SEAT MARKET QUOTES AS OF FRIDAY, November 13, 2009 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOT FULL MEMBERSHIP (WITHOUT STOCK)

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1 Exchange November 13, 2009 Volume 37, Number 46 Bulletin The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the Exchange membership. To satisfy this requirement, a copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered by free of charge or by hard copy for a fee to all effective members on a weekly basis. Members are encouraged to receive the Exchange and Regulatory Bulletin and Information Circulars via . subscriptions may be obtained by submitting your name, firm if applicable, address, and phone number, to members@cboe.com. There is no charge for delivery of the Exchange and Regulatory Bulletin or for Information Circulars. If you do sign up for delivery, please remember to inform the Membership Department of address changes. Subscriptions for hard copy delivery may be obtained by submitting your name, firm if any, mailing address and telephone number to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. The cost of an annual subscription (January 1 through December 31) is $ ($ after July 1), payable in advance. For up-to-date Seat Market Quotes, call THE-CBOE and select choice 3 from the main menu, or, visit click CBOE Member Site and then Seat Market Information on the following page. For access to the CBOE Member Web Site, please also notify the Membership Department by sending an to members@cboe.com or by phone at Copyright 2009 Chicago Board Options Exchange, Incorporated SEAT MARKET QUOTES AS OF FRIDAY, November 13, 2009 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOE $2,500, $3,000, $2,750, November 5, 2009 CBOT FULL MEMBERSHIP (WITHOUT STOCK) CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE With ERP None None $725, September 30, 2008 Without ERP $250, $290, $265, November 5, 2009 ERP None None $230, October 13, 2008

2 Page 2 November 13, 2009 Volume 37, Number 46 Chicago Board Options Exchange MEMBERSHIP INFORMATION FOR 11/5/09 THROUGH 11/11/09 MEMBERSHIP APPLICATIONS RECEIVED FOR WHICH A POSTING PERIOD IS REQUIRED Individual Membership Applicants Date Posted Patrick A. Lawler, Nominee 11/5/09 CTC LLC 360 W. Illinois # 4C Chicago, IL MEMBERSHIP LEASES New Leases Effective Date Lessor: Bruce V. Rauner 11/9/09 Lessee: Equitec Proprietary Markets, LLC Stephen B. Borkowski, NOMINEE Rate: $10,000 Term: Monthly Terminated Leases Lessor: Endeavour Capital Advisors Inc. 11/9/09 Lessee: Equitec Proprietary Markets, LLC Stephen B. Borkowski (SBW), NOMINEE Termination Date MEMBERSHIP TERMINATIONS Member Organizations Lessor: Endeavour Capital Advisors Inc. 11/9/09 EFFECTIVE MEMBERSHIPS Individual Members Lessor: Effective Date Bruce V. Rauner 11/9/09 Nominee: Termination Date Effective Date Adam Persiani (ASP) 11/5/09 Infinium Securities, LLC Type of Business to be Conducted: Market Maker

3 Page 3 November 13, 2009 Volume 37, Number 46 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between Novermber 10, 2009 and Novermber 13, If you wish to read the entire document, please refer to the CBOE website at and click on the Trading Tools Tab. New listings and series information is also available in the Trading Tools section of the website. For questions regarding information discussed in a Research Circular, please call The Options Clearing Corporation at OPTIONS. Research Circular #RS November 10, 2009 Lear Corporation ( LEARQ/LEA ) Contract Adjustment to LEA Options Effective Date: November 10, 2009 Research Circular #RS November 11, 2009 Steris Corporation ( STE ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: November 20, 2009 Research Circular #RS November 11, 2009 EnCana Corporation ( ECA/ACJ/ZBM/YVR ) Distribution of Shares of Cenovus Energy, Inc. ( CVE ) Ex-Distribution Date: December 9, 2009 Research Circular #RS November 11, 2009 Wynn Resorts Limited ( WYNN/UWV/UWY/WQP/VEG/VOB ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: November 17, 2009 Research Circular #RS November 11, 2009 DISH Network Corporation Class A ( DISH/HSW/QHS/OUB & adj. YIS )CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: November 18, 2009 Research Circular #RS November 11, 2009 Cypress Semiconductor Corporation ( CY ) To Move and Begin Trading on the NASDAQ Effective Date: November 12, 2009 Research Circular #RS November 11, 2009 Werner Enterprises, Inc. ( WERN/RVQ ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: November 19, 2009 Research Circular #RS November 12, 2009 Trex Company, Inc. ( TWP ) Underlying Symbol Change to TREX Effective Date: November 23, 2009 Research Circular #RS November 12, 2009 CF Industries Holdings, Inc. ( CF/CJW/GYW/XCX/KDJ ) Exchange Offer FURTHER EXTENDED and FURTHER AMEND- ED by North Acquisition Co. Research Circular #RS November 13, 2009 Starent Networks, Inc. ( STAR/QTQ/XTJ ) Proposed Merger with Cisco Systems, Inc. ( CSCO/CYQ/CWY/VYC/WCY ) Research Circular #RS November 13, 2009 Brasil Telecom Participacoes S.A. ( BRP ) Proposed Merger with Brasil Telecom, S.A. ( BTM )

