACEREPORTING

Disclosure 9 of 37

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Allegations: CFTC RELEASE 5763-09, DECEMBER 17, 2009: THE COMMODITY FUTURESTRADING COMMISSION ("COMMISSION") HAS REASON TO BELIEVE THATMF GLOBAL INC., A REGISTERED FUTURES COMMISSION MERCHANT,VIOLATED COMMISSION REGULATION ("REGULATION") 166.3, 17 CFRSECTION 166.3 (2009). THEREFORE THE COMMISSION DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED TODETERMINE WHETHER MF GLOBAL ENGAGED IN THE VIOLATIONS SETFORTH HEREIN, AND TO DETERMINE WHETHER AN ORDER SHOULD BEISSUED IMPOSING REMEDIAL SANCTIONS. IN FOUR SEPARATEINSTANCES ON VARIOUS DAYS DURING THE PERIOD 2003 TO 2008, MFGLOBAL FAILED TO ENSURE THAT SIGNIFICANT ASPECTS OF ITS RISKMANAGEMENT, SUPERVISION AND COMPLIANCE PROGRAMS COMPORTEDWITH ITS OBLIGATIONS TO SUPERVISE DILIGENTLY ITS BUSINESS AS ACOMMISSION REGISTRANT. SPECIFICALLY, ON FEBRUARY 26-27, 2008, AMF GLOBAL ASSOCIATED PERSON ("AP") IN MF GLOBAL'S MEMPHISBRANCH ENGAGED IN UNDETECTED OVERNIGHT TRADING IN WHEATFUTURES IN HIS PERSONAL ACCOUNT THAT RESULTED IN TRADINGLOSSES OF APPROXIMATELY $141 MILLION, WHICH MF GLOBAL PAID AS ACLEARING MEMBER OF THE CHICAGO MERCANTILE EXCHANGE/CHICAGOBOARD OF TRADE ("CBOT"). THE AP ACCUMULATED A MASSIVE SHORTPOSITION IN THE MAY 2008 CBOT WHEAT FUTURES CONTRACT DESPITETHE FACT THAT THE AP ENTERED THE TRADING SESSION WITH A DEBITBALANCE IN HIS ACCOUNT. MF GLOBAL PERSONNEL FAILED TO USE THECOMPANY'S INTERNAL CONTROLS APPROPRIATELY AND FAILED TODETECT OR PREVENT THE AP'S EXCESSIVE TRADING. IN ADDITION, MFGLOBAL FAILED TO PROVIDE APPROPRIATE SUPERVISORY TRAINING TOTHE MEMPHIS BRANCH OFFICE AND TO ENFORCE ADEQUATELY ITS OWNSUPERVISORY POLICIES. FROM APPROXIMATELY MAY 2003 UNTIL APRIL2007, AT LEAST ONE MF GLOBAL VOICE BROKER SENT PRICE INDICATIONSON THE CORRESPONDING TERMS OF THE NEW YORK MERCANTILEEXCHANGE ("NYMEX") NATURAL GAS CONTRACT LOOKALIKE, FINANCIALLYSETTLED OPTIONS AND CALENDAR SPREADS TO THE BACK-OFFICE OF ACUSTOMER THAT TRADED NATURAL GAS OPTIONS. THE MF GLOBALVOICE BROKER INCLUDED WITH THE PRICE INDICATIONS A STATEMENTTHAT THE PRINCE INDICATIONS "ARE NOT TRADABLE MARKETS. THEY ARENUMBERS THAT REFLECT A CONSENSUS TAKEN ON [A PARTICULAR] DATEAND TIME, FROM DIFFERENT SOURCES IN THE MARKET PLACE." MFGLOBAL FAILED TO IMPLEMENT PROCEDURES TO ENSURE THAT THEPRICE INDICATIONS TRANSMITTED BY ITS BROKER DID, IN FACT, "REFLECT A CONSENSUS TAKEN ON [A PARTICULAR] DATE AND TIME," ANDWERE DERIVED FROM "DIFFERENT SOURCES IN THE MARKET PLACE." ONTWO OCCASIONS IN AUGUST AND SEPTEMBER OF 2004, A MF GLOBALFLOOR BROKER FAILED TO ENSURE THE PROPER AND ACCURATEPREPARATION OF TRADING CARDS REQUIRES BY THE REGULATIONS ANDINSTEAD PROCESSED TRADES THAT WERE MADE AFTER THE RELEVANTNATURAL GAS FUTURES CONTRACT WAS NO LONGER TRADING. THETRADES WERE KNOWN AS "EFS" TRADES, WHICH INVOLVE AN EXCHANGEOF FUTURES FOR, OR IN CONNECTION WITH, A SWAP. EACH OF THETRADES WAS CALLED INTO THE FLOOR OF THE NYMEX ON THE BUSINESSDAY AFTER THE EXPIRATION OF THE NATURAL GAS FUTURES CONTRACTAND AFTER THE TIME EFS TRADES ARE PERMITTED. TRADING CARDSSUBMITTED IN CONNECTION WITH THESE TRADES REFLECTEDINACCURATELY THAT THE TRADES HAD BEEN MADE PRIOR TO THEEXPIRATION OF THE NATURAL GAS FUTURES CONTRACT. MF GLOBALFAILED TO IMPLEMENT PROCEDURES REGARDING EVALUATION OF LATESUBMITTAL OF TRADES. SEPARATELY BETWEEN JANUARY AND MARCH2006, MF GLOBAL EFFECTED APPROXIMATELY 20 TRANSACTIONS IN ACUSTOMER'S ACCOUNT FROM TELEPHONIC INSTRUCTIONS FROM THECUSTOMER'S INTRODUCING BROKER. MF GLOBAL DID NOT HAVE IN ITSFILES THE CUSTOMER'S AUTHORIZATIONS TO EFFECT THESETRANSACTIONS FROM THIS BROKER.







Initiated By: COMMODITY FUTURES TRADING COMMISSION







CFTC RELEASE 5763-09, DECEMBER 17, 2009: THE COMMODITY FUTURESTRADING COMMISSION ("COMMISSION") HAS REASON TO BELIEVE THATMF GLOBAL INC., A REGISTERED FUTURES COMMISSION MERCHANT,VIOLATED COMMISSION REGULATION ("REGULATION") 166.3, 17 CFRSECTION 166.3 (2009). THEREFORE THE COMMISSION DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED TODETERMINE WHETHER MF GLOBAL ENGAGED IN THE VIOLATIONS SETFORTH HEREIN, AND TO DETERMINE WHETHER AN ORDER SHOULD BEISSUED IMPOSING REMEDIAL SANCTIONS. IN FOUR SEPARATEINSTANCES ON VARIOUS DAYS DURING THE PERIOD 2003 TO 2008, MFGLOBAL FAILED TO ENSURE THAT SIGNIFICANT ASPECTS OF ITS RISKMANAGEMENT, SUPERVISION AND COMPLIANCE PROGRAMS COMPORTEDWITH ITS OBLIGATIONS TO SUPERVISE DILIGENTLY ITS BUSINESS AS ACOMMISSION REGISTRANT. SPECIFICALLY, ON FEBRUARY 26-27, 2008, AMF GLOBAL ASSOCIATED PERSON ("AP") IN MF GLOBAL'S MEMPHISBRANCH ENGAGED IN UNDETECTED OVERNIGHT TRADING IN WHEATFUTURES IN HIS PERSONAL ACCOUNT THAT RESULTED IN TRADINGLOSSES OF APPROXIMATELY $141 MILLION, WHICH MF GLOBAL PAID AS ACLEARING MEMBER OF THE CHICAGO MERCANTILE EXCHANGE/CHICAGOBOARD OF TRADE ("CBOT"). THE AP ACCUMULATED A MASSIVE SHORTPOSITION IN THE MAY 2008 CBOT WHEAT FUTURES CONTRACT DESPITETHE FACT THAT THE AP ENTERED THE TRADING SESSION WITH A DEBITBALANCE IN HIS ACCOUNT. MF GLOBAL PERSONNEL FAILED TO USE THECOMPANY'S INTERNAL CONTROLS APPROPRIATELY AND FAILED TODETECT OR PREVENT THE AP'S EXCESSIVE TRADING. IN ADDITION, MFGLOBAL FAILED TO PROVIDE APPROPRIATE SUPERVISORY TRAINING TOTHE MEMPHIS BRANCH OFFICE AND TO ENFORCE ADEQUATELY ITS OWNSUPERVISORY POLICIES. FROM APPROXIMATELY MAY 2003 UNTIL APRIL2007, AT LEAST ONE MF GLOBAL VOICE BROKER SENT PRICE INDICATIONSON THE CORRESPONDING TERMS OF THE NEW YORK MERCANTILEEXCHANGE ("NYMEX") NATURAL GAS CONTRACT LOOKALIKE, FINANCIALLYSETTLED OPTIONS AND CALENDAR SPREADS TO THE BACK-OFFICE OF ACUSTOMER THAT TRADED NATURAL GAS OPTIONS. THE MF GLOBALVOICE BROKER INCLUDED WITH THE PRICE INDICATIONS A STATEMENTTHAT THE PRINCE INDICATIONS "ARE NOT TRADABLE MARKETS. THEY ARENUMBERS THAT REFLECT A CONSENSUS TAKEN ON [A PARTICULAR] DATEAND TIME, FROM DIFFERENT SOURCES IN THE MARKET PLACE." MFGLOBAL FAILED TO IMPLEMENT PROCEDURES TO ENSURE THAT THEPRICE INDICATIONS TRANSMITTED BY ITS BROKER DID, IN FACT, "REFLECT A CONSENSUS TAKEN ON [A PARTICULAR] DATE AND TIME," ANDWERE DERIVED FROM "DIFFERENT SOURCES IN THE MARKET PLACE." ONTWO OCCASIONS IN AUGUST AND SEPTEMBER OF 2004, A MF GLOBALFLOOR BROKER FAILED TO ENSURE THE PROPER AND ACCURATEPREPARATION OF TRADING CARDS REQUIRES BY THE REGULATIONS ANDINSTEAD PROCESSED TRADES THAT WERE MADE AFTER THE RELEVANTNATURAL GAS FUTURES CONTRACT WAS NO LONGER TRADING. THETRADES WERE KNOWN AS "EFS" TRADES, WHICH INVOLVE AN EXCHANGEOF FUTURES FOR, OR IN CONNECTION WITH, A SWAP. EACH OF THETRADES WAS CALLED INTO THE FLOOR OF THE NYMEX ON THE BUSINESSDAY AFTER THE EXPIRATION OF THE NATURAL GAS FUTURES CONTRACTAND AFTER THE TIME EFS TRADES ARE PERMITTED. TRADING CARDSSUBMITTED IN CONNECTION WITH THESE TRADES REFLECTEDINACCURATELY THAT THE TRADES HAD BEEN MADE PRIOR TO THEEXPIRATION OF THE NATURAL GAS FUTURES CONTRACT. MF GLOBALFAILED TO IMPLEMENT PROCEDURES REGARDING EVALUATION OF LATESUBMITTAL OF TRADES. SEPARATELY BETWEEN JANUARY AND MARCH2006, MF GLOBAL EFFECTED APPROXIMATELY 20 TRANSACTIONS IN ACUSTOMER'S ACCOUNT FROM TELEPHONIC INSTRUCTIONS FROM THECUSTOMER'S INTRODUCING BROKER. MF GLOBAL DID NOT HAVE IN ITSFILES THE CUSTOMER'S AUTHORIZATIONS TO EFFECT THESETRANSACTIONS FROM THIS BROKER.


Resolution:


No

Order






Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. WITHOUT ADMITTING ORDENYING THE FINDINGS HEREIN, MF GLOBAL ACKNOWLEDGES SERVICEOF THIS ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTIONS6(C) AND 6(D) OF THE COMMODITY EXCHANGE ACT AND MAKING FINDINGSAND IMPOSING REMEDIAL SANCTIONS. THE COMMISSION FINDS THAT MFGLOBAL VIOLATED REGULATION 166.3, 17 CFR SECTION 166.3 (2009).ACCORDINGLY, IT IS HEREBY ORDERED THAT MF GLOBAL SHALL CEASEAND DESIST FROM VIOLATING REGULATION 166.3, 17 CFR SECTION 166.3(2009); MF GLOBAL SHALL PAY A CIVIL MONETARY PENALTY IN THEAMOUNT OF $10,000,000 WITHIN TEN DAYS OF THE DATE OF THE ENTRYOF THIS ORDER. MF GLOBAL, INCLUDING ITS SUBSIDIARIES ANDAFFILIATES THAT OPERATE IN OR PROVIDE SERVICES FOR COMMODITYAND/OR COMMODITY DERIVATIVE TRADING IN THE UNITED STATES, SHALLCOMPLY WITH THE UNDERTAKINGS. UNDERTAKINGS: MF GLOBAL SHALL COOPERATE FULLY/EXPEDITIOUSLYWITH THE COMMISSION, MF GLOBAL'S DESIGNATED SELF-REGULATORYORGANIZATION ("DSRO"), AND OTHER FEDERAL/STATE/MUNICIPALAUTHORITIES WITH JURISDICTION, IN MATTERS RELATED TO THEUNDERLYING EVENTS THAT GAVE RISE TO THE SPECIFIC CLAIMS HEREIN.MF GLOBAL AGREES TO COMPLY FULLY/PROMPTLY/TRUTHFULLY WITHANY INQUIRIES OR REQUESTS FOR INFORMATION, INCLUDING REQUESTSFOR DOCUMENT AUTHENTICATION; FOR ANY DOCUMENTS WITHIN ITSACTUAL/CONSTRUCTIVE POSSESSION/CUSTODY/ CONTROL; TO URGETHEIR CURRENT AGENTS AND EMPLOYEES TO TESTIFY COMPLETELY ANDTRUTHFULLY; TO PRODUCE ANY CURRENT OFFICER, DIRECTOR, OREMPLOYEE, REGARDLESS OF THE LOCATION, TO APPEAR FORINTERVIEWS, DEPOSITIONS, AND PROVIDE TESTIMONY OR ASSISTANCEAT ANY TRIAL RELATED TO THE SUBJECT MATTER UNDERLYING THEINSTANT VIOLATIONS; AND FOR ASSISTANCE IN LOCATING ANDCONTACTING ANY FORMER OFFICER, DIRECTOR, OR EMPLOYEE.SUBJECT TO APPLICABLE PRIVILEGES, MF GLOBAL AGREES THAT IT WILLNOT ACT IN ANY WAY THAT WOULD LIMIT ITS ABILITY TO COOPERATEFULLY WITH THE COMMISSION.

