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JAMES H. HOLL, III., CA Bar. No. 177885

Email: jholl@cftc.gov

Telephone: (202) 418-5311

PAUL G. HAYECK, pro hac vice forthcoming

Email: phayeck@cftc.gov

Telephone: (202) 418-5312

A. DANIEL ULLMAN II, pro hac vice forthcoming

Email: dullman@cftc.gov

Telephone: (202) 418-5420

DEREK S. HAMMOND, pro hac vice forthcoming

Email: dhammond@cftc.gov

Telephone: (202) 418-5020

Attorneys for Plaintiff

COMMODITY FUTURES 

TRADING COMMISSION

1155 21st Street, N.W.

Washington, D.C. 20581

Facsimile: (202) 418-5523

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

COMMODITY FUTURES

TRADING COMMISSION, 

Plaintiff,

v.

YUEYU BAO, 

Defendant.

Civil Action No. _____________

COMPLAINT FOR INJUNCTIVE

AND OTHER EQUITABLE 

RELIEF AND FOR CIVIL

MONETARY PENALTIES 

UNDER THE COMMODITY 

EXCHANGE ACT AND

COMMISSION REGULATIONS

DEMAND FOR JURY TRIAL

2:24-cv-376

Case 2:24-cv-00376 Document 1 Filed 01/16/24 Page 1 of 18 Page ID #:1
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The Commodity Futures Trading Commission (“Commission” or “CFTC”), an 

independent federal agency, invokes the jurisdiction of this Court pursuant to 28 U.S.C. 

§§ 1331, 1345 and 7 U.S.C. § 13a-1(a), alleging as follows:

I. INTRODUCTION

1. Beginning in October 2021—and ending in November 2021 when his 

trading account was frozen because of suspicious trading activity—Yueyu Bao 

(“Bao” or “Defendant”) engaged in a series of illegal transactions on the Chicago 

Board of Trade (“CBOT”), a Chicago Mercantile Exchange Group (“CME”) 

exchange, involving at least 33 non-competitive, fictitious sales of 410 futures 

contracts. 

2. Through this illegal scheme, Bao illegally coordinated trades of 

commodity futures contracts with his cousin (“Trader A”) for the sole purpose of 

transferring profits of, at least, $159,000 from Trader A’s account into his account. 

3. On November 14, 2022, Trader A participated in a recorded interview 

with the CME and admitted the fictious sales scheme in toto (the “CME Interview”). 

4. Trader A admitted to entering into 33 matched trades with Bao—at 

Bao’s direction and for his benefit—to transfer profits from Trader A’s account to 

Bao’s account. 

5. By engaging in this conduct, Defendant violated Section 4c(a)(2)(A)(ii) 

of the Commodity Exchange Act (“Act”), 7 U.S.C. § 6c(a)(2)(A)(ii), by entering into 

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a transaction that is a fictitious sale involving the purchase or sale of any commodity 

for future delivery. 

6. Defendant also violated Commission Regulation (“Regulation”) 1.38(a), 

17 C.F.R. § 1.38(a), by entering into illegal, non-competitive fictitious transactions to 

buy and sell commodities for future delivery. 

7. Due to his conduct, Defendant has engaged, is engaging, or is about to 

engage in acts and practices in violation of certain trade practice provisions of the 

Act, 7 U.S.C. §§ 1 et seq. 

8. Unless restrained and enjoined by this Court, Defendant is likely to 

continue to engage in the acts and practices alleged in this Complaint and similar acts 

and practices, as detailed below. 

9. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, the 

Commission brings this action to enjoin Defendant’s unlawful acts and practices and 

to compel Defendant to comply with the Act and Regulations. 

10. Additionally, the Commission seeks civil monetary penalties and 

remedial ancillary relief, including, but not limited to, trading and registration bans, 

disgorgement, post-judgment interest, and such other relief as the Court may deem 

necessary and appropriate. 

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II. JURISDICTION AND VENUE

11. Jurisdiction. This Court has jurisdiction over this action under 28 

U.S.C. § 1331 (codifying federal question jurisdiction) and 28 U.S.C. § 1345 

(providing that U.S. District Courts have original jurisdiction over civil actions 

commenced by the United States or by any agency expressly authorized to sue by Act 

of Congress). 

12. In addition, Section 6c(a) of the Act, 7 U.S.C. § 13a-1(a), provides that 

district courts have jurisdiction to hear actions brought by the CFTC for injunctive

and other relief or to enforce compliance with the Act whenever it shall appear to the 

Commission that any person has engaged, is engaging, or is about to engage in any 

act or practice constituting a violation of any provision of the Act or any rule, 

regulation, or order thereunder. 