4 November 18, 2009 Volume RB20, Number 46 _ The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this requirement. Copyright 2009 Chicago Board Options Exchange, Incorporated. REGULATORY CIRCULARS Regulatory Circular RG To: From: Members and Member Organizations Division of Member and Regulatory Services Date: November 11, 2009 Re: Continuing Education Firm Element Advisory The Securities Industry/Regulatory Council on Continuing Education ( Council ) publishes a Firm Element Advisory ( FEA ), as a guide for members or member organizations to utilize when developing their continuing education Firm Element Training for covered registered persons and their supervisors. The Council has updated the FEA for firms to use in identifying topics to include in their Firm Element Training. Topics added to the FEA since the prior publications have been identified as such. FEA topics are not exhaustive and are intended for consideration for inclusion in training plans by firms. Each firm should consider whether a FEA topic is relevant, bearing in mind the specific nature of their business, clients, products and services. The updated Firm Element Advisory can be accessed on the Council's website at Members and member organizations have asked for more resources to help with Firm Element Planning. In response to such requests, the Council has developed tools for use in addition to or in conjunction with the Firm Element Advisory: - Guide to Firm Element Needs Analysis and Training Plan Development: - Firm Element Organizer: November 18, 2009 Volume RB20, Number 46 1

5 - Training Resources: Included in the FEA, is a listing of training resources that can be useful for Firm Element training or can assist individuals when preparing for their Regulatory Element sessions. Questions concerning this Regulatory Circular may be directed to Lawrence J. Bresnahan at Replaces Regulatory Circular RG _ APPROVED RULE CHANGE(S) R U L E C H A N G E S The Securities and Exchange Commission ( SEC ) has approved the following change(s) to Exchange rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended (the Act ). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at The effective date of the rule change is the date of approval unless otherwise noted. SR-CBOE Preferred Market-Makers On November 6, 2009, the SEC approved Rule Change File No. SR-CBOE , which filing amends the Exchange s Preferred Market-Maker program to allow for the preferencing of complex orders on a class-by-class basis. The filing also makes a clarification regarding the existing operation of the Preferred Market-Maker program for simple orders. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at The rule text is shown below and the rule filing is available at Rule 8.13 Preferred Market-Maker Program RULE Preferred Market-Maker Program (a) Generally. The Exchange may allow, on a class-by-class basis, for the receipt of marketable orders, through the Exchange s Order Routing System when the Exchange s disseminated quote is the NBBO, that carry a designation from the member transmitting the order that specifies a Market-Maker in that class as the Preferred Market-Maker for that order. A qualifying recipient of a Preferred Market-Maker order shall be afforded a participation entitlement as set forth in subparagraph (c) below. (b) Eligibility. Any Exchange Market-Maker type (e.g. Lead Market-Maker, and Designated Primary Market-Maker) may be designated as a Preferred Market-Maker, however, the Hybrid System is programmed so that a recipient of a Preferred Market- Maker order will only receive a participation entitlement for such order if the following provisions are met: (i) The Preferred Market-Maker [must have] has an appointment/allocation in the relevant option class. (ii) The Preferred Market-Maker [must be] is quoting at the best bid/offer on the Exchange. [(iii) The Preferred Market-Maker must comply with the quoting obligations applicable to its Market-Maker type under Exchange rules and must provide continuous electronic quotes (as defined in Rule 1.1 (ccc)) in at least 90% of the series of each class for which it receives Preferred Market-Maker orders.] November 18, 2009 Volume RB20, Number 46 2

