EXCHANGE RULES: Rule 432. General Offenses (in part)
It shall be an offense:
B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade;
Q. to commit an act which is detrimental to the interest or welfare of the Exchange or to engage in any conduct which tends to impair the dignity or good name of the Exchange;
T. to engage in dishonorable or uncommercial conduct.
Pursuant to an offer of settlement David Kotz (“Kotz”) presented at a hearing on April 26, 2016, in which Kotz neither admitted nor denied the rule violations or any of the findings or conclusions herein upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that Kotz was a NYMEX member at the time of the conduct at issue and therefore subject to the jurisdiction of the Exchange pursuant to Rules 400 and 402, and that on multiple trade dates during the time period from June 2013 through June 2014, Kotz entered numerous orders in Natural Gas futures contract without the intent to trade. Specifically, he entered orders to obtain fills on the smaller orders he had placed on the opposite side of the order book. After receiving a fill on his smaller orders, Kotz would cancel the resting orders he had entered on the opposite side of the order book, within approximately one second. Furthermore, the Panel found that during that same time period, Kotz placed a number of orders opposite his resting stop orders with the purpose and effect of preventing the election of those stop orders.
The Panel found that as a result of the above, Kotz violated Exchange Rules 432.B.2., 432.Q, and 432.T.
In accordance with the settlement offer, the Panel ordered Kotz to: 1) pay a $200,000 fine; and 2) serve a 15 business day suspension of any access to any CME Group Inc. trading floor and of direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc., including CME Globex. The suspension shall run from April 28, 2016 through May 18, 2016, inclusive.
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