Regulator Statement UNDERTAKING CONT.: MF GLOBAL'S PARENT COMPANY ENGAGEDANOTHER COMPANY ("REC-COM") AND ITS CEO ("RECOMMENDER") TORECOMMEND INDUSTRY "BEST PRACTICES" IN ITS RISK MANAGEMENT,SUPERVISION, AND COMPLIANCE PROGRAMS. IT HAS MADERECOMMENDATIONS TO THE PARENT COMPANY RELATED TO THECOMMODITY AND COMMODITY DERIVATIVES TRADING ACTIVITIES OF MFGLOBAL THAT WERE APPROVED BY THE BOARD AND WHICH THE PARENTCOMPANY EITHER HAS IMPLEMENTED OR IS IMPLEMENTED. THEREVIEWS AND ASSESSMENTS ("RA") SHALL CONSIST OF AN INITIAL RA,COMMENCING ON OR ABOUT 1/2/10 COVERING THE PERIOD FROM THEDATE OF THE RECOMMENDATIONS THROUGH THE DATE OF COMPLETIONOF THE INITIAL RA, ANTICIPATED TO BE 3/1/10; AND A SECOND RA,COMMENCING ON OR ABOUT 1/2/11 COVERING THE PERIOD FROM THEDATE OF THE INITIAL RA THROUGH THE DATE OF COMPLETION OF THESECOND RA, ANTICIPATED TO BE 3/1/11. EACH RA SHALL COVER THEIMPLEMENTATION OF THE RECOMMENDATIONS, POLICIES ANDPROCEDURES, ANY ADDITIONAL RECOMMENDATIONS MADE BY THE AUDITCOMMITTEE IN ITS DISCRETION, AND ANY ADDITIONALRECOMMENDATIONS DEEMED NECESSARY BY REC-COM; AND ANEVALUATION OF WHETHER EXISTING AND FUTURE RISK MANAGEMENT,SUPERVISORY AND COMPLIANCE POLICIES & PROCEDURES AREGENERALLY EFFECTIVE IN PREVENTING/DETECTING POTENTIALVIOLATIONS; ADDRESS RISK MANAGEMENT, SUPERVISION & COMPLIANCEOF ALL COMMODITY RELATED ACTIVITIES; AND HAVE THE SUPPORT OFTHE PARENT COMPANY. THE RECOMMENDER IS COMPLETELYINDEPENDENT FROM MF GLOBAL AND IS NOT AND SHALL NOT BETREATED AS AN OFFICER, EMPLOYEE, AGENT OR AFFILIATE AND HE SHALLNOT BE OWED ANY FIDUCIARY DUTY. MF GLOBAL SHALL NOT EMPLOYTHE RECOMMENDER OR REC-COM FOR TWO YEARS AFTER THEENGAGEMENT TERMINATES. THE RAS DO NOT CONSTITUTE A DEFENSETO ANY ACTION THAT THE COMMISSION, DSRO, OR ANY FEDERAL, STATEOR MUNICIPAL ENTITY MAY ELECT TO BRING AGAINST MF GLOBAL. MFGLOBAL SHALL REQUIRE ITS DIRECTORS, OFFICERS, EMPLOYEES,AGENTS, AND CONSULTANTS TO FULLY COOPERATE WITH THERECOMMENDER, ANONYMOUSLY AT THEIR OPTION AND WITHOUTPENALTY. THE RECOMMENDER SHALL SUBMIT REPORTS TO THE AUDITCOMMITTEE, WHICH ARE CONFIDENTIAL. MF GLOBAL SHALL PROVIDEACCESS TO ALL RELEVANT DOCUMENTS; THE RIGHT TO INTERVIEW ANYPERSONNEL AND PARTICIPATE IN ANY RELEVANT MEETING; THE RIGHT TOOBSERVE RELEVANT BUSINESS OPERATIONS. MF GLOBAL SHALL PUTINTO EFFECT, TO EXTENT NOT ALREADY DONE, ENHANCED RISKMONITORING PROCEDURES REGARDING SUPERVISION OF MANAGERSDESIGNED TO NOTIFY SENIOR MANAGEMENT OF POTENTIALLY UNLAWFULOR EXCESSIVE TRADING BY APS OR OTHER EMPLOYEES; POLICIESREQUIRING TRAINING ON MARGIN, CREDIT AND RISK POLICIES; A RISKMITIGATION SYSTEM ON ALL ELECTRONIC ORDER ENTRY SYSTEMS ANDDOCUMENTATION OF SUCH PROCESSES AND CHANGES THEREON;PROCEDURES REGARDING ASSESSMENT AND MONITORING OF RISKSPOSED BY ACCOUNTS/CUSTOMERS/EMPLOYEES WITH ELECTRONICDIRECT MARKET ACCESS CAPABILITIES; UPDATING/STRENGTHENINGSUPERVISION OF DESKS AND PROCEDURES REQUIRING PERIODICCOMPLIANCE REVIEW OF LIVE AND TAPED TELEPHONIC CONVERSATIONS;POLICIES/PROCEDURES TO DEVELOP/IMPLEMENT ENHANCEDCOMPLIANCE AUDIT PROGRAM TO ENSURE EACH TRADING DESK ISAUDITED ANNUALLY TO DETECT AND DETER VIOLATIONS; EFFECTIVECOMMUNICATIONS POLICIES TO ALL PERSONNEL REGARDINGCOMPLIANCE; A POLICY TO REQUIRE PERSONNEL TO REPORTVIOLATIONS; A POLICY TO REQUIRE COMPLIANCE TO INVESTIGATE SUCHREPORTS; ENFORCEMENT OF PROCEDURES ADDRESSING REPORTS;REQUIRED UPDATE OF POLICIES/PROCEDURES; ESTABLISHMENT OFCENTRALIZED INFORMATION LOCATION; POLICY ARTICULATINGADHERENCE TO COMPLIANCE POLICIES; ANNUAL TRAINING PROGRAM;APPROVAL OF PERSONNEL OUTSIDE EMPLOYMENT. NEITHER MF GLOBALNOR ANY PERSONNEL UNDER ITS AUTHORITY/CONTROL SHALL TAKE ANYACTION/MAKE ANY PUBLIC STATEMENT DIRECTLY/INDIRECTLY DENYINGANY FINDING HEREIN OR CREATING/TENDING TO CREATE THEIMPRESSION THAT THIS ORDER IS WITHOUT FACTUAL BASIS. NOTHINGHEREIN SHALL AFFECT MF GLOBAL'S TESTIMONIAL OBLIGATIONS OR THERIGHT TO TAKE POSITIONS IN OTHER PROCEEDINGS TO WHICH THECOMMISSION IS NOT A PARTY.


No

Sanctions Ordered: Monetary/Fine $10,000,000.00Cease and Desist/Injunction






Regulator Statement UNDERTAKING CONT.: MF GLOBAL'S PARENT COMPANY ENGAGEDANOTHER COMPANY ("REC-COM") AND ITS CEO ("RECOMMENDER") TORECOMMEND INDUSTRY "BEST PRACTICES" IN ITS RISK MANAGEMENT,SUPERVISION, AND COMPLIANCE PROGRAMS. IT HAS MADERECOMMENDATIONS TO THE PARENT COMPANY RELATED TO THECOMMODITY AND COMMODITY DERIVATIVES TRADING ACTIVITIES OF MFGLOBAL THAT WERE APPROVED BY THE BOARD AND WHICH THE PARENTCOMPANY EITHER HAS IMPLEMENTED OR IS IMPLEMENTED. THEREVIEWS AND ASSESSMENTS ("RA") SHALL CONSIST OF AN INITIAL RA,COMMENCING ON OR ABOUT 1/2/10 COVERING THE PERIOD FROM THEDATE OF THE RECOMMENDATIONS THROUGH THE DATE OF COMPLETIONOF THE INITIAL RA, ANTICIPATED TO BE 3/1/10; AND A SECOND RA,COMMENCING ON OR ABOUT 1/2/11 COVERING THE PERIOD FROM THEDATE OF THE INITIAL RA THROUGH THE DATE OF COMPLETION OF THESECOND RA, ANTICIPATED TO BE 3/1/11. EACH RA SHALL COVER THEIMPLEMENTATION OF THE RECOMMENDATIONS, POLICIES ANDPROCEDURES, ANY ADDITIONAL RECOMMENDATIONS MADE BY THE AUDITCOMMITTEE IN ITS DISCRETION, AND ANY ADDITIONALRECOMMENDATIONS DEEMED NECESSARY BY REC-COM; AND ANEVALUATION OF WHETHER EXISTING AND FUTURE RISK MANAGEMENT,SUPERVISORY AND COMPLIANCE POLICIES & PROCEDURES AREGENERALLY EFFECTIVE IN PREVENTING/DETECTING POTENTIALVIOLATIONS; ADDRESS RISK MANAGEMENT, SUPERVISION & COMPLIANCEOF ALL COMMODITY RELATED ACTIVITIES; AND HAVE THE SUPPORT OFTHE PARENT COMPANY. THE RECOMMENDER IS COMPLETELYINDEPENDENT FROM MF GLOBAL AND IS NOT AND SHALL NOT BETREATED AS AN OFFICER, EMPLOYEE, AGENT OR AFFILIATE AND HE SHALLNOT BE OWED ANY FIDUCIARY DUTY. MF GLOBAL SHALL NOT EMPLOYTHE RECOMMENDER OR REC-COM FOR TWO YEARS AFTER THEENGAGEMENT TERMINATES. THE RAS DO NOT CONSTITUTE A DEFENSETO ANY ACTION THAT THE COMMISSION, DSRO, OR ANY FEDERAL, STATEOR MUNICIPAL ENTITY MAY ELECT TO BRING AGAINST MF GLOBAL. MFGLOBAL SHALL REQUIRE ITS DIRECTORS, OFFICERS, EMPLOYEES,AGENTS, AND CONSULTANTS TO FULLY COOPERATE WITH THERECOMMENDER, ANONYMOUSLY AT THEIR OPTION AND WITHOUTPENALTY. THE RECOMMENDER SHALL SUBMIT REPORTS TO THE AUDITCOMMITTEE, WHICH ARE CONFIDENTIAL. MF GLOBAL SHALL PROVIDEACCESS TO ALL RELEVANT DOCUMENTS; THE RIGHT TO INTERVIEW ANYPERSONNEL AND PARTICIPATE IN ANY RELEVANT MEETING; THE RIGHT TOOBSERVE RELEVANT BUSINESS OPERATIONS. MF GLOBAL SHALL PUTINTO EFFECT, TO EXTENT NOT ALREADY DONE, ENHANCED RISKMONITORING PROCEDURES REGARDING SUPERVISION OF MANAGERSDESIGNED TO NOTIFY SENIOR MANAGEMENT OF POTENTIALLY UNLAWFULOR EXCESSIVE TRADING BY APS OR OTHER EMPLOYEES; POLICIESREQUIRING TRAINING ON MARGIN, CREDIT AND RISK POLICIES; A RISKMITIGATION SYSTEM ON ALL ELECTRONIC ORDER ENTRY SYSTEMS ANDDOCUMENTATION OF SUCH PROCESSES AND CHANGES THEREON;PROCEDURES REGARDING ASSESSMENT AND MONITORING OF RISKSPOSED BY ACCOUNTS/CUSTOMERS/EMPLOYEES WITH ELECTRONICDIRECT MARKET ACCESS CAPABILITIES; UPDATING/STRENGTHENINGSUPERVISION OF DESKS AND PROCEDURES REQUIRING PERIODICCOMPLIANCE REVIEW OF LIVE AND TAPED TELEPHONIC CONVERSATIONS;POLICIES/PROCEDURES TO DEVELOP/IMPLEMENT ENHANCEDCOMPLIANCE AUDIT PROGRAM TO ENSURE EACH TRADING DESK ISAUDITED ANNUALLY TO DETECT AND DETER VIOLATIONS; EFFECTIVECOMMUNICATIONS POLICIES TO ALL PERSONNEL REGARDINGCOMPLIANCE; A POLICY TO REQUIRE PERSONNEL TO REPORTVIOLATIONS; A POLICY TO REQUIRE COMPLIANCE TO INVESTIGATE SUCHREPORTS; ENFORCEMENT OF PROCEDURES ADDRESSING REPORTS;REQUIRED UPDATE OF POLICIES/PROCEDURES; ESTABLISHMENT OFCENTRALIZED INFORMATION LOCATION; POLICY ARTICULATINGADHERENCE TO COMPLIANCE POLICIES; ANNUAL TRAINING PROGRAM;APPROVAL OF PERSONNEL OUTSIDE EMPLOYMENT. NEITHER MF GLOBALNOR ANY PERSONNEL UNDER ITS AUTHORITY/CONTROL SHALL TAKE ANYACTION/MAKE ANY PUBLIC STATEMENT DIRECTLY/INDIRECTLY DENYINGANY FINDING HEREIN OR CREATING/TENDING TO CREATE THEIMPRESSION THAT THIS ORDER IS WITHOUT FACTUAL BASIS. NOTHINGHEREIN SHALL AFFECT MF GLOBAL'S TESTIMONIAL OBLIGATIONS OR THERIGHT TO TAKE POSITIONS IN OTHER PROCEEDINGS TO WHICH THECOMMISSION IS NOT A PARTY.