6 (c) Entitlement Rate. Provided the provisions of subparagraph (b) above have been met, the Preferred Market-Maker participation entitlement shall be 40% when there are two or more Market-Makers also quoting at the best bid/offer on the Exchange, and 50% when there is only one other Market-Maker quoting at the best bid/offer on the Exchange. In addition, the following shall apply: (i) A Preferred Market-Maker may not be allocated a total quantity greater than the quantity that the Preferred Market-Maker is quoting at the best bid/offer on the Exchange. (ii) The participation entitlement rate is based on the number of contracts remaining after all public customer orders in the book at the best bid/offer on the Exchange have been satisfied. (iii) If a Preferred Market-Maker receives a participation entitlement under this Rule, then no other participation entitlements set forth in Exchange Rules (e.g. Rule 8.87 Participation Entitlement of DPMs and e-dpms and Rule 8.15B Participation Entitlement of LMMs) shall apply to such order. (d) Quoting Obligations: The Preferred Market-Maker must comply with the quoting obligations applicable to its Market-Maker type under Exchange rules and must provide continuous electronic quotes (as defined in Rule 1.1 (ccc)) in at least 90% of the series of each class for which it receives Preferred Market-Maker orders.... Interpretations and Policies:.01 The Exchange may allow, on a class-by-class basis, for the receipt of Preferred Market-Maker complex orders through the complex order book (COB) and/or complex order RFQ auction (COA) systems, and a qualifying recipient of a Preferred Market- Maker complex order shall be afforded a participation entitlement as set forth below. (a) Eligibility. Any Exchange Market-Maker type may be designated as a Preferred Market-Maker, however, the Hybrid System is programmed so that a recipient of a Preferred Market-Maker complex order will only receive a participation entitlement for such complex order if the following provisions are met: (i) The Preferred Market-Maker has an appointment/allocation in the relevant option class. (ii) With respect to participation entitlements for COB, the Preferred Market- Maker is quoting at the best net priced bid/offer when the order is received. (iii) With respect to participation entitlements for COA: (1) at the beginning of the auction, the Preferred Market-Maker is quoting at either (A) the best bid/offer on the Exchange in at least one of the component series of the complex order or (B) the best net priced bid/offer for the complex order; and (2) at the conclusion of the auction, the Preferred Market-Maker is quoting at the best net priced bid/offer. (b) Entitlement Rate. Provided the provisions of subparagraph (a) above have been met, the Preferred Market-Maker participation entitlement shall be 40% when there are two or more Market-Makers also quoting at the best net priced bid/offer execution price, and 50% when there is only one other Market-Maker quoting at the best net priced bid/offer execution price. In addition, the following shall apply: (i) the Preferred Market-Maker would not be allocated a total quantity greater than the quantity that the Preferred Market-Maker is quoting at the best net priced bid/offer execution price; (ii) the entitlement would be based on the number of contracts remaining after equivalent derived net priced orders and quotes in the EBook and equivalent net priced public customer complex orders resting in COB that have priority over Preferred Market- Maker in accordance with Rule 6.53C; and (iii) if a Preferred Market-Maker receives a participation entitlement for a complex order resting in COB or a response to COA, then no other participation entitlements for complex orders set forth in Exchange Rules shall apply to complex orders resting in COB or entered in response to COA. November 18, 2009 Volume RB20, Number 46 3