13. Venue. Venue properly lies with the United States District Court for the 

Central District of California pursuant to Section 6c(e) of the Act, 7 U.S.C. § 13a1(e) because Defendant is found in, inhabits, or transacts business in this district, and 

the acts and practices in violation of the Act have occurred, are occurring, or are 

about to occur within this District. Bao directed and coordinated the illegal scheme 

with Trader A, who acted on Bao’s instructions to execute the illicit trades from her

home in the Central District of California. 

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III. PARTIES

14. Plaintiff, Commodity Futures Trading Commission, is an independent 

federal regulatory agency charged by Congress with responsibility for administering 

and enforcing the provisions of the Act, 7 U.S.C. §§ 1 et seq. and Regulations, 17 

C.F.R. §§ 1.1 et seq. 

15. Defendant Yueyu Bao currently resides in Shanghai, China. He is the 

cousin of Trader A.

IV. OTHER RELEVANT ENTITIES

16. Trader A resides in Irvine, California. Trader A was formerly registered 

with FINRA to trade securities. She is Defendant’s cousin. On September 22, 2023, 

the Commission issued an order simultaneously filing and settling charges against 

Trader A for engaging in the fictitious sales scheme with Defendant described here. 

17. FCM No. 1 is Bao’s Futures Commission Merchant (“FCM”). Bao 

opened a trading account at FCM No. 1. for express purposes of trading the 

Agricultural Futures at the heart of his fictitious trading scheme. As mandated by the 

Act, FCM No. 1 is registered with the Commission through the National Futures 

Association (“NFA”). 

18. FCM No. 2 is Trader A’s FCM. As mandated by the Act, FCM No. 2 is 

registered with the Commission through the NFA.

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V. FACTS

Background

19. A futures contract is an agreement to purchase or sell a commodity for 

delivery, in the future, at a price determined at the initiation of the contract, that 

obligates each party to fulfill the contract at the specified price. Futures contracts are 

used to assume, or shift, price risk and may be satisfied by delivery or offset.

20. CBOT is a Designated Contract Market (“DCM”) under Section 5(b)(1), 

7 U.S.C. § 7(b)(1) and Regulations 38.3(ii) and (iii), 17 C.F.R. §§ 38.3(ii) and (iii).

DCMs are routinely called “exchanges.” 

21. CBOT’s rules prohibit Defendant from executing fictious sales. 

22. CBOT utilizes an electronic trading platform called Globex, which is an 

open-access marketplace that allows traders to (1) view the book of visible orders and 

prices for futures contracts and options and (2) enter orders to buy or sell futures 

contracts or options. 

23. An “order,” in the context of electronic exchange trading, is a request 

submitted to the exchange to buy (“bid”) or sell (“offer” or “ask”) a certain number of 

a specified futures contracts. An order may be for one or more contracts (often called

“lots”). 

24. Orders are entered into Globex’s electronic order book and when there is 

a willing buyer and seller for a contract at a specified price, a transaction occurs, and 

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the orders are executed. Globex runs continuously and, therefore, it is not restricted 

by geography or time zones. 

25. A Futures Commission Merchant (“FCM”) is an individual, association, 

partnership, corporation, or trust that is, among other things, engaged in soliciting or 

in accepting orders for regulated transactions including futures, swaps, commodity 

options, or retail commodity transactions. FCMs hold customer funds to margin 

futures transactions. As mandated by the Act, all FCMs must register with the 

Commission through the NFA. See 7 U.S.C. § 6d(a)(1). 

26. FCMs serve as legal agents for their foreign customers “for purposes of 

accepting delivery or service of any communication issued by or on behalf of the 

Commission,” 17 C.F.R. § 15.05(b), including “any summons, complaint, order, [or] 

subpoena,” id. at § 15.05(a). FCMs are required to “transmit the communication 

promptly and in a manner which is reasonable under the circumstances, or in a 

manner specified by the Commission in the communication, to the foreign 

[customer].” Id. at § 15.05(b). 

Defendant’s Fictious Trading Scheme

27. Beginning in October 2021, and concluding when FCM No. 1 froze his 

account in November 2021 (the “Relevant Period”) due to suspicious trading activity, 

Bao entered into at least 33 fictitious, non-competitive sales, involving 410 futures 

contracts, with Trader A. 