UNDERTAKING CONT.: MF GLOBAL'S PARENT COMPANY ENGAGEDANOTHER COMPANY ("REC-COM") AND ITS CEO ("RECOMMENDER") TORECOMMEND INDUSTRY "BEST PRACTICES" IN ITS RISK MANAGEMENT,SUPERVISION, AND COMPLIANCE PROGRAMS. IT HAS MADERECOMMENDATIONS TO THE PARENT COMPANY RELATED TO THECOMMODITY AND COMMODITY DERIVATIVES TRADING ACTIVITIES OF MFGLOBAL THAT WERE APPROVED BY THE BOARD AND WHICH THE PARENTCOMPANY EITHER HAS IMPLEMENTED OR IS IMPLEMENTED. THEREVIEWS AND ASSESSMENTS ("RA") SHALL CONSIST OF AN INITIAL RA,COMMENCING ON OR ABOUT 1/2/10 COVERING THE PERIOD FROM THEDATE OF THE RECOMMENDATIONS THROUGH THE DATE OF COMPLETIONOF THE INITIAL RA, ANTICIPATED TO BE 3/1/10; AND A SECOND RA,COMMENCING ON OR ABOUT 1/2/11 COVERING THE PERIOD FROM THEDATE OF THE INITIAL RA THROUGH THE DATE OF COMPLETION OF THESECOND RA, ANTICIPATED TO BE 3/1/11. EACH RA SHALL COVER THEIMPLEMENTATION OF THE RECOMMENDATIONS, POLICIES ANDPROCEDURES, ANY ADDITIONAL RECOMMENDATIONS MADE BY THE AUDITCOMMITTEE IN ITS DISCRETION, AND ANY ADDITIONALRECOMMENDATIONS DEEMED NECESSARY BY REC-COM; AND ANEVALUATION OF WHETHER EXISTING AND FUTURE RISK MANAGEMENT,SUPERVISORY AND COMPLIANCE POLICIES & PROCEDURES AREGENERALLY EFFECTIVE IN PREVENTING/DETECTING POTENTIALVIOLATIONS; ADDRESS RISK MANAGEMENT, SUPERVISION & COMPLIANCEOF ALL COMMODITY RELATED ACTIVITIES; AND HAVE THE SUPPORT OFTHE PARENT COMPANY. THE RECOMMENDER IS COMPLETELYINDEPENDENT FROM MF GLOBAL AND IS NOT AND SHALL NOT BETREATED AS AN OFFICER, EMPLOYEE, AGENT OR AFFILIATE AND HE SHALLNOT BE OWED ANY FIDUCIARY DUTY. MF GLOBAL SHALL NOT EMPLOYTHE RECOMMENDER OR REC-COM FOR TWO YEARS AFTER THEENGAGEMENT TERMINATES. THE RAS DO NOT CONSTITUTE A DEFENSETO ANY ACTION THAT THE COMMISSION, DSRO, OR ANY FEDERAL, STATEOR MUNICIPAL ENTITY MAY ELECT TO BRING AGAINST MF GLOBAL. MFGLOBAL SHALL REQUIRE ITS DIRECTORS, OFFICERS, EMPLOYEES,AGENTS, AND CONSULTANTS TO FULLY COOPERATE WITH THERECOMMENDER, ANONYMOUSLY AT THEIR OPTION AND WITHOUTPENALTY. THE RECOMMENDER SHALL SUBMIT REPORTS TO THE AUDITCOMMITTEE, WHICH ARE CONFIDENTIAL. MF GLOBAL SHALL PROVIDEACCESS TO ALL RELEVANT DOCUMENTS; THE RIGHT TO INTERVIEW ANYPERSONNEL AND PARTICIPATE IN ANY RELEVANT MEETING; THE RIGHT TOOBSERVE RELEVANT BUSINESS OPERATIONS. MF GLOBAL SHALL PUTINTO EFFECT, TO EXTENT NOT ALREADY DONE, ENHANCED RISKMONITORING PROCEDURES REGARDING SUPERVISION OF MANAGERSDESIGNED TO NOTIFY SENIOR MANAGEMENT OF POTENTIALLY UNLAWFULOR EXCESSIVE TRADING BY APS OR OTHER EMPLOYEES; POLICIESREQUIRING TRAINING ON MARGIN, CREDIT AND RISK POLICIES; A RISKMITIGATION SYSTEM ON ALL ELECTRONIC ORDER ENTRY SYSTEMS ANDDOCUMENTATION OF SUCH PROCESSES AND CHANGES THEREON;PROCEDURES REGARDING ASSESSMENT AND MONITORING OF RISKSPOSED BY ACCOUNTS/CUSTOMERS/EMPLOYEES WITH ELECTRONICDIRECT MARKET ACCESS CAPABILITIES; UPDATING/STRENGTHENINGSUPERVISION OF DESKS AND PROCEDURES REQUIRING PERIODICCOMPLIANCE REVIEW OF LIVE AND TAPED TELEPHONIC CONVERSATIONS;POLICIES/PROCEDURES TO DEVELOP/IMPLEMENT ENHANCEDCOMPLIANCE AUDIT PROGRAM TO ENSURE EACH TRADING DESK ISAUDITED ANNUALLY TO DETECT AND DETER VIOLATIONS; EFFECTIVECOMMUNICATIONS POLICIES TO ALL PERSONNEL REGARDINGCOMPLIANCE; A POLICY TO REQUIRE PERSONNEL TO REPORTVIOLATIONS; A POLICY TO REQUIRE COMPLIANCE TO INVESTIGATE SUCHREPORTS; ENFORCEMENT OF PROCEDURES ADDRESSING REPORTS;REQUIRED UPDATE OF POLICIES/PROCEDURES; ESTABLISHMENT OFCENTRALIZED INFORMATION LOCATION; POLICY ARTICULATINGADHERENCE TO COMPLIANCE POLICIES; ANNUAL TRAINING PROGRAM;APPROVAL OF PERSONNEL OUTSIDE EMPLOYMENT. NEITHER MF GLOBALNOR ANY PERSONNEL UNDER ITS AUTHORITY/CONTROL SHALL TAKE ANYACTION/MAKE ANY PUBLIC STATEMENT DIRECTLY/INDIRECTLY DENYINGANY FINDING HEREIN OR CREATING/TENDING TO CREATE THEIMPRESSION THAT THIS ORDER IS WITHOUT FACTUAL BASIS. NOTHINGHEREIN SHALL AFFECT MF GLOBAL'S TESTIMONIAL OBLIGATIONS OR THERIGHT TO TAKE POSITIONS IN OTHER PROCEEDINGS TO WHICH THECOMMISSION IS NOT A PARTY.


Initiated By: COMMODITY FUTURES TRADING COMMISSION


Allegations: ALLEGED VIOLATIONS OF CFTC REGULATION 166.3 REGARDING FAILURETO SUPERVISE IN CONNECTION WITH THE FIRM'S DISCLOSURE OF $141.5MILLION IN TRADING LOSSES INCURRED IN A SINGLE DAY BY AN AP IN HISPERSONAL TRADING ACCOUNT AND THREE OTHER MATTERS WHICHINVOLVED ALLEGATIONS THAT THE FIRM FAILED TO IMPLEMENTPROCEDURES TO ENSURE PROPER TRANSMISSIONS OF PRICEINFORMATION FOR CERTAIN OPTIONS THAT WERE SENT TO A CUSTOMER,SPECIFICALLY THAT THE PRICE INDICATIONS REFLECTED A CONSENSUSTAKEN ON [A PARTICULAR] TIME AND DATE AND WERE DERIVED FROMDIFFERENT SOURCES IN THE MARKET PLACE; FAILED TO DILIGENTLYSUPERVISE THE PROPER AND ACCURATE PREPARATION OF TRADINGCARDS AND FAILED TO MAINTAIN APPROPRIATE WRITTEN AUTHORIZATIONTO CONDUCT TRADES FOR A CERTAIN CUSTOMER.










CEASE AND DESIST FROM VIOLATING CFTC REGULATION 166.3. MFGLOBAL AGREED TO UNDERTAKINGS RELATING TO SUPERVISORYPRACTICES AND PROCEDURES AND THE FIRM AGREED TO ENGAGE ANINDEPENDENT OUTSIDE FIRM TO REVIEW AND ACCESS THEIMPLEMENTATION OF THE UNDERTAKINGS AND CERTAINRECOMMENDATIONS PREVIOUSLY MADE TO, AND ACCEPTED BY MFGLOBAL.






Resolution:

Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: MF GLOBAL SUBMITTED AN OFFER OF SETTLEMENT, WITHOUT ADMITTINGOR DENYING THE FINDINGS, WHICH THE CFTC ACCEPTED; MF GLOBALCONSENTED TO THE ENTRY OF AN ORDER WHICH ORDERED THE FIRM TOCEASE AND DESIST FROM VIOLATING REGULATION 166.3, PAY A CIVILMONETARY FINE OF $10,000,000.00 AND FIRM AGREED TO ENGAGE ANINDEPENDENT OUTSIDE FIRM TO REVIEW AND ACCESS THEIMPLEMENTATION OF THE UNDERTAKINGS AND CERTAINRECOMMENDATIONS PREVIOUSLY MADE TO, AND ACCEPTED BY MFGLOBAL.

Firm Statement ON DECEMBER 17, 2009, THE FIRM SETTLED A CFTC ADMINISTRATIVEPROCEEDING IN CONNECTION WITH THE FIRM'S DISCLOSURE OF $141.5MILLION IN TRADING LOSSES INCURRED IN A SINGLE DAY BY AN AP IN HISPERSONAL TRADING ACCOUNT AND THREE OTHER MATTERS WITHOUTADMITTING OR DENYING ANY ALLEGATIONS AND ACCEPTING A CHARGEOF FAILING TO SUPERVISE. THE THREE ADDITIONAL MATTERS INVOLVEDALLEGATIONS THAT THE FIRM FAILED TO IMPLEMENT PROCEDURES TOENSURE PROPER TRANSMISSIONS OF PRICE INFORMATION FOR CERTAINOPTIONS THAT WERE SENT TO A CUSTOMER, SPECIFICALLY THAT THEPRICE INDICATIONS REFLECTED A CONSENSUS TAKEN ON [APARTICULAR] TIME AND DATE AND WERE DERIVED FROM DIFFERENTSOURCES IN THE MARKET PLACE; FAILED TO DILIGENTLY SUPERVISE THEPROPER AND ACCURATE PREPARATION OF TRADING CARDS AND FAILEDTO MAINTAIN APPROPRIATE WRITTEN AUTHORIZATION TO CONDUCTTRADES FOR A CERTAIN CUSTOMER. UNDER THE CFTC'S ORDER, THEFIRM AGREED TO PAY AN AGGREGATE CIVIL MONETARY PENALTY OF $10MILLION (WHICH IT HAD PREVIOUSLY ACCRUED) AND AGREED TO A CEASEAND DESIST ORDER. IN ADDITION, THE FIRM AGREED TO SPECIFICUNDERTAKINGS RELATED TO ITS SUPERVISORY PRACTICES ANDPROCEDURES AND AGREED THAT IT WOULD ENGAGE AN INDEPENDENTOUTSIDE FIRM TO REVIEW AND ASSESS THE IMPLEMENTATION OF THEUNDERTAKINGS AND CERTAIN RECOMMENDATIONS THAT THE FIRMPREVIOUSLY ACCEPTED.

Sanctions Ordered: Monetary/Fine $10,000,000.00Cease and Desist/Injunction

Settled






ON DECEMBER 17, 2009, THE FIRM SETTLED A CFTC ADMINISTRATIVEPROCEEDING IN CONNECTION WITH THE FIRM'S DISCLOSURE OF $141.5MILLION IN TRADING LOSSES INCURRED IN A SINGLE DAY BY AN AP IN HISPERSONAL TRADING ACCOUNT AND THREE OTHER MATTERS WITHOUTADMITTING OR DENYING ANY ALLEGATIONS AND ACCEPTING A CHARGEOF FAILING TO SUPERVISE. THE THREE ADDITIONAL MATTERS INVOLVEDALLEGATIONS THAT THE FIRM FAILED TO IMPLEMENT PROCEDURES TOENSURE PROPER TRANSMISSIONS OF PRICE INFORMATION FOR CERTAINOPTIONS THAT WERE SENT TO A CUSTOMER, SPECIFICALLY THAT THEPRICE INDICATIONS REFLECTED A CONSENSUS TAKEN ON [APARTICULAR] TIME AND DATE AND WERE DERIVED FROM DIFFERENTSOURCES IN THE MARKET PLACE; FAILED TO DILIGENTLY SUPERVISE THEPROPER AND ACCURATE PREPARATION OF TRADING CARDS AND FAILEDTO MAINTAIN APPROPRIATE WRITTEN AUTHORIZATION TO CONDUCTTRADES FOR A CERTAIN CUSTOMER. UNDER THE CFTC'S ORDER, THEFIRM AGREED TO PAY AN AGGREGATE CIVIL MONETARY PENALTY OF $10MILLION (WHICH IT HAD PREVIOUSLY ACCRUED) AND AGREED TO A CEASEAND DESIST ORDER. IN ADDITION, THE FIRM AGREED TO SPECIFICUNDERTAKINGS RELATED TO ITS SUPERVISORY PRACTICES ANDPROCEDURES AND AGREED THAT IT WOULD ENGAGE AN INDEPENDENTOUTSIDE FIRM TO REVIEW AND ASSESS THE IMPLEMENTATION OF THEUNDERTAKINGS AND CERTAIN RECOMMENDATIONS THAT THE FIRMPREVIOUSLY ACCEPTED.

Disclosure 10 of 37

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Initiated By: CHICAGO BOARD OPTIONS EXCHANGE








Allegations: MF GLOBAL, INC. ("MF GLOBAL"), A MEMBER ORGANIZATION REGISTEREDWITH THE EXCHANGE AS A FLOOR BROKER AND ORDER SERVICE FIRMORGANIZATION AND AS A MEMBER APPROVED TO CONDUCT NON-MEMBER CUSTOMER BUSINESS, WAS CENSURED AND FINED $30,000 FORTHE FOLLOWING CONDUCT. MF GLOBAL FAILED TO EVIDENCE THEREVIEW OF OUTSIDE BROKERAGE ACCOUNT STATEMENTS FOR 40 OF 100ASSOCIATED PERSONS THAT DISCLOSED HAVING OUTSIDE ACCOUNTS.(EXCHANGE RULES 4.2 - ADHERENCE TO LAW; 4.18 - PREVENTION OF THEMISUSE OF MATERIAL, NON-PUBLIC INFORMATION; 15.1 - MAINTENANCE,RETENTION AND FURNISHING OF BOOKS, RECORDS AND OTHERINFORMATION; AND SECTION 15(F) OF THE SECURITIES AND EXCHANGEACT OF 1934, AS AMENDED, (THE "ACT") - PREVENTION OF THE MISUSE OFMATERIAL, NON-PUBLIC INFORMATION; SECTION 17(A) OF THE ACT ANDRULES 17A-3 - RECORDS TO BE MADE BY CERTAIN EXCHANGE MEMBERS,BROKERS AND DEALERS; 17A-4 - RECORDS TO BE PRESERVED BYCERTAIN EXCHANGE MEMBERS, BROKERS AND DEALERS; THEREUNDER)









Resolution:


Sanction Details: A $30,000 FINE AND A CENSURE.

