The Business Conduct Committee of the CBOE took disciplinary action in 6 cases against members and associated persons, based on investigations by Exchange staff.  Each member settled the charges by submitting a Letter of Consent and agreeing to pay a fine.  To access CBOE's records, click the linked case reference. In Thursday's posting, we deal with cases involving:  (i) MNR Executions LLC;  (ii) Diligentia Capital, LLC;  and (iii) Jag Trading, LLC and Craig Bauer. In the next posting, we'll deal with cases involving:  (iv) Andrew W. Smyth Jr. and Sparta Group of Chicago, L.P.;  (v) Coastal Trade Securities, L.L.C.;  and, (vi) Maryann Tesinsky. _______________________________ In the Matter of:  MNR Executions LLC, File No. 12-0009. The Chicago-based firm, a Trading Permit Holder, approved to conduct business as a Floor Broker, agreed to settle the following Exchange charges, by submitting a Letter of Consent and agreeing to pay $5K fine:

From September 2010 to August 2011, MNR allegedly failed to notify its customers prior to the execution of 3 orders processed through the AON-AIM mechanism as required.   Such an action would constitute a violation of CBOE Rules 4.1 and 6.74B.02.

In the Matter of:  Diligentia Capital, LLC, File No. 12-0005. The Chicago-based firm, a Trading Permit Holder approved to conduct business as a Market-Maker (Dealer-Specialist), agreed to settle the following Exchange charges, by submitting a Letter of Consent and agreeing to pay a $30K fine:

From January 2011 through May 2011, Diligentia allegedly effected numerous transactions through the use of orders resulting in the receipt of preferential market-maker treatment where Diligentia was not entitled to such treatment.  Such actions would constitute violations of Exchange Rules 8.1, 8.3 and Federal Reserve Board Regulation X.

From January 2011 through March 2011, the firm is further alleged to have electronically submitted orders to trade with the electronic book, without an appointment in the subject class.  The Exchange found that, for this same period, the firm's supervision was inadequate to ensure compliance for this conduct.

The submission of orders as noted above would constitute a violation of Exchange Rule 6.45B(c), and such supervisory deficiencies would constitute a violation of Exchange Rule 4.2.

In the Matter of Jag Trading, LLC,  and Craig Bauer, File No. 11-0033. The West Bloomfield, MI-based firm is a CBOE Stock Exchange (“CBSX”) Trading Permit Holder registered to conduct business as a Market-Maker.  Mr. Bauer is an Associated Person of Jag Trading and its Managing Member.  Both respondents agreed to settle the following Exchange charges by submitting a Letter of Consent and agreeing to pay a $10K fine jointly and severally:

An investigation by Exchange staff indicated that "there was probable cause for finding" that, from July 2009 through October 2009, Jag Trading entered numerous buy and sell orders that traded against each other, resulting in 33 transactions with no change in beneficial ownership.  During that same period, the firm and Craig Bauer employed supervisory procedures that were deemed to be inadequate for detecting and preventing transactions with no change in beneficial ownership.

The entering of transactions with no change in beneficial ownership would constitute violations of Exchange Rule 4.1, and such supervisory deficiencies would constitute violations of Exchange Rule 4.2