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28. Defendant Bao’s fictitious trading scheme focused on three futures 

contracts (collectively, the “Agricultural Futures”) traded on the Globex platform

used by CBOT: 

Name CBOT Futures

Contract Designation

Globex Code

SRW Wheat Futures Chicago SRW Wheat ZWN4

Oats Futures Oats ZOU2, ZOZ2

Soybean Futures Soybean Meal ZMZ4

29. In May 2021, Bao opened an account at FCM No. 1 to trade the 

Agricultural Futures at the heart of his fictitious trading scheme. 

30. Bao traded at FCM No. 1, though an account with an account number 

ending in -5146 (“Bao’s Account”).

31. At FCM No. 1, Defendant was assigned a unique trader identification 

number (known as a “TAG 50” identifier) ending in -2630.

32. TAG 50s are used for submitting individualized trading orders to, and 

from, futures exchanges like CBOT. 

33. Bao executed fictitious trades, involving the Agricultural Futures, to 

move the profits from Trader A’s account at FCM No. 2 to Bao’s Account at FCM

No. 1. 

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34. Correspondingly, upon Bao’s suggestion, Trader A agreed to engage in 

these 33 fictitious trades of the Agricultural Futures.

35. Trader A traded through an account at FCM No. 2, which was assigned 

an account number ending in -3297 (“Trader A’s Account”). 

36. At FCM No. 2, Trader A was assigned a “TAG 50” identifier ending in -

9644. 

37. Bao and Trader A traded, in concert, extremely illiquid futures contracts 

in the Agricultural Futures. 

38. Because Bao and Trader A specifically targeted futures contracts trading 

at low trading volumes, they could reliably trade with each other, rather than an 

unrelated third party.

39. Bao and Trader A worked in tandem, coordinated their trading, and 

synchronized their fictitious sales by communicating in real time about their bids and 

offers. 

40. To accomplish their scheme, Bao would enter orders in the Agricultural 

Futures and then, based on Bao’s instructions, Trader A would place her own orders

in those futures, aggressively “pricing into” Bao’s order by crossing the bid/ask 

spread. 

41. In other words, Bao could buy futures contracts at prices lower than 

other market participants—and sell futures contracts at prices higher than other 

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market participants—by purposely coordinating and transacting with Trader A within 

a wide bid/ask spread. 

42. To do this, Bao and Trader A intentionally executed their orders during 

periods of low overall trading volume with the express purpose of finding and 

matching each other’s opposite orders on Globex. 

43. The execution of Bao’s fictitious sales scheme—which included nearly 

three dozen fictious transactions—is exemplified by his trading activity on November 

1, 2021. 

44. On November 1, 2021, in the middle of the night at 12:40 a.m. 

(00:40:41.322, as represented in the CBOT trading data; all times are expressed in 

Central Time), Bao placed an order to sell 15 contracts of July 2024 SRW Wheat 

Futures at $7.2875 per bushel (there are 5,000 bushels per contract) through his 

account ending in -5146 at FCM No. 1.

45. Almost simultaneously, at 12:41 a.m. (00:41:12.324), Trader A placed 

an order to buy 10 contracts of July 2024 SRW Wheat Futures, at $7.29 per bushel, 

through her account ending in -3297 at FCM No. 2.

46. The two orders instantly matched on the CBOT at $7.2875 for 10

contracts and Bao’s fictious sale was consummated.

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47. Around thirty-eight seconds later, at 12:41 a.m. (00:41:50.451), Bao 

placed another order to buy 10 contracts of July 2024 SRW Wheat Futures at $7.1625 

per bushel. 

48. Less than a minute after that, at 12:42 a.m. (00:42:43.843), Trader A 

placed an order to sell 10 contracts of July 2024 SRW Wheat Futures at $7.16 per 

bushel. 

49. The two orders for 10 contracts matched immediately on the CBOT at 

12:42 a.m. (00:42:43.843) for $7.1625, thereby consummating Bao’s fictious sale.

50. This series of trades on November 1, 2021, resulted in approximately

$6,250 in profits being transferred from Trader A’s Account into Bao’s Account. 

51. In total, Defendant Bao repeated his non-competitive, fictitious sales at 

least 33 times with Trader A between October and November 2021, resulting in the 

illegal trading of 410 Agricultural Futures Contracts. 

52. Through this illegal scheme, Bao successfully coordinated the transfer of 

at least $159,000 in profits from Trader A’s Account to his own account. 