Regulator Statement A $30,000 FINE AND A CENSURE.


Decision




Censure


FINE OF $30,000.00




Other Product Type(s): MATTER RELATED TO OUTSIDE BROKERAGE ACCOUNT REVIEW

Allegations: ALLEGED VIOLATIONS OF CBOE EXCHANGE RULES 4.2, 4.18 15.1 ANDSECTION 15(F) OF THE SECURITIES AND EXCHANGE ACT OF 1934 (THEACT) AND SECTION 17(A) OF THE ACT AND RULES 17A-3 AND 17A-4THEREUNDER IN THAT THE FIRM FAILED TO EVIDENCE REVIEW OFOUTSIDE BROKERAGE ACCOUNT STATEMENTS FOR 40 OF 100ASSOCIATED PERSONS THAT DISCLOSED HAVING ACCOUNTS.



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: FIRM SUBMITTED A LETTER OF CONSENT DATED APRIL 6, 2009, WHICHWAS ACCEPTED BY THE BCC OF THE CBOE ON MAY 1, 2009. SANCTIONWAS A $30,000.00 FINE AND CENSURE.


Decision






Sanction Details: FIRM SUBMITTED A LETTER OF CONSENT DATED APRIL 6, 2009, WHICHWAS ACCEPTED BY THE BCC OF THE CBOE ON MAY 1, 2009. SANCTIONWAS A $30,000.00 FINE AND CENSURE.

Firm Statement IN A CBOE ROUTINE FINANCIAL AND OPERATIONAL EXAMINATION THEFIRM FAILED TO EVIDENCE THE REVIEW OF OUTSIDE BROKERAGEACCOUNT STATEMENTS FOR 40 OF 100 ASSOCIATED PERSONS(ALTHOUGH THE CBOE NOTED THAT ALL OF THE STATEMENTS WEREREVIEWED SOON THEREAFTER).

Disclosure 11 of 37

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Initiated By: FINRA





Principal Product Type: Equity - OTC


Allegations: NASD RULES 2110, 3010, 6620(B) - MF GLOBAL INC. REPORTED TO THE OTCREPORTING FACILITY LAST SALE REPORTS OF TRANSACTIONS IN OTCEQUITY SECURITIES IT WAS NOT REQUIRED TO REPORT. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS, REGULATIONS AND NASD RULESCONCERNING TRADE REPORTING TO THE OTC REPORTING FACILITY. THEFIRM FAILED TO PROVIDE DOCUMENTARY EVIDENCE THAT IT PERFORMEDTHE SUPERVISORY REVIEWS SET FORTH IN ITS WRITTEN SUPERVISORYPROCEDURES CONCERNING TRADE REPORTING TO THE OTC REPORTINGFACILITY.



Resolution:


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $15,000.


No





Censure


FINE OF $15,000.00





Allegations: FINRA ALLEGED THAT MF GLOBAL INC. DOUBLE REPORTED 160TRANSACTIONS OF OTC SECURITIES IN THE FACILITY. THE FIRM WASALSO UNABLE TO DEMONSTRATE ITS SUPERVISORY REVIEWS. THE FIRMRECEIVED A CENSURE AND $15,000 FINE.



Resolution:

Other Sanctions Ordered: NO

Sanction Details: THE FIRM RECEIVED A CENSURE AND $15,000 FINE.








Disclosure 12 of 37

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Initiated By: FINRA







Allegations: NASD RULES 1120(A)(2), 3010(B): REGISTERED REPRESENTATIVES OF MFGLOBAL SECURITIES BECAME CONTINUING EDUCATION INACTIVE, (CE)-INACTIVE, AFTER FAILING TO FULFILL THE REGULATORY ELEMENT OF THECONTINUING EDUCATION REQUIREMENT IN A TIMELY MANNER. THESEREGISTERED REPRESENTATIVES RECEIVED COMMISSIONS WHILE CE-INACTIVE AND ONE OF THE REPRESENTATIVES WAS ALLOWED TO ACT IN AREGISTERED CAPACITY BECAUSE THE FIRM DID NOT FOLLOW UP ONNOTICES THAT THE REPRESENTATIVE HAD BECOME CE-INACTIVE.ADDITIONALLY, THE MEMBER MAINTAINED WRITTEN SUPERVISORYPROCEDURES ADDRESSING REGULATORY ELEMENTS OF THECONTINUING EDUCATION REQUIREMENT. THE PROCEDURES INCLUDED APROVISION PRECLUDING CE-INACTIVE REPRESENTATIVES FROMRECEIVING COMMISSIONS. HOWEVER, THE PROCEDURES FAILED TODESIGNATE A PERSON RESPONSIBLE AND THE STEPS SUCH PERSONSHOULD TAKE TO ENSURE THAT REPRESENTATIVES APPROACHING THEIRANNIVERSARY DATES COMPLETED THE REGULATORY ELEMENTS AFTERBEING NOTIFIED OF THEIR NEED TO DO SO.



Resolution:


No








Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS THE FIRM CONSENTEDTO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS:THEREFORE, THE FIRM IS FINED $5000.


No








Docket/Case Number: NO. 2007007340301



Allegations: FINRA ALLEGED THAT THE FIRM ALLOWED THREE (3) REGISTEREDPERSONNEL TO RECEIVE COMMISSIONS WHILE CE-INACTIVE. FINRA ALSOALLEGED THE FIRM'S PROCEDURES DID NOT PROVIDE FOR SUFFICIENTSUPERVISORY OVERSIGHT IN MONITORING CE COMPLIANCE.



Resolution:


Sanction Details: THE FIRM WILL PAY FINE OF $5,000.00 UPON ACCEPTANCE OF AWC.

Firm Statement THE FIRM MODIFIED ITS PROCEDURES AND AGREED TO PAY $5,000.00 TORESOLVE THE MATTER.








Disclosure 13 of 37

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Allegations: MF GLOBAL SECURITIES, INC., AN EXCHANGE REGISTERED AS A FLOORBROKER, ORDER SERVICE FIRM ORGANIZATION AND AS A MEMBERAPPROVED TO CONDUCT NON-MEMBER CUSTOMER BUSINESS, WASCENSURED AND FINED $20,000 FOR THE FOLLOWING CONDUCT. MFGLOBAL: 1) FAILED TO OBTAIN AND REVIEW OUTSIDE BROKERAGEACCOUNT STATEMENTS FOR (I) 9 OF 13 NEW ASSOCIATED PERSONS(APPROXIMATELY 69%) AND (II) 20 OF 40 CURRENT ASSOCIATED PERSONS(APPROXIMATELY 50%) WHO INDICATED THEY HELD OUTSIDEBROKERAGE ACCOUNTS; AND 2) FAILED TO PROPERLY REGISTER THEFINGERPRINT RECORDS FOR 10 OF 47 (APPROXIMATELY 21%) OF MFGLOBAL'S NEW ASSOCIATED PERSONS. (CBOE RULES 3.7(C) – CERTAINDOCUMENTS REQUIRED OF MEMBERS, APPLICANTS, AND ASSOCIATEDPERSONS, 4.2 - ADHERENCE TO LAW; 4.18 – PREVENTION OF THE MISUSEOF MATERIAL, NON-PUBLIC INFORMATION; 15.1 – MAINTENANCE,RETENTION AND FURNISHING OF BOOKS, RECORDS AND OTHERINFORMATION; SECTION 17(A) OF THE SECURITIES AND EXCHANGE ACTOF 1934, AS AMENDED (THE "ACT") AND RULES 17A-3 – RECORDS TO BEMADE BY CERTAIN EXCHANGE MEMBERS, BROKERS AND DEALERS AND17A-4 – RECORDS TO BE PRESERVED BY CERTAIN MEMBERS, BROKERSAND DEALERS THEREUNDER; SECTION 17(F) OF THE ACT AND RULE 17F-2– FINGERPRINTING OF SECURITIES INDUSTRY PERSONNEL THEREUNDER,AND SECTION 15(F) OF THE ACT)



Resolution:


Decision & Order of Offer of Settlement







Sanction Details: A $20,000 FINE AND A CENSURE.



Initiated By: CHICAGO BOARD OF OPTIONS EXCHANGE




CENSURE





Allegations: THE STATEMENT OF CHARGES WERE FILED ON MARCH 17, 2008 ANDALLEGED VIOLATIONS OF CBOE RULES 3.7(C), 4.2, 4.18, 15.1, ANDSECTIONS 15(F), 17(A), AND 17(F) OF THE SECURITIES AND EXCHANGE ACTOF 1934 AND SEC RULES 17A-3, 17A-4, AND 17F-2.



Resolution:


Sanction Details: FINE OF $20,000 WAS PAID BY FIRM ON MAY 14, 2008.

Firm Statement WITHOUT ADMITTING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFEROF SETTLEMENT. DECISION ACCEPTING OFFER OF SETTLEMENT WASISSUED BY THE BUSINESS CONDUCT COMMITTEE OF THE CBOE ON APRIL29, 2008. FIRM WAS CENSURED AND PAID A FINE OF $20,000. PAYMENTWAS MADE ON MAY 14, 2008.


Decision

Disclosure 14 of 37

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Allegations: MAN SECURITIES, INC. AN EXCHANGE MEMBER ORGANIZATION, WASCENSURED, FINED IN THE AMOUNT OF FIFTY THOUSAND DOLLARS($50,000) AND ORDERED AN UNDERTAKING IN WHICH MAN SECURITIES,LLC SHALL SUBMIT A COPY OF ITS RECENTLY IMPLEMENTED WEEKLYREVIEW PROCEDURES OF THE RECONCILIATION OF THE SOURCEDOCUMENTATION USED IN MAN'S SEC RULE 15C3-3 CALCULATION TO THEEXCHANGE'S DEPARTMENT OF MEMBER FIRM REGULATION NO LATERTHAN 15 DAYS FROM THE DATE OF THE DECISION FOR THE FOLLOWINGCONDUCT. MAN MISCALCULATED ITS WEEKLY CUSTOMER RESERVEFORMULA BY UNDERSTATING EXCESS CREDITS OVER DEBITS, WHICHRESULTED IN VARIOUS CUSTOMER RESERVE BANK ACCOUNTDEFICIENCIES. IN ADDITION, MAN FAILED TO SUPERVISE ITS EMPLOYEESTO ASSURE THAT MAN'S WEEKLY CUSTOMER RESERVE FORMULA WASPROPERLY CALCULATED IN CONNECTION WITH THE CONDUCTDESCRIBED IN THE STATEMENT OF CHARGES. (CBOE RULES 4.2 -ADHERENCE TO LAW; 15.1 - MAINTENANCE, RETENTION AND FURNISHINGOF BOOKS, RECORDS AND OTHER INFORMATION; 15(C) OF THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED, (THE "ACT") ANDRULE 15C3-3 CUSTOMER PROTECTION THEREUNDER, AND SECTION 17(A)OF THE ACT AND RULE 17A-3 - RECORDS TO BE MADE BY CERTAINEXCHANGE MEMBERS, BROKERS AND DEALERS.)



Resolution:

Other Sanctions Ordered: A FIFTY THOUSAND DOLLAR ($50,000) FINE AND A CENSURE. IN ADDITION,AN UNDERTAKING IN WHICH MAN SECURITIES, LLC SHALL SUBMIT A COPYOF ITS RECENTLY IMPLEMENTED WEEKLY REVIEW PROCEDURES OF THERECONCILIATION OF THE SOURCE DOCUMENTATION USED IN MAN'S SECRULE 15C3-3 CALCULATION TO THE EXCHANGE'S DEPARTMENT OFMEMBER FIRM REGULATION NO LATER THAN 15 DAYS FROM THE DATE OFTHE DECISION.


Decision






A FIFTY THOUSAND DOLLAR ($50,000) FINE AND A CENSURE. IN ADDITION,AN UNDERTAKING IN WHICH MAN SECURITIES, LLC SHALL SUBMIT A COPYOF ITS RECENTLY IMPLEMENTED WEEKLY REVIEW PROCEDURES OF THERECONCILIATION OF THE SOURCE DOCUMENTATION USED IN MAN'S SECRULE 15C3-3 CALCULATION TO THE EXCHANGE'S DEPARTMENT OFMEMBER FIRM REGULATION NO LATER THAN 15 DAYS FROM THE DATE OFTHE DECISION.

Sanction Details: A FIFTY THOUSAND DOLLAR ($50,000) FINE AND A CENSURE. IN ADDITION,AN UNDERTAKING IN WHICH MAN SECURITIES, LLC SHALL SUBMIT A COPYOF ITS RECENTLY IMPLEMENTED WEEKLY REVIEW PROCEDURES OF THERECONCILIATION OF THE SOURCE DOCUMENTATION USED IN MAN'S SECRULE 15C3-3 CALCULATION TO THE EXCHANGE'S DEPARTMENT OFMEMBER FIRM REGULATION NO LATER THAN 15 DAYS FROM THE DATE OFTHE DECISION.




Censure





Other Product Type(s): LETTER OF CONSENT

Allegations: ALLEGED VIOLATION OF EXCHANGE RULES 4.2, 15.1, SEC. 15C OF THESECURITIES EXCHANGE ACT OF 1934 (ACT) AND RULE 15C3-3THEREUNDER AND SEC 17(A) OF THE ACT AND RULE 17A-3 THEREUNDERIN THAT THE FIRM MISCALCULATED ITS WEEKLY CUSTOMER RESERVEFORMULA BY UNDERSTANDING EXCESS CREDITS OVER DEBITS, WHICHRESULTED IN VARIOUS CUSTOMER RESERVE BANK ACCOUNTDEFICIENCIES.



Resolution:


Sanction Details: FINE OF $50,000.00 WAS PAID SEPTEMBER 19, 2007.


Order






Sanction Details: FINE OF $50,000.00 WAS PAID SEPTEMBER 19, 2007.

Firm Statement IN AN EXPEDITED PROCEEDING BEFORE THE BCC OF THE CBOE,WITHOUT ADMITTING OR DENYING THAT A VIOLATION OF EXCHANGERULES WAS COMMITTED, THE FIRM SUBMITTED A LETTER OF CONSENT.DECISION ACCEPTING THE LETTER OF CONSENT WAS ISSUED BY THEBCC ON SEPTEMBER 12, 2007.