7 (c) Quoting Obligations: A Preferred Market-Maker is subject to the requirements of Rule 8.13(d) above. EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filings were submitted to the SEC effective on filing, and may have taken effect pursuant to Section 19(b)(3) of the Act. They will remain in effect barring further action by the SEC within 60 days after publication in the Federal Register. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at SR-CBOE $1 Strikes for Mini-RUT Options On November 6, 2009, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend CBOE Rules 5.5 and 24.9 to permit $1 strikes for Mini-RUT options, if the strike price is less than $200. In connection with $1 strikes, the rule change also proposes to establish a modest delisting policy for Mini-RUT options. Any questions regarding the rule change may be directed to Jenny Klebes, Legal Division, at The rule text is shown below and the rule filing is available at pdf. Rule 5.5 Series of Option Contracts Open for Trading RULE 5.5 (a) (e) No change.... Interpretations and Policies No change. [.13].15 Notwithstanding Interpretation and Policy.01 above, the intervals between strike prices for Mini-NDX option series shall be determined in accordance with Interpretation and Policy.01[(h)] (j) to Rule Notwithstanding Interpretation and Policy.01 above, the intervals between strike prices for Mini-RUT option series shall be determined in accordance with Interpretation and Policy.01(k) to Rule Rule 24.9 Terms of Index Option Contracts RULE No change.... Interpretations and Policies:.01 The procedures for adding and deleting strike prices for index options are provided in Rule 5.5 and Interpretations and Policies related thereto, as otherwise generally provided by Rule 24.9, and include the following: (a) (g) No change. [(h)] (j) Notwithstanding Interpretation and Policy.01(a) to Rule 24.9, the interval between strike prices of series of Mini-Nasdaq-100 Index ( MNX or Mini-NDX ) options will be $1 or greater, subject to following conditions: (i) (ii) No change. (iii) The Exchange shall not list LEAPS on Mini-NDX options at intervals less than [$5] $2.50. (iv) No change. (k) Notwithstanding Interpretation and Policy.01(a) to Rule 24.9, the interval between strike prices of series of Mini-Russell 2000 Index ( RMN or Mini-RUT ) options will be $1 or greater, subject to following conditions: (i) Initial Series. The Exchange may list series at $1 or greater strike price intervals for Mini-RUT options, if the strike price is less than $200, and will list at least two strike prices above and two strike prices below the current value of the RMN at about the time a series is opened for trading on the Exchange. The Exchange shall list strike prices for Mini-RUT options that are within 5 points from the closing value of the RMN on the preceding day. November 18, 2009 Volume RB20, Number 46 4

8 (ii) Additional Series. Additional series of the same class of Mini-RUT options may be opened for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market, to meet customer demand or when the underlying RMN moves substantially from the initial exercise price or prices. To the extent that any additional strike prices are listed by the Exchange, such additional strike prices shall be within thirty percent (30%) above or below the closing value of the RMN. The Exchange may also open additional strike prices that are more than 30% above or below the current RMN value provided that demonstrated customer interest exists for such series, as expressed by institutional, corporate or individual customers or their brokers. Market- Makers trading for their own account shall not be considered when determining customer interest under this provision. In addition to the initial listed series, the Exchange may list up to sixty (60) additional series per expiration month for each series in Mini-RUT options. In all cases, however, $1 strike prices intervals may be listed on Mini-RUT options only where the strike price is less than $200. (iii) The Exchange shall not list LEAPS on Mini-RUT options at intervals less than $2.50. (iv) (A) Delisting Policy. With respect to Mini-RUT options added pursuant to the above paragraphs, the Exchange will, on a monthly basis, review series that are outside a range of five (5) strikes above and five (5) strikes below the current value of the RMN, and delist series with no open interest in both the put and the call series having a: (i) strike higher than the highest strike price with open interest in the put and/or call series for a given expiration month; and (ii) strike lower than the lowest strike price with open interest in the put and/or call series for a given expiration month. (B) Notwithstanding the above referenced delisting policy, customer requests to add strikes and/or maintain strikes in Mini-RUT option series eligible for delisting shall be granted. (C) In connection with the above referenced delisting policy, if the Exchange identifies series for delisting, the Exchange shall notify other options exchanges with similar delisting policies regarding eligible series for delisting, and shall work with such other exchanges to develop a uniform list of series to be delisted, so as to ensure uniform series delisting of multiply listed Mini-RUT options No change. SR-CBOE Fees Schedule On November 10, 2009, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to adopt fees to allow CBOE to charge non-customer orders routing and execution fees in connection with representing those orders through the new linkage. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at The rule filing is available at PROPOSED RULE CHANGE(S) Pursuant to Section 19(b)(1) of the Act, and Rule 19b-4 thereunder, the Exchange has filed the following proposed rule change(s) with the SEC. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies of the rule change filings are available at Members may submit written comments to the Legal Division. The effective date of a proposed rule change will be the date of approval by the SEC, unless otherwise noted. November 18, 2009 Volume RB20, Number 46 5