Trader A Has Admitted to the Fictitious Sale Scheme

53. During the CME Interview, Trader A admitted to Bao’s fictious sales 

scheme in toto. 

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54. Trader A admitted to engaging in this fictitious trading scheme with Bao 

for the sole purpose of passing money from her account at FCM No. 2 to Bao’s 

Account at FCM No. 1. 

55. According to Trader A, Bao conceived the scheme to transfer the profits 

from Trader A’s Account to Bao’s Account through fictitious trades in the 

Agricultural Futures. 

56. Trader A admitted that she agreed to Bao’s request. Trader A explained 

that, in carrying out the scheme, Bao and she communicated in real time with the 

express purpose of coordinating their trades with one another and that Bao 

specifically instructed her in terms of what orders to place and at what prices. Trader 

A further admitted that she, in fact, heeded Bao’s instructions to consummate the 

scheme.

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND

COMMISSION REGULATIONS

COUNT I 

Violations of Section 4c(a)(2)(A)(ii) of the Act, 7 U.S.C. § 6c(a)(2)(A)(ii) 

Fictitious Sales

57. Paragraphs 1 through 56 are re-alleged and incorporated herein. 

58. Section 4c(a)(1) of the Act, 7 U.S.C. § 6c(a)(1), provides: “It shall be 

unlawful for any person to offer to enter into, enter into, or confirm the execution of a 

transaction described in paragraph (2) involving the purchase or sale of any 

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commodity for future delivery (or any option on such a transaction or option on a 

commodity) or swap, if the transaction is used or may be used to (A) hedge any 

transaction in interstate commerce in the commodity or the product or byproduct of 

the commodity; (B) determine the price basis of any such transaction in interstate 

commerce in the commodity; or (C) deliver any such commodity sold, shipped, or 

received in interstate commerce for the execution of the transaction.” 7 U.S.C. 

§ 6c(a)(1). 

59. Section 4c(a)(2) of the Act, 7 U.S.C. § 6c(a)(2), in relevant part, 

provides: “A transaction referred to in paragraph (1) is a transaction that . . . (i) is, is 

of the character of, or is commonly known to the trade as, a ‘wash sale’ or 

‘accommodation trade’ or (ii) is a fictitious sale[.]” 7 U.S.C. § 6c(a)(2)(A)(i), (ii).

60. Fictitious trades include both the unlawful practices specifically 

enumerated in Section 4c(a)(2) of the Act, 7 U.S.C. § 6c(a)(2), as well as trading 

techniques that give the appearance of submitting trades to the open market while 

negating the risk or price competition incident to such a market.

61. As referenced above, during the Relevant Period, Defendant Bao

violated Section 4c(a)(2)(A)(ii) of the Act, 7 U.S.C. § 6c(a)(2)(A)(ii), by engaging in 

a series of illegal transactions on the CBOT involving at least 33 fictitious sales and 

410 Agricultural Futures contracts. Through this illegal scheme, Defendant Bao 

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successfully coordinated the transfer of at least $159,000 in profits to his account 

from Trader A’s Account. 

62. Each non-competitive, fictitious transaction entered into by Bao, 

including, but not limited to, those specifically alleged herein, is alleged as a separate 

and distinct violation of Section 4c(a)(2)(A)(ii) of the Act, 7 U.S.C. § 6c(a)(2)(A)(ii). 

COUNT II

Violations of Regulation 1.38(a)

Non-Competitive Trades

63. Paragraphs 1 through 62 are re-alleged and incorporated herein. 

64. Regulation 1.38(a), 17 C.F.R. § 1.38(a), requires that all purchases and 

sales of commodity futures be executed “openly and competitively.”

65. As referenced above, during the Relevant Period, Defendant Bao

engaged in a series of illegal transactions on the CBOT involving at least 33 fictitious 

sales and 410 Agricultural Futures contracts. Through this illegal scheme, Defendant 

Bao successfully coordinated the transfer of at least $159,000 in profits from Trader 

A’s Account to his own account. 

66. By engaging in fictitious trading as alleged above, Defendant also 

intentionally engaged in noncompetitive trading. 

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67. Each noncompetitive trade, including, but not limited to, those 

specifically alleged herein, is alleged as a separate and distinct violation of 

Regulation 1.38(a), 17 C.F.R. § 1.38(a).