Disclosure 15 of 37

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Allegations: MAN SECURITIES, INC. AN EXCHANGE MEMBER ORGANIZATION, WASCENSURED AND FINED $15,000 FOR THE FOLLOWING CONDUCT. MANFAILED TO OBTAIN A PERSONAL TRADING ATTESTATION ("PTA") FORNUMEROUS EMPLOYEE ACCOUNTS AND MAN WAS UNABLE TO PROVIDEBROKERAGE STATEMENTS FOR NUMEROUS EMPLOYEE ACCOUNTS. INACCEPTING THE OFFER OF SETTLEMENT, THE COMMITTEE CONSIDEREDTHAT THERE WAS NO ALLEGATION OR INDICATION THAT MAN OR ANY OFITS ASSOCIATED PERSONS MISUSED OR IMPROPERLY DISCLOSEDMATERIAL, NON-PUBLIC INFORMATION OR ENGAGED IN INSIDER TRADING.(CBOE RULES 4.2 - ADHERENCE TO LAW; 4.18 PREVENTION OF THEMISUSE OF MATERIAL, NONPUBLIC INFORMATION; SECTION 15(F) OF THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "ACT") AND RULE15F-2 PREVENTION OF MATERIAL NON-PUBLIC INFORMATIONTHEREUNDER.)



Resolution:









Sanction Details: MAN SECURITIES, INC. SHALL BE AND HEREBY IS CENSURED AND FINEDIN THE AMOUNT OF FIFTEEN THOUSAND DOLLARS ($15,000). INACCEPTING THE OFFER OF SETTLEMENT, THE COMMITTEE CONSIDEREDTHAT THERE WAS NO ALLEGATION OR INDICATION THAT MAN OR ANY OFITS ASSOCIATED PERSONS MISUSED OR IMPROPERLY DISCLOSEDMATERIAL, NON-PUBLIC INFORMATION OR ENGAGED IN INSIDER TRADING.







CENSURE





Allegations: THE STATEMENT OF CHARGES ALLEGES VIOLATIONS OF CBOE RULES 4.2,4.18 AND SECTION 15(F) AND 15(F)-2 OF THE SECURITIES AND EXCHANGEACT OF 1934 IN THAT THE FIRM FAILED TO OBTAIN CERTAIN PERSONALTRADING ATTESTATION FORMS AND WAS UNABLE TO PROVIDE COPIES OFCERTAIN DUPLICATE EMPLOYEE BROKERAGE ACCOUNT STATEMENTS.



Resolution:


Sanction Details: FINE OF $15,000.00 WAS PAID AUGUST 16, 2007.

Firm Statement WITHOUT ADMITTING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFEROF SETTLEMENT. DECISION ACCEPTING OFFER OF SETTLEMENT WASISSUED BY THE BCC OF THE CBOE ON AUGUST 7, 2007. FIRM WASCENSURED AND PAID FINE OF $15,000.00.








WITHOUT ADMITTING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFEROF SETTLEMENT. DECISION ACCEPTING OFFER OF SETTLEMENT WASISSUED BY THE BCC OF THE CBOE ON AUGUST 7, 2007. FIRM WASCENSURED AND PAID FINE OF $15,000.00.

Disclosure 16 of 37

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Initiated By: NEW YORK STOCK EXCHANGE DIVISION OF ENFORCEMENT




Docket/Case Number: HPD# 05-162



Allegations: **9/30/05**STIPULATION AND CONSENT FILED BY NYSE DIVISION OFENFORCEMENT AND PENDING.CONSENTED TO FINDINGS:WITHOUT ADMITTING OR DENYING GUILT, MAN FINANCIAL INC., NOWKNOWN AS MAN SECURITIES INC., CONSENTED TO FINDINGS RELATED TOAN EXAMINATION CONDUCTED BY THE NEW YORK STOCK EXCHANGE,INC. DURING THE YEAR 2002 THAT IT:1.VIOLATED SECTION 15(C) OF THESECURITIES EXCHANGE ACT OF 1934 AND RULE 15C3-3(E)(1)THEREUNDER, IN THAT ON ONE OR MORE OCCASIONS, THE FIRMPERMITTED DEPOSITS TO BE MADE FOR ITS SPECIAL RESERVE BANKACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS BY CREATINGAN OVERDRAFT IN AN OPERATING ACCOUNT;2.VIOLATED SECTION 15(C)OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 15C3-3(A)(1)THEREUNDER, IN THAT ON ONE OR MORE OCCASIONS, THE FIRM: A)INACCURATELY CODED NON-CUSTOMER ACCOUNTS, AND B)INACCURATELY CODED THE PROPRIETARY ACCOUNTS OF INTRODUCINGBROKERS;3.VIOLATED EXCHANGE RULE 342 IN THAT ON ONE OR MOREOCCASIONS, THE FIRM A) FAILED TO SUPERVISE ITS FLOOR CLERKS, ANDB) FAILED TO SUPERVISE ITS QUALIFYING FLOOR BROKERMEMBER;4.VIOLATED SECTION 17(A) OF THE SECURITIES EXCHANGE ACTOF 1934 AND RULE 17A-3(A)(11) THEREUNDER, AND EXCHANGE RULE 440IN THAT ON ONE OR MORE OCCASIONS THE FIRM FAILED TO MAINTAIN ANACCURATE CUSTOMER TRIAL BALANCE;5.VIOLATED SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF 1934AND RULE 17A-4(A)(5) THEREUNDER, AND EXCHANGE RULES 440 AND440.20, IN THAT ON ONE OR MORE OCCASIONS, THE FIRM FAILED TOMAINTAIN FORMAL RECONCILIATIONS FOR INTERCOMPANY ACCOUNTSAND AFFILIATES' ACCOUNT BALANCES;**CONTINUED AT #13C**









Resolution:


Sanction Details: **12/22/05**HEARING PANEL DECISION ISSUED - HPD 05-162I.VIOLATED SECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934(THE "EXCHANGE ACT") AND RULE 15C3-3(E)(1) THEREUNDER IN THAT, ONONE OR MORE OCCASIONS, RESPONDENT FIRM PERMITTED DEPOSITSTO BE MADE FOR ITS SPECIAL RESERVE BANK ACCOUNT FOR THEEXCLUSIVE BENEFIT OF CUSTOMERS BY CREATING AN OVERDRAFT IN ANOPERATING ACCOUNT.II.VIOLATED SECTION 15(C) OF THE EXCHANGE ACTAND RULE 15C3-3(A)(1) THEREUNDER IN THAT, ON OR MORE OCCASIONS,RESPONDENT FIRM:A.INACCURATELY CODED NON-CUSTOMERACCOUNTS; AND B.INACCURATELY CODED THE PROPRIETARY ACCOUNTSOF INTRODUCING BROKERS.III.VIOLATED NYSE RULE 342 IN THAT, ON ONEORE MORE OCCASIONS,RESPONDENT FIRM:A.FAILED TO SUPERVISE ITSFIVE FLOOR CLERKS;B.FAILED TO SUPERVISE ITS QUALIFYING FLOORBROKER MEMBER.IV.VIOLATED SECTION 17(A) OF THE EXCHANGE ACTAND RULE 17A-3(A)(11) THEREUNDER AND NYSE RULE 440 IN THAT, ONONE OR MORE OCCASIONS, RESPONDENT FIRM FAILED TO MAINTAIN ANACCURATE CUSTOMER TRIAL BALANCE.V.VIOLATED SECTION 17(A) OFTHE EXCHANGE ACT AND RULE 17A-4(A)(5) THEREUNDER AND NYSERULES 440 AND 440.20 IN THAT, ON ONE OR MORE OCCASIONS,RESPONDENT FIRM FAILED TO MAINTAIN FORMAL RECONCILIATIONS FORINTERCOMPANY ACCOUNTS AND AFFILIATES' ACCOUNT BALANCES.**CONTINUED AT #14**

Regulator Statement **CONTINUED FROM 13C**VI.VIOLATED NYSE RULE 401 BY FAILING TOCOMPLY WITH EXCHANGE INFORMATION MEMOS 94-6 AND 00-15 IN THAT,ON ONE OR MORE OCCASIONS, RESPONDENT FIRM: A. FAILED TOIDENTIFY THE BENEFICIAL OWNERS OF CERTAIN PRIME BROKERACCOUNTS;B.FAILED TO ENSURE THAT ITS PRIME BROKERS NOTMANAGED BY REGISTERED INVESTMENT ADVISORS WERE MAINTAININGTHE REQUIRED MINIMUM NET EQUITY;C.FAILED TO HAVE PROCEDURESTO IDENTIFY SHORT SALES IN ITS PRIME BROKER CUSTOMERACCOUNTS;D. FAILED TO HAVE PROCEDURES TO DETERMINE WHETHERSECURITIES WERE AVAILABLE PRIOR TO EFFECTING SHORT SALES IN ITSPRIME BROKER CUSTOMER ACCOUNTS OR THAT THE FIRM COULDBORROW THE SECURITIES FOR DELIVERY BY THE SETTLEMENT DATE.VII. VIOLATED NYSE RULE 431(F)(8)(B) AS EXPLAINED IN EXCHANGEINFORMATION MEMO 01-9 IN THAT, ON ONE OR MOREOCCASIONS,RESPONDENT FIRM EMPLOYED AN IMPROPER FORMULA TODETERMINE DAY TRADING MARGIN CALLS.VIII. VIOLATED NYSE RULE 132,AS EXPLAINED IN EXCHANGE INFORMATION MEMO 96-36, IN THAT, ON ONEOR MORE OCCASIONS, RESPONDENT FIRM SUBMITTED INACCURATEACCOUNT TYPE INDICATORS. **2/17/06**THE DECISION IS NOW FINAL ANDEFFECTIVE IMMEDIATELY.CONTACT:PEGGY GERMINO 212-656-8450


Decision






**CONTINUED FROM 13C**VI.VIOLATED NYSE RULE 401 BY FAILING TOCOMPLY WITH EXCHANGE INFORMATION MEMOS 94-6 AND 00-15 IN THAT,ON ONE OR MORE OCCASIONS, RESPONDENT FIRM: A. FAILED TOIDENTIFY THE BENEFICIAL OWNERS OF CERTAIN PRIME BROKERACCOUNTS;B.FAILED TO ENSURE THAT ITS PRIME BROKERS NOTMANAGED BY REGISTERED INVESTMENT ADVISORS WERE MAINTAININGTHE REQUIRED MINIMUM NET EQUITY;C.FAILED TO HAVE PROCEDURESTO IDENTIFY SHORT SALES IN ITS PRIME BROKER CUSTOMERACCOUNTS;D. FAILED TO HAVE PROCEDURES TO DETERMINE WHETHERSECURITIES WERE AVAILABLE PRIOR TO EFFECTING SHORT SALES IN ITSPRIME BROKER CUSTOMER ACCOUNTS OR THAT THE FIRM COULDBORROW THE SECURITIES FOR DELIVERY BY THE SETTLEMENT DATE.VII. VIOLATED NYSE RULE 431(F)(8)(B) AS EXPLAINED IN EXCHANGEINFORMATION MEMO 01-9 IN THAT, ON ONE OR MOREOCCASIONS,RESPONDENT FIRM EMPLOYED AN IMPROPER FORMULA TODETERMINE DAY TRADING MARGIN CALLS.VIII. VIOLATED NYSE RULE 132,AS EXPLAINED IN EXCHANGE INFORMATION MEMO 96-36, IN THAT, ON ONEOR MORE OCCASIONS, RESPONDENT FIRM SUBMITTED INACCURATEACCOUNT TYPE INDICATORS. **2/17/06**THE DECISION IS NOW FINAL ANDEFFECTIVE IMMEDIATELY.CONTACT:PEGGY GERMINO 212-656-8450


Initiated By: NEW YORK STOCK EXCHANGE




Docket/Case Number: EXCHANGE HEARING PANEL DECISION 05-162



Allegations: REGULATORY ACTION DERIVED FROM AN NYSE AUDIT OF THE APPLICANTIN 2002. EXCHANGE INITIATED ACTION IN 2005 CONCERNING APPARENTNYSE RULE VIOLATIONS FROM THIS 2002 AUDIT. VIOLATIONS LISTED:I.VIOLATED SECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934(THE "EXCHANGE ACT") AND RULE 15C3-3(E)(1) THEREUNDER IN THAT, ONONE OR MORE OCCASIONS, FIRM PERMITTED DEPOSITS TO BE MADE FORITS SPECIAL RESERVE BANK ACCOUNT FOR THE EXCLUSIVE BENEFIT OFCUSTOMERS BY CREATING AN OVERDRAFT IN AN OPERATINGACCOUNT.II.VIOLATED SECTION 15(C) OF THE EXCHANGE ACT AND RULE15C3-3(A)(1) THEREUNDER IN THAT, ON OR MORE OCCASIONS,FIRM:A.INACCURATELY CODED NON-CUSTOMER ACCOUNTS; ANDB.INACCURATELY CODED THE PROPRIETARY ACCOUNTS OFINTRODUCING BROKERS.III.VIOLATED NYSE RULE 342 IN THAT, ON ONEORE MORE OCCASIONS,FIRM:A.FAILED TO SUPERVISE ITS FIVE FLOORCLERKS;B.FAILED TO SUPERVISE ITS QUALIFYING FLOOR BROKERMEMBER.IV.VIOLATED SECTION 17(A) OF THE EXCHANGE ACT AND RULE17A-3(A)(11) THEREUNDER AND NYSE RULE 440 IN THAT, ON ONE OR MOREOCCASIONS, FIRM FAILED TO MAINTAIN AN ACCURATE CUSTOMER TRIALBALANCE.V.VIOLATED SECTION 17(A) OF THE EXCHANGE ACT AND RULE17A-4(A)(5) THEREUNDER AND NYSE RULES 440 AND 440.20 IN THAT, ONONE OR MORE OCCASIONS, FIRM FAILED TO MAINTAIN FORMALRECONCILIATIONS FOR INTERCOMPANY ACCOUNTS AND AFFILIATES'ACCOUNT BALANCES. ***CONTINUED AT #13***








CENSURE


Resolution:


Sanction Details: DECISION FINAL AND EFFECTIVE IMMEDIATELY ON FEBRUARY 17, 2006PER NYSE'S LETTER TO FIRM.