9 SR-CBOE Hybrid Matching Algorithms On November 6, 2009, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend Rules 6.45A, Priority and Allocation of Equity Option Trades on the CBOE Hybrid System, and 6.45B, Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System, to revise the modified participation entitlement priority overlay. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at The rule text is shown below and the rule filing is available at Rule 6.45A - Priority and Allocation of Equity Option Trades on the CBOE Hybrid System (a) Allocation of Incoming Electronic Orders: The Exchange will determine to apply, for each class of options, one of the following rules of trading priority described in paragraphs (i) or (ii). The Exchange will issue a Regulatory Circular periodically specifying which priority rules will govern which classes of options any time the Exchange changes the priority. (i) Ultimate Matching Algorithm ( UMA ): Under this method, a market participant who enters a quotation or order and whose quote or order is represented by the disseminated CBOE best bid or offer ( BBO ) shall be eligible to receive allocations of incoming electronic orders for up to the size of its quote or order, in accordance with the principles described below. As an initial matter, if the number of contracts represented in the disseminated quote is less than the number of contracts in an incoming electronic order(s), the incoming electronic order(s) shall only be entitled to receive a number of contracts up to the size of the disseminated quote, in accordance with Rule 6.45A(a)(i)(B). The balance of the electronic order will be eligible to be filled at the refreshed quote either electronically (in accordance with paragraph (a)(i)(b) below) or manually (in accordance with Rule 6.45A(b)) and, as such, may receive a split price execution. (D) Modified Participation Entitlement: This participation entitlement is the same as provided in subparagraph (C)(1) above except as follows: The participation entitlement shall only be applied to the execution of an inbound order if the Market-Maker s participation entitlement is greater than its UMA share at the best price. In all other cases and when calculating the amount it would otherwise receive pursuant to the operation of the Algorithm, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions or executions initiated from PAR. (ii) Price-Time or Pro-Rata Priority Additional Priority Overlays Applicable to Price-Time or Pro-Rata Priority Methods In addition to the base allocation methodologies set forth above, the Exchange may determine to apply, on a class-by-class basis, one or more of the following designated market participant overlay priorities in a sequence determined by the Exchange. The Exchange will issue a Regulatory Circular periodically which will specify which classes of options are subject to these additional priorities as well as any time the Exchange changes these priorities. (3) Modified Participation Entitlement: This participation entitlement is the same as provided in subparagraph (2) above except as follows: [Notwithstanding subparagraph (2)(D) above, t]the participation entitlement shall only be applied to the execution of an inbound order if [there are no Public Customer orders resting at the best price or if a Public Customer was the first to rest interest at the best price] November 18, 2009 Volume RB20, Number 46 6

10 the Market-Maker s participation entitlement allocation is greater than the Market- Maker s price-time or pro-rata allocation at the best price. In all other cases and when calculating the price-time or pro-rata allocation, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions or executions initiated from PAR. Rule 6.45B - Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System (a) Allocation of Incoming Electronic Orders: The Exchange will determine to apply, for each class of options, one of the following rules of trading priority described in paragraphs (i) or (ii). The Exchange will issue a Regulatory Circular periodically specifying which priority rules will govern which classes of options any time the Exchange changes the priority. (i) Price-Time or Pro-Rata Priority Additional Priority Overlays Applicable to Price-Time or Pro-Rata Priority Methods (3) Modified Participation Entitlement: This participation entitlement is the same as provided in subparagraph (2) above except as follows: [Notwithstanding subparagraph (2)(D) above, t]the participation entitlement shall only be applied to the execution of an inbound order if [there are no Public Customer orders resting at the best price or if a Public Customer was the first to rest interest at the best price] the Market-Maker s participation entitlement allocation is greater than the Market-Maker s price-time or pro-rata allocation at the best price. In all other cases and when calculating the price-time or pro-rata allocation, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions or executions initiated from PAR. (ii) Ultimate Matching Algorithm ( UMA ): Under this method, a market participant who enters a quotation and whose quote is represented by the disseminated CBOE best bid or offer ( BBO ) shall be eligible to receive allocations of incoming electronic orders for up to the size of its quote, in accordance with the principles described below. As an initial matter, if the number of contracts represented in the disseminated quote is less than the number of contracts in an incoming electronic order(s), the incoming electronic order(s) shall only be entitled to receive a number of contracts up to the size of the disseminated quote, in accordance with Rule 6.45B(a)(ii)(B). The balance of the electronic order will be eligible to be filled at the refreshed quote either electronically (in accordance with paragraph (a)(ii)(b) below) or manually (in accordance with Rule 6.45B(b)) and, as such, may receive a split price execution. (D) Modified Participation Entitlement: This participation entitlement is the same as provided in subparagraph (C)(1) above except as follows: The participation entitlement shall only be applied to the execution of an inbound order if the Market-Maker s participation entitlement is greater than its UMA share at the best price. In all other cases and when calculating the amount it would otherwise receive pursuant to the operation of the Algorithm, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions or executions initiated from PAR. November 18, 2009 Volume RB20, Number 46 7

