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Braman vs CME

Braman vs CME

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Published by zerohedge
Braman vs CME
Braman vs CME

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Published by: zerohedge on Apr 13, 2014
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 ______________________________________________________________________________ IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION  ______________________________________________________________________________  WILLIAM C. BRAMAN, MARK MENDELSON, ) CLASS ACTION and JOHN SIMMS, Individually and ) COMPLAINT On Behalf of All Others Similarly Situated, ) ) Plaintiffs, ) )  v. ) Case No. 14-cv-02646 ) THE CME GROUP, INC., and ) THE BOARD OF TRADE OF THE CITY OF ) CHICAGO ) ) Defendants. ) JURY TRIAL DEMANDED  ______________________________________________________________________________
INTRODUCTION
 
1. Plaintiffs Mark Mendelson, John Simms and William Charles Braman (“Plaintiffs”), individually and on behalf of all others similarly situated, by their undersigned attorneys, for their Complaint against the above-named defendants (“Defendants”), upon knowledge as to matters relating to themselves and upon information and belief as to all other matters allege as follows:
NATURE OF THE ACTION
2. This is a federal derivatives class action on behalf of all users of real-time futures market data and futures contracts from the Defendants The Chicago Board of Trade (“CBOT”) and the Chicago Mercantile Exchange (“CME”) from 2007 until April 10,
Case: 1:14-cv-02646 Document #: 3 Filed: 04/11/14 Page 1 of 18 PageID #:20
 
 1
2014 (the “Class Period”) that are listed on the CBOT and the CME for violations of the Commodity Exchange Act (“CEA”). 3. CBOT is a designated contract market (“DCM”) registered with the Commodity Futures Trading Commission (“CFTC”). It is required pursuant to 7 U.S.C. § 7(d)(2) to regulate itself in conformity with the CEA and all regulations enacted by the CFTC including what are termed, Core Principles such as the Prevention of Market Disruption, the Protection of Markets and Market Participants, and the listing of contracts Not Readily Subject of Manipulation. The CBOT is required to operate in accordance with the strictures of the CEA. 4. At all relevant times, the CBOT and the CME together comprised the world’s largest derivatives exchange and provided what it labeled as real-time price data information on United States debt instruments, agricultural products, energy, equity indexes, foreign exchange rates and metals to the entire financial world. The CBOT and CME charged exchange fees and data-fees for this real-time price data to market users and the world’s financial marketplace falsely maintaining that the data sold was in real-time. The purchasers of real-time price data/information are ostensibly in a class of people composed of the first people to see the price data. In other words, the Defendants represented that those who paid for the data were getting it in “real-time.” 5. Throughout the Class Period, the Defendants held themselves out to the world as providing real-time and
bona fide
 market data when throughout this same period, the Defendants also charged high frequency traders (“HFTs”) for the ability to see price data and unexecuted order information before anyone else in the financial world, including all
Case: 1:14-cv-02646 Document #: 3 Filed: 04/11/14 Page 2 of 18 PageID #:21
 
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the people who had paid and continue to pay the Defendants for seeing the same data first, in real-time. 6. Throughout the Class Period, Defendants not only permitted the HFTs to see price and market data, including open orders, market orders before all other market participants and trader saw the price and market data, they permitted the HFTs to execute trades using this same non public data and order information before all other traders and market participants. In so doing, the Defendants engaged in a fraud on the marketplace, deceptive practice and failed to maintain a marketplace that is free from market disruption and market manipulation. 7. Throughout the Class Period, the Defendants concealed the fact that they were not providing real-time price information and continued to charge fees to all non HFTs for allegedly real-time data and transparent price information. 8. Throughout the Class Period, the Defendants concealed the fact that they were not providing a marketplace free of market manipulation because they were allowing the HFTs to trade based upon non-public information, specifically, the non-published and unexecuted orders of all other users of the CME and CBOT. In so doing, the Defendants failed to provide a marketplace that is free from market manipulation and established an unequal and two-tiered marketplace all the while inviting and soliciting the use of its financial trading instruments for profit. 9. Plaintiffs bring this class action under the CEA seeking recovery of damages from the Defendants’ allowance and facilitation of market manipulation by the HFTs and for
Case: 1:14-cv-02646 Document #: 3 Filed: 04/11/14 Page 3 of 18 PageID #:22

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