Firm Statement VI.VIOLATED NYSE RULE 401 BY FAILING TO COMPLY WITH EXCHANGEINFORMATION MEMOS 94-6 AND 00-15 IN THAT, ON ONE OR MOREOCCASIONS, FIRM: A. FAILED TO IDENTIFY THE BENEFICIAL OWNERS OFCERTAIN PRIME BROKER ACCOUNTS;B.FAILED TO ENSURE THAT ITSPRIME BROKERS NOT MANAGED BY REGISTERED INVESTMENT ADVISORSWERE MAINTAINING THE REQUIRED MINIMUM NET EQUITY;C.FAILED TOHAVE PROCEDURES TO IDENTIFY SHORT SALES IN ITS PRIME BROKERCUSTOMER ACCOUNTS;D. FAILED TO HAVE PROCEDURES TO DETERMINEWHETHER SECURITIES WERE AVAILABLE PRIOR TO EFFECTING SHORTSALES IN ITS PRIME BROKER CUSTOMER ACCOUNTS OR THAT THE FIRMCOULD BORROW THE SECURITIES FOR DELIVERY BY THE SETTLEMENTDATE. VII. VIOLATED NYSE RULE 431(F)(8)(B) AS EXPLAINED IN EXCHANGEINFORMATION MEMO 01-9 IN THAT, ON ONE OR MORE OCCASIONS,FIRMEMPLOYED AN IMPROPER FORMULA TO DETERMINE DAY TRADINGMARGIN CALLS.VIII. VIOLATED NYSE RULE 132, AS EXPLAINED INEXCHANGE INFORMATION MEMO 96-36, IN THAT, ON ONE OR MOREOCCASIONS, RESPONDENT FIRM SUBMITTED INACCURATE ACCOUNTTYPE INDICATORS.


Stipulation and Consent

Disclosure 17 of 37

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Allegations: SEE SUMMARY












Resolution:


Sanction Details: NONE

Regulator Statement MAN SECURITIES, INC. ("MAN"), AN EXCHANGE MEMBER ORGANIZATION,WAS CENSURED AND FINED $65,000 FOR THE FOLLOWING CONDUCT.MAN DEPOSITED FUNDS INTO THE SPECIAL CUSTOMER RESERVE BANKACCOUNT ("SRA") AFTER THE 10:00 A.M. CUTOFF FOR SUCH DEPOSITS,I.E., ON THE SECOND BUSINESS DAY AFTER THE DATE OF THE CUSTOMERRESERVE COMPUTATION AND DEPOSITED FUNDS INTO THE SRA FROM ANACCOUNT THAT DID NOT HAVE SUFFICIENT FUNDS TO MAKE THEDEPOSITS, RESULTING IN A CUSTOMER RESERVE DEFICIENCY IN THESRA. IN ACCEPTING THIS LETTER OF CONSENT THE BCC CONSIDEREDTHE FACT THAT MAN RETAINED AN OUTSIDE INDEPENDENT CONSULTANTTO CONDUCT A COMPREHENSIVE REVIEW OF ITS FINANCIAL REPORTINGAND TREASURY FUNCTIONS. (CBOE RULES 4.2 - ADHERENCE TO LAW;15.1 - MAINTENANCE, RETENTION AND FURNISHING OF BOOKS, RECORDSAND OTHER INFORMATION; 15(C) OF THE SECURITIES EXCHANGE ACT OF1934, AS AMENDED, (THE "ACT") AND RULE 15C3-3 – CUSTOMERPROTECTION THEREUNDER AND SECTION 17(A) OF THE ACT AND RULES17A-3 - RECORDS TO BE MADE BY CERTAIN EXCHANGE MEMBERS,BROKERS AND DEALERS AND 17A-5 – REPORTS TO BE MADE BY CERTAINBROKERS AND DEALERS THEREUNDER.)


Decision




Allegations: ALLEGED VIOLATIONS OF SECTION 15(C) AND 17(A) OF THE SECURITIESEXCHANGE ACT OF 1934 AND RULES 15C3-3, 17A-3 AND 17A-5THEREUNDER AND CBOE RULES 4.2 AND 15.1.








Censure


FINE OF $65,000




Other Product Type(s): NONE


Resolution:


Sanction Details: FINE OF $65,000 WAS PAID ON JUNE 28,2004.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS AND FOR THE SOLEPURPOSE OF RESOLVING THE MATTER, THE FIRM ENTERED INTO ALETTER OF CONSENT ON MAY 15, 2004, WHICH WAS ACCEPTED BY THECBOE'S BCC ON JUNE 15, 2004. THE FINE WAS PAID ON JUNE 28, 2004.



Disclosure 18 of 37

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Initiated By: CHICAGO BOARD OF TRADE


Other


FINE OF 7,500.00


Docket/Case Number: 2002-INV-5



Allegations: THE FLOOR GOVERNORS COMMITTEE OF THE CBOT ALLEGED THAT THEFIRM FAILED TO KEEP IN AN ACCURATE MANNER ALL BOOKS ANDRECORDS REQUIRED TO BE MAINTAINED UNDER EXCHANGE RULES ANDREGULATIONS IN VIOLATION OF REGULATION 545.02.








FINE OF 7,500.00


Resolution:


Sanction Details: FINE OF $7,500 WAS PAID BY FIRM.

Firm Statement WITHOUT ADMITTING OR DENYING ANY VIOLATION, THE FIRM PAID A FINEOF $7,500.00 AND CONSENTED TO THE ENTRY OF A CONCLUSION THATTHE FLOOR GOVERNORS COMMITTEE HAD REASON TO BELIEVE THATTHE FIRM VIOLATED SAID RULES.


Decision

Disclosure 19 of 37

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Initiated By: THE CHICAGO BOARD OF TRADE


Other


FINE OF $30,000.00.


Docket/Case Number: 01-MSI-48



Allegations: THE BCC OF THE CHICAGO BOARD OF TRADE ALLEGED THAT THE FIRM, ATTHE CUSTOMER'S REQUEST, OFFSET POSITIONS IN AN OMNIBUSACCOUNT LESS THAN TWO DAYS PRIOR TO FIRST DELIVERY OF THECONTRACT IN VIOLATION OF CBOT REGULATION 444.03.



Resolution:




Decision







Firm Statement WITHOUT ADMITTING OR DENYING ANY VIOLATIONS, THE FIRM AGREEDTO PAY A $30,000 FINE.

Disclosure 20 of 37

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Other


FINE OF $25,000.00


Docket/Case Number: 2001-INV-33C



Allegations: THE FLOOR GOVERNORS COMMITTEE OF THE CBOT ALLEGED THE FIRMFAILED TO SUPERVISE AN EMPLOYEE AND A/C/E TERMINAL OPERATOR'SCOMPLIANCE WITH EXCHANGES RULES IN VIOLATION OF CBOTREGULATIONS 9B.07 AND 480.10.



Resolution:


Sanction Details: FINE OF $25,000.00 WAS PAID BY THE FIRM.

Firm Statement WITHOUT ADMITTING OR DENYING ANY VOILATION, THE FIRM AGREED TOPAY A FINE OF $25,000.00 AND CONSENTED TO THE ENTRY OF THECONCLUSION THAT THE FLOOR GOVERNORS COMMITTEE HAD REASONTO BELIEVE THT THE FIRM VIOLATED SAID RULES.


Decision

Disclosure 21 of 37

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS




Docket/Case Number: CMS000141



Allegations: NASD RULES 2110 AND 6130(B) - WITHOUT ADMITTING OR DENYING THEALLEGATIONS, THE FIRM CONSENTED TO THE FINDINGS THAT FINDINGSTHAT IT FAILED TO ACCEPT OR DECLINE IN THE AUTOMATEDCONFIRMATION TRANSACTION SERVICE TRANSACTIONS IN ELIGIBLESECURITIES WITHIN 20 MINUTES AFTER EXECUTION.


Resolution:



Regulator Statement 04/19/02AC FINES & COST PAID IN FULL $50,000.00 11/19/01 INVOICE #01-MS- 664




Initiated By: NASD


Docket/Case Number: CMS000141


Allegations: FIRM FAILED TO DESIGNATE AS LATE TO "ACT" TWELVE (12)TRANSACTIONS IN NASDAQ NATIONAL MARKET ("NNM") SECURITIES, ANDIMPROPERLY DESIGNATED AS ".T" TO "ACT" EACH SUCH TRANSACTION, INSEPARATE AND DISTINCT VIOLATIONS OF NASD MARKETPLACE RULE 4632(A).








Other




Resolution:



Firm Statement FIRM, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, CONSENTEDTO THE FINDINGS THAT IT FAILED TO ACCEPT OR DECLINE IN THEAUTOMATED CONFIRMATION TRANSACTION SERVICE TRANSACTIONS INELIGIBLE SECURITIES WITHIN 20 MINUTES AFTER EXECUTION.



Disclosure 22 of 37

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Initiated By: NYMEX


Other


FINE OF $10,000





Allegations: ALLEGATION THAT THE FIRM ENGAGED IN NON-COMPETITIVE CROSSTRADES DURING ACCESS TRADING SESSIONS FOR THE WEEK OF AUGUST23, 1999, IN VIOLATION OF NYMEX DIVISION RULES 6.61(B) -PREARRANGED TRADING AND 6.40(A) SIMULTANEOUS BUY AND SELLORDERS ON NYMEX ACCESS.



Resolution: Decision & Order of Offer of Settlement








Sanction Details: RESPONDENT TO PAY A FINE TO THE EXCHANGE IN THE AMOUNT OF$10,000.

Firm Statement ON 5/02/01,WITHOUT ADMITTING OR DENYING THE AFORESAIDVIOLATIONS, OR ANY ALLEGATIONS OR CONCLUSIONS CONTAINED IN THECOMPLAINT OR IN THE OFFER, AND WITHOUT ADJUDICATION,RESPONDENT CONSENTED TO THE ENTRY OF AN ORDER THATRESPONDENT PAY A FINE TO THE EXCHANGE IN THE AMOUNT OF $10,000.


Disclosure 23 of 37

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Other


FINE OF $500


Docket/Case Number: 2000-MSI-3



Allegations: ALLEGATIONS OF VIOLATION OF CBOT REGULATION 444.03, IN THATDURING THE DELIVERY MONTH THE FIRM TRANSFERRED A POSITION,WHICH WAS EXECUTED PRIOR TO THE TRANSFER DATE, TO OFFSETANOTHER POSITION.



Resolution:


Sanction Details: FIRM PAID FINE OF $500

Firm Statement ON 3/16/2001, THE BBC OF THE CBOT CONCLUDED THAT THE FIRM,WITHOUT ADMITTING OR DENYING ANY VIOLATION,WAS IN NON-COMPLIANCE WITH REGARD TO REGULATION 444.03, IN THAT DURING THEDELIVERY MONTH THE FIRM TRANSFERRED A POSITION WHICH WASEXECUTED PRIOR TO THE TRANSFER DATE, TO OFFSET ANOTHERPOSITION.

Sanctions Ordered: Monetary/Fine $500.00

Decision






Firm Statement ON 3/16/2001, THE BBC OF THE CBOT CONCLUDED THAT THE FIRM,WITHOUT ADMITTING OR DENYING ANY VIOLATION,WAS IN NON-COMPLIANCE WITH REGARD TO REGULATION 444.03, IN THAT DURING THEDELIVERY MONTH THE FIRM TRANSFERRED A POSITION WHICH WASEXECUTED PRIOR TO THE TRANSFER DATE, TO OFFSET ANOTHERPOSITION.

Disclosure 24 of 37

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Other


FINE OF $5,000.00


Docket/Case Number: 2000-RRI-23



Allegations: ALLEGATIONS OF VILOLATIONS OF CBOT RULES 545.01 AND 545.02RELATING TO SUBMISSION OF POSITIONS AND RECORD-KEEPINGREQUIREMENTS.



Resolution:


Sanction Details: FIRM PAID FINE OF $5,000.00.

Firm Statement ON DECEMBER 28, 2000, THE BBC OF THE CBOT CONCLUDED THAT THEFIRM WAS IN NON-COMPLIANCE WITH CERTAIN REPORTING AND RECORD-KEEPING REQUIREMENTS.


Decision

Disclosure 25 of 37

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Allegations: THE NEW YORK MERCANTILE EXCHANGE ALLEGED THAT A COMMERCIALENERGY CLIENT OF THE FIRM WAS LATE IN ITS DELIVERY OBLIGATIONSARISING OUT OF 62 DECEMBER 2000 NEW YORK HARBOR UNLEADEDGASOLINE CONTRACTS.







Initiated By: NEW YORK MERCANTILE EXCHANGE


Other


ASSESSMENT OF PENALTY


Docket/Case Number:

Principal Product Type: Futures - Commodity


Allegations: THE NEW YORK MERCANTILE EXCHANGE ALLEGED THAT A COMMERCIALENERGY CLIENT OF THE FIRM WAS LATE IN ITS DELIVERY OBLIGATIONSARISING OUT OF 62 DECEMBER 2000 NEW YORK HARBOR UNLEADEDGASOLINE CONTRACTS.


Resolution:

Other Sanctions Ordered: ASSESSMENT OF PENALTY

Sanction Details: PENALTY OF $138,694.25 WAS ASSESSED AGAINT THE FIRM, WHICH WASPAID BY THE FIRM ON MARCH 2, 2001.

Firm Statement ON FEBRUARY 2, 2001, THE NEW YORK MERCANTILE EXCHANGE("NYMEX") ISSUED A NOTICE OF ASSESSMENT AGAINST THE FIRM IN THEAMOUNT OF $138,694.25 AS A RESULT OF "LATE PERFORMANCE" BY ACOMMERCIAL ENERGY CLIENT ("CLIENT") IN ITS DELIVERY OBLIGATIONSARISING OUT OF 62 DECEMBER 2000 NEW YORK HARBOR UNLEADEDGASOLINE CONTRACTS. UNDER NYMEX RULES, THE CLEARING MEMBERFIRM IS PRIMARILY LIABLE TO NYMEX FOR ITS CLIENT'S "LATEPERFORMANCE." THE CLIENT REIMBURSED THE FIRM FOR THE AMOUNTOF THE ASSESSMENT.

Sanctions Ordered:

Other

Disclosure 26 of 37

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Allegations: ALLEGATION OF NON-COMPLIANCE WITH CRT RULES IN THAT FIRM FAILEDTO COLLECT AND TIMESTAMP TRADING CARDS WITHIN SPECFIFIED PICK-UP SCHEDULE









Other


FINE OF $1,5000.00


Docket/Case Number: 00-17688-CTRA




Resolution:



Firm Statement ON JULY 18, 2000, CME CRT COMMITTEE CONDUCTED REVIEW OF FIRM'SCOMPLIANCE WITH CERTAIN RECORDKEEPING REQUIREMENTS. THECOMMITTEE FOUND NON-COMPLIANCE WITH CERTAIN RULES AND FIRMWAS FINED $1,500.00.