11 BUSINESS CONDUCT COMMITTEE DECISIONS At its meetings on September 16, 2009 and November 4, 2009, the Business Conduct Committee ( BCC ) resolved the following disciplinary matters by accepting four Offers of Settlement and four Letters of Consent, in which the Respondents and Subjects, respectively, consented to stipulations of facts and findings as detailed below without admitting or denying that Exchange Rules had been violated. In the Matter of Fat Squirrel Trading Group, LLC, Steve Peter and Damon Rein; File No (Offer of Settlement, Decision issued November 4, 2009). Fat Squirrel Trading Group, LLC ( FSTG ), an Exchange member organization, Steve Peter ( Peter ) and Damon Rein ( Rein ), were each censured and jointly and severally fined $30,000. In addition, the BCC ordered disgorgement in the amount of $45,000 for the following conduct: Peter and Rein, on behalf of FSTG, effected numerous short-term FLEX transactions in conjunction with stock purchases to directly circumvent Regulation SHO closeout obligations. (CBOE Rules 4.1 Just and Equitable Principles of Trade, 4.2 Adherence to Law; and Regulation SHO of the Securities Exchange Act of 1934, as amended and SEC Rule 203(b)(3) Borrowing and Delivery Requirements thereunder.) In the Matter of Rhino Trading, LLC and Damon Rein; File No (Offer of Settlement, Decision issued November 4, 2009). Rhino Trading, LLC ( Rhino ), an Exchange member organization and Damon Rein ( Rein ), were each censured and jointly and severally fined $150,000. In addition, the BCC ordered disgorgement in the amount of $350,000 for the following conduct: Rein, on behalf of Rhino effected numerous short-term FLEX transactions in conjunction with stock purchases to directly circumvent Regulation SHO closeout obligations and on several occasions Rein effected standardized in-the-money call transactions to circumvent Regulation SHO closeout obligations; and effected several short-term FLEX transactions in conjunction with stock sales to assist other market participants to circumvent its Regulation SHO close-out obligations. (CBOE Rules 4.1 Just and Equitable Principles of Trade, 4.2 Adherence to Law; and Regulation SHO of the Securities Exchange Act of 1934, as amended and SEC Rule 203(b)(3) Borrowing and Delivery Requirements thereunder.) In the Matter of Lek Securities Corporation, File No (Offer of Settlement, Decision issued November 10, 2009). Lek Securities Corporation ( Lek Securities ), an Exchange member organization, was censured and fined $10,000 for the following conduct: i) Lek Securities submitted, or caused to be submitted, a Nominee Authorization, Guarantee and Certification form to the Exchange stating that Michael Frehr would be a nominee of Lek Securities acting as a floor broker on behalf of Lek Securities when Lek Securities knew, or should have known, that Michael Frehr continued to be employed by and perform as a floor broker on behalf of JOH Options, Inc. ( JOH ); ii) Lek Securities permitted Michael Frehr to perform as a floor broker on behalf of JOH while Michael Frehr was registered and approved by the Exchange to perform floor broker trading functions only on behalf of Lek Securities; and iii) Lek Securities failed to adequately supervise Michael Frehr when Michael Frehr performed floor broker functions on behalf of JOH while Michael Frehr was registered and approved by the Exchange to perform floor broker trading functions only on behalf of Lek Securities. (CBOE Rules 3.8 Nominees and Members Who Register Their Memberships for Member Organizations, 4.1 Just and Equitable Principles of Trade and 4.2 Adherence to Law.) In the Matter of Everest Trading, LLC, Gary Patzik and Jason Maras; File No (Letter of Consent, Decision issued November 10, 2009). November 18, 2009 Volume RB20, Number 46 8