VI. RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that this Court, as 

authorized by Section 6c of the Act, 7 U.S.C. § 13a-l, and pursuant to the Court’s own 

equitable powers:

A. Find that Defendant violated: 

1. Section 4c(a)(2)(A)(ii) of the Act, 7 U.S.C. § 6c(a)(2)(A)(ii); and

2. Regulation 1.38(a), 17 C.F.R. § 1.38(a). 

B. Enter an Order of Permanent Injunction prohibiting Defendant and any 

affiliates, agents, servants, employees, successors, assigns, attorneys, and all persons in 

active concert with him, who receive actual notice of such order by personal service or 

otherwise, from engaging in conduct in violation of Section 4c(a)(2)(A)(ii) of the Act, 7 

U.S.C. § 6c(a)(2)(A)(ii); and Regulation 1.38(a), 17 C.F.R. § 1.38(a). 

C. Enter an order of permanent injunction restraining and enjoining Defendant, 

and all persons in active concert with him, from directly or indirectly:

1. Trading on or subject to the rules of any registered entity (as that term 

is defined by Section 1a(40) of the Act, 7 U.S.C. § 1a(40));

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2. Entering into any transactions involving “commodity interests” (as 

that term is defined in Regulation 1.3, 17 C.F.R. § 1.3) in accounts 

held in the name of Defendant or for accounts in which Defendant 

has a direct or indirect interest; 

3. Having any commodity interests traded on his behalf;

4. Controlling or directing the trading for or on behalf of any other 

person or entity, whether by power of attorney or otherwise, in any 

account involving commodity interests;

5. Soliciting, receiving, or accepting any funds from any person for the 

purpose of purchasing or selling of any commodity interests;

6. Applying for registration or claiming exemption from registration 

with the Commission in any capacity, and engaging in any activity 

requiring such registration or exemption from registration with the 

Commission except as provided for in Regulation 4.14(a)(9), 

17 C.F.R. § 4.14(a)(9); and

7. Acting as a principal (as that term is defined in Regulation 3.1(a), 

17 C.F.R. § 3.1(a)), agent, or any other officer or employee of any 

person registered, exempted from registration, or required to be 

registered with the Commission except as provided for in 

17 C.F.R. § 4.14(a)(9).

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D. Enter an order directing Defendant, as well as any third-party transferee 

and/or successors thereof, to disgorge, pursuant to such procedure as the Court may 

order, all benefits received including, but not limited to, salaries, commissions, loans, 

fees, revenues, and trading profits derived, directly or indirectly, from acts or 

practices which constitute violations of the Act and Regulations as described herein, 

including pre-judgment and post-judgment interest;

E. Enter an order requiring Defendant to make full restitution to every 

person who has sustained losses proximately caused by the violations described 

herein, including pre-judgment and post-judgment interest;

F. Enter an order directing Defendant to pay civil monetary penalties 

assessed by the Court, in an amount not to exceed the penalty prescribed by Section 

6c(d)(1) of the Act, 7 U.S.C. § 13a-1(d)(1), as adjusted for inflation pursuant to the 

Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 

114-74, tit. VII, § 701, 129 Stat. 584, 599–600, see Regulation 143.8, 17 C.F.R. 

§ 143.8 (2022), for each violation of the Act and Regulations, as described herein; 

G. Enter an order requiring Defendant to pay costs and fees as permitted 

by 28 U.S.C. §§ 1920 and 2413(a)(2); and

H. Enter an order providing such other and further relief as this Court 

may deem necessary and appropriate under the circumstances.

* * * 

Case 2:24-cv-00376 Document 1 Filed 01/16/24 Page 17 of 18 Page ID #:17
- 18 -

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF AND FOR CIVIL MONETARY 

PENALTIES UNDER THE COMMODITY EXCHANGE ACT AND COMMISSION REGULATIONS

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Dated: January 16, 2024 JURY TRIAL DEMANDED,

COMMODITY FUTURES 

TRADING COMMISSION

/s/ James H. Holl III

JAMES H. HOLL III, CA Bar. No. 177885 

PAUL G HAYECK,

(pro hac vice forthcoming)

A. DANIEL ULLMAN II,

(pro hac vice forthcoming)

DEREK S. HAMMOND,

(pro hac vice forthcoming)

Attorneys for Plaintiff

COMMODITY FUTURES

TRADING COMMISSION

1155 21st Street, N.W.

Washington, D.C. 20581

Telephone: (202) 418-5000

jholl@cftc.gov

phayeck@cftc.gov

dullman@cftc.gov

dhammond@cftc.gov

Case 2:24-cv-00376 Document 1 Filed 01/16/24 Page 18 of 18 Page ID #:18