Decision

Disclosure 27 of 37

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Other


FINE OF $2,500.00


Docket/Case Number: 99-RFT-125



Allegations: ALLEGATIONS OF VIOLATIONS OF CBOT RULES 332.02 AND 332.08RELATING TO SUBMISSION OF TRADE DATA.








FINE OF $2,500.00


Resolution:



Firm Statement THE CBOT CONDUCTED A REVIEW OF THE FIRM'S COMPLIANCE WITHCERTAIN RECORD KEEPING REQUIREMENTS. THE BCC OF THE CBOTFOUND NON-COMPLIANCE WITH CERTAIN CRT RULES. THE FIRM WASFINED $2,500.00.


Decision

Disclosure 28 of 37

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Other


FINE OF $2,500.00


Docket/Case Number: 99-RFT-208



Allegations: ALLEGATIONS OF NON-COMPLIANCE WITH CBOT RULES 332.02 AND 332.08RELATING TO TRADE DATA SUBMISSIONS



Resolution:



Firm Statement THE CBOT CONDUCTED A REVIEW OF THE FIRM'S COMPLIANCE WITHCERTAIN RECORD KEEPING REQUIREMENTS. THE FIRM WAS FOUND TOBE IN NON-COMPLIANCE WITH CERTAIN CRT RULES AND WAS FINED$2,500.00


Decision






Firm Statement THE CBOT CONDUCTED A REVIEW OF THE FIRM'S COMPLIANCE WITHCERTAIN RECORD KEEPING REQUIREMENTS. THE FIRM WAS FOUND TOBE IN NON-COMPLIANCE WITH CERTAIN CRT RULES AND WAS FINED$2,500.00

Disclosure 29 of 37

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Disgorgement


FINE OF $125,000.00


Docket/Case Number: 98-MSR-12A


Other Product Type(s): EFPS

Allegations: ALLEGATIONS THAT FIRM VIOLATED CBOT REGULATIONS 444.01, 545.01,545.02, 480.10 AND 501.00 IN CONNECTION WITH IMPROPER EFPTRANSACTIONS.



Resolution:


Sanction Details: FIRM WAS FINED $125,000.00 WHICH WAS BY ON OR ABOUT MARCH 10,2000.

Firm Statement WITHOUT ADMITTING OR DENYING ANY VIOLATION, THE FIRM AGREED TOPAY A $125,000.00 FINE AND CONSENTED TO THE ENTRY OF ACONCLUSION THAT THE BCC HAD REASON TO BELIEVE THAT THE FIRMVIOLATED SAID RULES.


Other

Disclosure 30 of 37

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Allegations: ALLEGED VIOLATION OF PHILADELPHIA STOCK EXCHANGE RULE 1080(B)(IV) CONCERNING UNBUNDLING ORDERS.







Initiated By: PHILADELPHIA STOCK EXCHANGE


Other


FINE OF $2,000.00


Docket/Case Number: ENFORCEMENT NO. 99-02



Allegations: ALLEGED VIOLATION OF PHILADELPHIA STOCK EXCHANGE RULE 1080(B)(IV) CONCERNING UNBUNDLING ORDERS.


Resolution:


Sanction Details: FINE OF $2,000.00 WAS LEVIED AGAINST FIRM. AMOUNT WAS PAID06/30/1999.

Firm Statement ON 4/27/1999, BCC REVIEWED A REPORT OF AN INVESTIGATIONCONCERNING THIS MATTER AND A STATEMENT OF CHARGES WAS ISSUED5/12/1999. FIRM MADE AN OFFER OF SETTLEMENT, STIPUATION OF FACTSAND CONSENT TO SANCTIONS ON JUNE 17, 1999. THE BCC ACCEPTEDTHE OFFER ON JULY 27, 1999 AND A DECISION ISSUED UPON ACCEPTANCEOF OFFER OF SETTLEMENT WAS ISSUED ON AUGUST 19, 1999.


Decision

Disclosure 31 of 37

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Docket/Case Number: 99-6729-CTRA

Allegations: ALLEGATIONS OF NON-COMPLIANCE WITH CRT RULES IN THAT FIRMFAILED TO ACCURATELY SUBMIT TIME STAMPS FROM FLOOR ORDERS ANDCOLLECT AND TIME STAMP TRADING CARDS IN ACCORDANCE WITHESTABLISHED PICK-UP SCHEDULE.






https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=99-02



Other


FINE OF $1,500.00.




Resolution:



Firm Statement ON JULY 20, 1999, CME CRT COMMITTEE CONDUCTED A REVIEW OF THEFIRM'S COMPLIANCE WITH CERTAIN RECORD KEEPING REQUIREMENTS.THE COMMITTEE FOUND NON-COMPLIANCE WITH CERTAIN CRT RULES.FIRM WAS FINED $1,500.00


Decision

Disclosure 32 of 37

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Initiated By: COFFEE, SUGAR & COCOA EXCHANGE, INC.


Cease and Desist






Allegations: ALLEGED VIOLATIONS OF SPECTULATIVE POSITION LIMIT RULE.



Resolution:


Settled






Other Sanctions Ordered: FIRM ALSO AGREED TO CEASE AND DESIST FROM ALL FURTHERVIOLATIONS OF SPECULATIVE POSITION LIMIT RULE 13.05(B).

Sanction Details: FIRM PAID $15,000.00 FINE ON DECEMBER 9, 1998.

Firm Statement WITHOUT ADMITTING ANY VIOLATION, THE FIRM ENTERED INTO ASETTLEMENT AGREEEMENT WITH THE COFFEE, SUGAR & COCOAEXCHANGE, INC. ON DECEMBER 8, 1998. FIRM AGREED TO IMPOSITION OFFINE IN THE AMOUNT OF $15,000.00 AND AGREED TO CEASE AND DESISTFROM ALL FURTHER VIOLATIONS OF SPECULATIVE POSITION LIMIT RULE13.05(B).


Disclosure 33 of 37

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Initiated By: COFFEE, SUGAR & COCOA EXCHANGE, INC.


Cease and Desist


FIRM AGREED TO CEASE AND DESIST FROM FURTHER VIOLATIONS OFMEBERSHIP RULE 1.13(2) AND A FINE OF $30,000.00


Docket/Case Number: CASE NO. 98-38



Allegations: ALLEGATION THAT FIRM FAILED TO REPORT CERTAIN COCOA FUTURESPOSITIONS AS DULICATE POSITIONS TO CCCNY ON 4/15/98, TWO DAYSBEFORE FIRST NOTICE DAY.



Resolution:


Sanction Details: FIRM PAID FINE OF $30,000.00.

Firm Statement WITHOUT ADMITTING VIOLATIONS, FIRM ENTERED INTO SETTLEMENTAGREEMENT WITH COFFEE, SUGAR & COCOA EXCHANGE, INC. ONDECEMBER 9, 1998. FIRM AGREED TO IMPOSITION OF $30,000.00 FINE ANDAGREED TO CEASE AND DESIST FROM FURTHER VIOLATIONS OFMEMBERSHIP RULE 1.133(2).


Settled






WITHOUT ADMITTING VIOLATIONS, FIRM ENTERED INTO SETTLEMENTAGREEMENT WITH COFFEE, SUGAR & COCOA EXCHANGE, INC. ONDECEMBER 9, 1998. FIRM AGREED TO IMPOSITION OF $30,000.00 FINE ANDAGREED TO CEASE AND DESIST FROM FURTHER VIOLATIONS OFMEMBERSHIP RULE 1.133(2).

Disclosure 34 of 37

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Initiated By: CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED


Censure


FINE OF $5,000.00





Allegations: ALLEGATION THAT FIRM FAILED TO ACCURATELY COMPUTE NET CAPITALCOMPUTATION AND FAILED TO PROPERLY MARGIN CERTAIN MARKET-MAKER AND CUSTOMER ACCOUNTS.



Resolution:



Firm Statement STATEMENT OF CHARGES ISSUED BY CBOE ON DECEMBER 20, 1990 ANDAMENDED STATEMENT OF CHARGES WAS ISSUED MARCH 15, 1991.WITHOUT ADMITTING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFEROF SETTLEMENT ON MARCH 26, 1991. DECISION ACCEPTING OFFER OFSETTLEMENT RENDERED BY CBOE ON APRIL 10, 1991. FIRM WASCENSURED AND PAID FINE OF $5,000.00.



Disclosure 35 of 37

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Initiated By: NYSE DIVISION OF ENFORCEMENT




Docket/Case Number:

Principal Product Type:


Allegations: **05/07/1999** STIPULATION AND CONSENT TOPENALTY FILED BY NYSE DIVISION OF ENFORCEMENT AND PENDING.CONSENTED TO FINDINGS A. A FINDING BY THE HEARING PANEL THATIT: ab VIOLATED SECURITIES AND EXCHANGE COMMISSION ("S.E.C.")RULE 15c-3-3(e)(1)(EXHIBIT A) PROMULGATED UNDER THE SECURITIESEXCHANGE ACT OF 1934 ("THE"ACT") IN THAT IT DID NOT PROPERLYCOMPUTE THE AMOUNT REQUIRED TO BE ON DEPOSIT IN ITS RESERVEBANK ACCOUNT. 1. ab VIOLATED SEC RULE 17a-3(a)(11) PROMULGATEDUN THE ACT IN THAT IT FAILED TO PROPERLY COMPUTE ITS NETCAPITAL. 2. ab VIOLATED EXCHANGE RULE 325(b) (1) IN THAT ITFAILED TO MAKE THE REQUIRED NOTIFICATION TO THE EXCHANGE WHENITS CAPITAL PERCENTAGE WAS BELOW 7%. 3. ab VIOLATED SEC RULE17a-5 PROMULGATED UNDER THE ACTS AND EXCHANGE RULE 476(a)(10)IN THAT IT FILED INACCURATE FOCUS REPORTS. 4. ab VIOLATED SECRULE 17a-3(a)(5) PROMULGATED UNDER THE ACT IN THAT IT DID NOTPROPERLY MAINTAIN SECURITIES RECORD OR LEDGERS. 5. ab VIOLATEDSEC RULE 17a-4(a) PROMULGATED UNDER THE ACT IN THAT IT DID NOTPRESERVE RECORDS AS REQUIRED THEREBY. 6. ab VIOLATED EXCHANGERULE 440 IN THAT IT DID NOT (a) RECONCILE POSITION STATEMENTSWITH RESPECT TO SECURITIES HELD BY CLEARING CORPORATIONS ATLEAST ONCE PER MONTH, (b) MAINTAIN PROPER RECORDS IDENTIFYINGSUSPENSE ACCOUNTS, (c) REVIEW EACH GENERAL LEDGERBOOKKEEPINGACCOUNTS AT LEAST MONTHLY TO DETERMINE THAT IT WAS CURRENTANDACCURATE, AND (d) PAY THE REQUIRED SEC TRANSACTION FEES. 7. abVIOLATED EXCHANGE RULE 476(a)(7) IN THAT IT DID NOT PAY CHARGESON FLOOR TRANSACTIONS REQUIRED BY ARTICLE X SECTION 4 OF THEEXCHANGE CONSTITUTION. 8. ab VIOLATED EXCHANGE RULE 342 IN THATIT FAILED TO REASONABLY SUPERVISE OR CONTROL ITS BUSINESSACTIVITIES TO PREVENT THE FOREGOING VIOLATIONS OF EXCHANGEANDSEC RULES. B. THE IMPOSITION BY THE EXCHANGE OF THE PENALTY OFA CENSURE AND A FINE OF $80,000.








Resolution:


Sanction Details: Not Provided

Regulator Statement CONTACT: PEGGY GERMINO (212) 656-8450




Initiated By: NEW YORK STOCK EXCHANGE


Censure


FINE OF $80,000.00.


Docket/Case Number: NYSE HEARING PANEL DECISION 99-73



Allegations: ALLEGED VIIOLATIONS OF SEC RULES 15C-3-3(E)(1); 17A-3(A)(5);17A-3(A)(11); 17A-4(A); AND 17A-5 AND NYSE RULES 325(B)(1); 342; 440; 476(A)(7);AND 476(A)(10).



Resolution:


Sanction Details: A FINE OF $80,000.00 WAS PAID ON SEPTEMBER 14, 1999.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS AND FOR THE SOLEPURPOSE OF SETTLING THE MATTER, THE FIRM ENTERED INTO ASTIPULATION OF FACTS AND CONSENT TO PENALTY ON MAY 7, 1999. NYSEHEARING PANEL RENDERED ITS DECISION ON JULY 13, 1999. THEDECISION BECAME FINAL ON AUGUST 18, 1999. FINE WAS PAIDSEPTEMBER 14, 1999.








WITHOUT ADMITTING OR DENYING THE ALLEGATIONS AND FOR THE SOLEPURPOSE OF SETTLING THE MATTER, THE FIRM ENTERED INTO ASTIPULATION OF FACTS AND CONSENT TO PENALTY ON MAY 7, 1999. NYSEHEARING PANEL RENDERED ITS DECISION ON JULY 13, 1999. THEDECISION BECAME FINAL ON AUGUST 18, 1999. FINE WAS PAIDSEPTEMBER 14, 1999.

Disclosure 36 of 37

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Initiated By: CBOE







Allegations: Not Provided



Resolution:


Sanction Details: A $5,000 fine.