12 Everest Trading, LLC ( Everest ), an Exchange member organization and Gary Patzik ( Patzik ) and Jason Maras ( Maras ), were each censured and jointly and severally fined $125,000. In addition, the BCC ordered disgorgement in the amount of $275,000 for the following conduct: i) Patzik on behalf of Everest effected numerous short-term FLEX transactions in conjunction with stock purchases to directly circumvent Regulation SHO closeout obligations; ii) Maras on behalf of Everest effected several short-term FLEX transactions in conjunction with stock purchases to directly circumvent Regulation SHO closeout obligations; iii) Everest effected numerous shortterm FLEX transactions in conjunction with stock sales to assist other market participants to circumvent its Regulation SHO close-out obligations; iv) Maras, on behalf of Everest failed to locate numerous shares of Regulation SHO threshold securities and, as a result, Everest improperly availed itself of the Regulation SHO market maker exception to locate stock before selling short on numerous occasions; v) Patzik effected several short-term FLEX transactions in conjunction with stock purchases to circumvent Regulation SHO closeout obligations in Everest s Joint Account QAZ while Patzik was not registered as an Exchange Market-Maker or an approved participant of Joint Account QAZ; and vi) Patzik on behalf of Everest failed to establish and maintain adequate supervisory procedures to ensure compliance with SEC Regulation SHO requirements. (CBOE Rules 4.1- Just and Equitable Principals of Trade, 4.2 Adherence to Law and 8.9 Securities Accounts and Orders of Market-Makers; and Regulation SHO of the Securities Exchange Act of 1934, as amended and SEC Rule 203(b)(1) Locate Requirement for Short Sales and SEC Rule 203(b)(3) Borrowing and Delivery Requirements thereunder, and Federal Reserve Board Regulation X.) In the Matter of Timber Hill, LLC; File No (Letter of Consent, Decision issued November 10, 2009). Timber Hill, LLC ( Timber Hill ), an Exchange Designated Primary Market-Maker ( DPM ) organization, was censured and fined $30,000 for the following conduct. Timber Hill did not accord priority in approximately 231 instances to orders it represented as agent over the DPM s principal transactions. In accepting this Letter of Consent, the Committee considered the following factors: (i) the significant number of trades executed by Timber Hill in its capacity as DPM without incident; (ii) the Exchange found no evidence of intentional conduct by Timber Hill and that the exceptions resulted at least in part from the manual execution and order handling processes at the time and; (iii) the development of various systems enhancements by the Exchange which were requested and supported by Timber Hill and aided DPM organizations in preventing certain order handling violations, including the elimination of the DPM agency functions. (CBOE Rule 8.85(b)(iii) DPM Obligations.) In the Matter of SMC Options Management, LLC; File No (Letter of Consent, Decision issued November 10, 2009). SMC Options Management, LLC ( SMC ), an Exchange Designated Primary Market-Maker ( DPM ) organization, was censured and fined $30,000 for the following conduct. SMC did not accord priority in approximately 175 instances to orders it represented as agent over the DPM s principal transactions. In accepting this Letter of Consent, the Committee considered the following factors: (i) the significant number of trades executed by SMC in its capacity as DPM without incident; and (ii) the development of systems enhancements by the Exchange which aided DPM organizations in preventing certain order handling violations, including the elimination of the DPM agency functions. (CBOE Rule 8.85(b)(iii) DPM Obligations.) November 18, 2009 Volume RB20, Number 46 9

13 In the Matter of Specialists DPM, LLC; File No (Letter of Consent, Decision issued November 10, 2009). Specialists DPM, LLC ( Specialists ), an Exchange Designated Primary Market-Maker ( DPM ) organization, was censured and fined $15,000 for the following conduct. Specialists did not accord priority in approximately 88 instances to orders it represented as agent over the DPM s principal transactions. In accepting this Letter of Consent, the Committee considered the following factors: (i) the significant number of trades executed by Specialists in its capacity as DPM without incident; and (ii) the development of systems enhancements by the Exchange which aided DPM organizations in preventing certain order handling violations, including the elimination of the DPM agency functions. (CBOE Rule 8.85(b)(iii) DPM Obligations.) In the Matter of Michael Lohman, File No (Offer of Settlement, Decision issued November 10, 2009). Michael Lohman ( Lohman ), a former Exchange Market-Maker, was censured and fined $2,500. In addition, the BCC ordered an undertaking requiring Lohman to submit the AML documentation to the Exchange s Department of Member Firm Regulation within 30 days from the issuance of the Decision for the following conduct. Lohman failed to file his Anti-Money Laundering Compliance Program with the Exchange. (CBOE Rules 4.20 Anti-Money Laundering Compliance Program and 15.1 Maintenance, Retention and Furnishing of Books, Records and Other Information.) November 18, 2009 Volume RB20, Number 46 10