Regulator Statement Several customer accounts of Geldermann reviewedby the Exchange were not opened and approved in accordance withExchange Rules; 2) the month end mark-to-market values of thecustomer accounts which contained foreign currency optionpositions were computed inaccurately by Geldermann, therebycausing incorrect account equity information to appear onnumerous monthly customer statements; 3) a branch officemanager of Geldermann's Tulsa, Oklahoma branch office wasdually and concurrently registered with Geldermann and anotherunrelated registered securities firm without the expresswritten permission of the Exchange; and 4) several customeraccounts of Geldermann reviewed by the Exchange were permittedto trade options which exceeded the customer account strategylevel approved by Geldermann. (CBOE Rules 9.4, 9.7, 9.8 and9.12)


Decision






Several customer accounts of Geldermann reviewedby the Exchange were not opened and approved in accordance withExchange Rules; 2) the month end mark-to-market values of thecustomer accounts which contained foreign currency optionpositions were computed inaccurately by Geldermann, therebycausing incorrect account equity information to appear onnumerous monthly customer statements; 3) a branch officemanager of Geldermann's Tulsa, Oklahoma branch office wasdually and concurrently registered with Geldermann and anotherunrelated registered securities firm without the expresswritten permission of the Exchange; and 4) several customeraccounts of Geldermann reviewed by the Exchange were permittedto trade options which exceeded the customer account strategylevel approved by Geldermann. (CBOE Rules 9.4, 9.7, 9.8 and9.12)


Initiated By: CHICAGO BOARD OF OPTIONS EXCHANGE , INCORPORATED


Other


FINE OF $5,000.00





Allegations: ALLEGATION THAT FIRM FAILED TO FULLY DOCUMENT CERTAINACCOUNTS, INACCURATELY COMPUTED MONTH-END MARK-TO-MARKETVALUES OF CUSTOMER ACCOUNTS, BRANCH MANAGER DUALLYREGISTERED WITHOUT EXCHANGE PERMISSION, AND CERTAINACCOUNTS TRADED OPTIONS WHICH EXCEEDED THE CUSTOMERSTRATEGY LEVEL.



Resolution:



Firm Statement STATEMENT OF CHARGES ISSUED BY EXCHANGE ON APRIL 24, 1990.WITHOUT ADMITTING THE ALLEGATIONS, THE FIRM SUBMITTED AN OFFEROF SETTLEMENT ON AUGUST 28, 1990. DECISION ACCEPTING OFFER OFSETTLEMENT RENDERED BY CBOE ON OCTOBER 9, 1990. FIRM PAID FINEOF $5,000.00.

Sanctions Ordered: Monetary/Fine


Disclosure 37 of 37

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.




Docket/Case Number: CHI-598



Allegations:



Resolution:


Sanction Details:

Regulator Statement COMPLAINT CHI-598 FILED 7-25-77DISTRICT #812-6-77: CENSURED: ASSESSED COSTS OF $253.41:AND ASSESSED COSTS OF $139.251-19-78: TO BE FINAL12-27-77: CALLED FOR REVIEW B/G5-4-78: B/G DECISION RENDERED, PENALTIES MODIFIED:CENSURED: ASSESSED COSTS OF $139.256-2-78: TO BE FINAL6-2-78: FINAL12-15-78: FC# 7187, PAID PER MB

Sanctions Ordered: Censure

Decision


Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.



Allegations: ALLEGED VIOLATION OF NASD RULE/REGULATION








Censure


ASSESSED COSTS OF $139.25





Resolution:

Other Sanctions Ordered: ASSESSED COSTS OF $139.25

Sanction Details: ASSESSED COSTS OF $139.25 PAID 12/15/19978.

Firm Statement COMPLAINT FILED 07/25/1977. CENSURE AND ASSESSED COSTS OF$235.41 ON 12/06/1977. B/G DECISION RENDERED AND PENALITIESMODIFIED TO CENSURE AND ASSESSED COSTS OF $139.25 ON 05/04/1978.DECISION FINAL ON 06/02/1978.

Sanctions Ordered: Censure

Decision






Civil - Final

This type of disclosure event involves (1) an injunction issued by a foreign or domestic court within the last 10 years inconnection with investment-related activity, (2) a finding by a court of a violation of any investment-related statute orregulation, or (3) an action dismissed by a court pursuant to a settlement agreement.

Disclosure 1 of 1


Initiated By: U.S. COMMODITY FUTURES TRADING COMMISSION

Court Details: UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEWYORK, CIVIL ACTION NO. 13-CIV-4463

CFTC RELEASE PR6626-13, JUNE 27, 2013: THE CFTC FILED ANENFORCEMENT ACTION AGAINST MF GLOBAL INC., A REGISTEREDFUTURES COMMISSION MERCHANT (FCM), ANOTHER COMPANY AND TWOINDIVIDUALS, BASED ON, AMONG OTHER VIOLATIONS, THE FIRM'SUNLAWFUL USE OF CUSTOMER FUNDS THAT HARMED THOUSANDS OFCUSTOMERS AND VIOLATED FUNDAMENTAL CUSTOMER PROTECTIONLAWS ON AN UNPRECEDENTED SCALE. WITH RESPECT TO THE COMPANYDEFENDANTS, IN ADDITION TO THE MISUSE OF CUSTOMER FUNDS, THECOMPLAINT CHARGED THAT THE FIRM (I) UNLAWFULLY FAILED TO NOTIFYTHE CFTC IMMEDIATELY WHEN IT KNEW OR SHOULD HAVE KNOWN OFTHE DEFICIENCIES IN ITS CUSTOMER ACCOUNTS; (II) FILED FALSEREPORTS WITH THE CFTC THAT FAILED TO SHOW THE DEFICITS IN THECUSTOMER ACCOUNTS; AND (III) USED CUSTOMER FUNDS FORIMPERMISSIBLE INVESTMENTS IN SECURITIES THAT WERE NOTCONSIDERED READILY MARKETABLE OR HIGHLY LIQUID IN VIOLATION OFCFTC REGULATION. THE COMPLAINT ALLEGED THE FIRM VIOLATEDSECTIONS 4D(A)(2) AND 6(C)(2) OF THE COMMODITY EXCHANGE ACT ANDCFTC REGULATIONS 1.12(H), 1.20, 1.22, 1.23, 1.25 AND 166.3.

MF GLOBAL AGREED TO SETTLE ALL CHARGES AGAINST IT ON TERMS SETFORTH IN A PROPOSED ORDER THAT IS SUBJECT TO COURT APPROVALAND INCLUDES 100% RESTITUTION OF THE APPROXIMATELY $1 BILLIONLOST BY ALL COMMODITY CUSTOMERS WHEN THE FIRM FAILED ONOCTOBER 31, 2011. IF APPROVED BY THE UNITED STATES DISTRICTCOURT AND THE UNITED STATES BANKRUPTCY COURT, THE PROPOSEDSETTLEMENT OF ALL CHARGES AGAINST MF GLOBAL WILL REQUIRE 100%RESTITUTION OF ALL REMAINING COMMODITY CUSTOMER CLAIMS. THEPROPOSED ORDER ALSO INCLUDES THE IMPOSITION OF A $100 MILLIONPENALTY, WHICH CAN BE PAID TO THE EXTENT MF GLOBAL HAS NOTFULLY EXHAUSTED ALL AVAILABLE FUNDS AND ASSETS PAYINGCUSTOMERS AND THEN OTHER CREDITORS ENTITLED TO PRIORITYUNDER BANKRUPTCY LAW.

Allegations:







Relief Sought: Injunction

Other Relief Sought: RESTITUTION; CIVIL MONETARY PENALTY; COSTS AND FEES; INTEREST

Date Court Action Filed: 06/27/2013


Other Product Types:

Resolution: Judgment Rendered


Other Sanctions:

Sanction Details: CFTC RELEASE PR6776-13, NOVEMBER 18, 2013: THE U.S. COMMODITYFUTURES TRADING COMMISSION (CFTC) OBTAINED A FEDERAL COURTCONSENT ORDER AGAINST DEFENDANT MF GLOBAL INC. (MF GLOBAL)REQUIRING IT TO PAY $1.212 BILLION IN RESTITUTION TO CUSTOMERS OFMF GLOBAL TO ENSURE CUSTOMERS RECOVER THEIR LOSSESSUSTAINED WHEN MF GLOBAL FAILED IN 2011.

THE CONSENT ORDER, ENTERED ON NOVEMBER 8, 2013 BY THE U.S.DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ALSOIMPOSES A $100 MILLION CIVIL MONETARY PENALTY ON MF GLOBAL, TOBE PAID AFTER MF GLOBAL HAS FULLY PAID CUSTOMERS AND CERTAINOTHER CREDITORS ENTITLED TO PRIORITY UNDER BANKRUPTCY LAW.THE TRUSTEE FOR MF GLOBAL OBTAINED PERMISSION FROM THEBANKRUPTCY COURT TO PAY RESTITUTION IN FULL TO CUSTOMERS TOREMEDY ANY SHORTFALL WITH FUNDS OF THE MF GLOBAL GENERALESTATE.

Regulator Statement THE CONSENT ORDER AROSE OUT OF THE CFTC'S COMPLAINT, FILED ONJUNE 27, 2013, CHARGING MF GLOBAL AND THE OTHER DEFENDANTSWITH UNLAWFUL USE OF CUSTOMER FUNDS. IN THE CONSENT ORDER,MF GLOBAL ADMITS TO THE ALLEGATIONS PERTAINING TO ITS LIABILITYBASED ON THE ACTS AND OMISSIONS OF ITS EMPLOYEES AS SET FORTHIN THE CONSENT ORDER AND THE COMPLAINT.

THE CFTC'S COMPLAINT CHARGED MF GLOBAL, A REGISTERED FUTURESCOMMISSION MERCHANT (FCM), WITH VIOLATING PROVISIONS OF THECOMMODITY EXCHANGE ACT AND CFTC REGULATIONS INTENDED TOPROTECT FCM CUSTOMER FUNDS AND REQUIRING DILIGENTSUPERVISION BY REGISTRANTS. SPECIFICALLY, THE COMPLAINTCHARGED THAT DURING THE LAST WEEK OF OCTOBER 2011, MF GLOBALUNLAWFULLY USED CUSTOMER SEGREGATED FUNDS TO SUPPORT ITSOWN PROPRIETARY OPERATIONS AND THE OPERATIONS OF ITSAFFILIATES. IN ADDITION TO THE MISUSE OF CUSTOMER FUNDS, THECOMPLAINT ALLEGED THAT MF GLOBAL (I) UNLAWFULLY FAILED TONOTIFY THE CFTC IMMEDIATELY WHEN IT KNEW OR SHOULD HAVEKNOWN OF THE DEFICIENCIES IN ITS CUSTOMER ACCOUNTS, (II) MADEFALSE STATEMENTS IN REPORTS IT FILED WITH THE CFTC THAT FAILEDTO SHOW THE DEFICITS IN THE CUSTOMER ACCOUNTS, (III) USEDCUSTOMER FUNDS FOR IMPERMISSIBLE INVESTMENTS IN SECURITIESTHAT WERE NOT CONSIDERED READILY MARKETABLE OR HIGHLY LIQUIDIN VIOLATION OF CFTC REGULATION, AND (IV) FAILED TO DILIGENTLYSUPERVISE THE HANDLING OF COMMODITY INTEREST ACCOUNTSCARRIED BY MF GLOBAL AND THE ACTIVITIES OF ITS PARTNERS,OFFICERS, EMPLOYEES, AND AGENTS.

THE CONSENT ORDER RECOGNIZES THE COOPERATION OF THE TRUSTEEFOR MF GLOBAL AND REQUIRES THE TRUSTEE'S CONTINUEDCOOPERATION WITH THE CFTC.

Monetary/Fine $100,000,000.00Disgorgement/Restitution

Sanctions Ordered or ReliefGranted:






THE CONSENT ORDER AROSE OUT OF THE CFTC'S COMPLAINT, FILED ONJUNE 27, 2013, CHARGING MF GLOBAL AND THE OTHER DEFENDANTSWITH UNLAWFUL USE OF CUSTOMER FUNDS. IN THE CONSENT ORDER,MF GLOBAL ADMITS TO THE ALLEGATIONS PERTAINING TO ITS LIABILITYBASED ON THE ACTS AND OMISSIONS OF ITS EMPLOYEES AS SET FORTHIN THE CONSENT ORDER AND THE COMPLAINT.

THE CFTC'S COMPLAINT CHARGED MF GLOBAL, A REGISTERED FUTURESCOMMISSION MERCHANT (FCM), WITH VIOLATING PROVISIONS OF THECOMMODITY EXCHANGE ACT AND CFTC REGULATIONS INTENDED TOPROTECT FCM CUSTOMER FUNDS AND REQUIRING DILIGENTSUPERVISION BY REGISTRANTS. SPECIFICALLY, THE COMPLAINTCHARGED THAT DURING THE LAST WEEK OF OCTOBER 2011, MF GLOBALUNLAWFULLY USED CUSTOMER SEGREGATED FUNDS TO SUPPORT ITSOWN PROPRIETARY OPERATIONS AND THE OPERATIONS OF ITSAFFILIATES. IN ADDITION TO THE MISUSE OF CUSTOMER FUNDS, THECOMPLAINT ALLEGED THAT MF GLOBAL (I) UNLAWFULLY FAILED TONOTIFY THE CFTC IMMEDIATELY WHEN IT KNEW OR SHOULD HAVEKNOWN OF THE DEFICIENCIES IN ITS CUSTOMER ACCOUNTS, (II) MADEFALSE STATEMENTS IN REPORTS IT FILED WITH THE CFTC THAT FAILEDTO SHOW THE DEFICITS IN THE CUSTOMER ACCOUNTS, (III) USEDCUSTOMER FUNDS FOR IMPERMISSIBLE INVESTMENTS IN SECURITIESTHAT WERE NOT CONSIDERED READILY MARKETABLE OR HIGHLY LIQUIDIN VIOLATION OF CFTC REGULATION, AND (IV) FAILED TO DILIGENTLYSUPERVISE THE HANDLING OF COMMODITY INTEREST ACCOUNTSCARRIED BY MF GLOBAL AND THE ACTIVITIES OF ITS PARTNERS,OFFICERS, EMPLOYEES, AND AGENTS.

THE CONSENT ORDER RECOGNIZES THE COOPERATION OF THE TRUSTEEFOR MF GLOBAL AND REQUIRES THE TRUSTEE'S CONTINUEDCOOPERATION WITH THE CFTC.






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 3


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

FINRA

10/29/2008

08-03925

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE; OTHER-OTHER

NO OTHER TYPE OF SEC INVOLVE; OPTIONS

$329,086.00

AWARD AGAINST PARTY

08/07/2009

$90,000.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 3

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



FINRA

12/11/2008

08-04194

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY

NO OTHER TYPE OF SEC INVOLVE; OPTIONS

$1,000,000.00 73©2022 FINRA. All rights reserved. Report about MF GLOBAL INC.




www.finra.org/awardsonline





Disposition:

Disposition Date:


$1,000,000.00

AWARD AGAINST PARTY

07/09/2010

$0.00


Disclosure 3 of 3

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

01/06/2009

08-04396

ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

NO OTHER TYPE OF SEC INVOLVE; OPTIONS; OTHER TYPES OFSECURITIES

$1,247,869.47

AWARD AGAINST PARTY

03/26/2010

$123,081.02








End of Report

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