EXCHANGE RULES: NYMEX RULE 432. GENERAL OFFENSES
It shall be an offense:
B.1. to engage in fraud or bad faith;
B.2. to engage in conduct or proceedings inconsistent with just and equitable principles of trade;
C. to engage in dishonest conduct;
L.1. to fail to appear before the Board, Exchange staff or any investigative or hearing committee at a duly convened hearing, scheduled staff interview or in connection with any investigation.
NYMEX RULE 530 (PRIORITY OF CUSTOMERS' ORDERS)
A member shall not buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority when he is in possession of an executable order for another person to buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option in the same product, regardless of the venue of execution. All contract months in a given futures product and all options on the futures product, in addition to any corresponding alternative sized (mini or micro) futures or options contracts on a given product, shall be considered the same product for the purposes of this rule.
NYMEX RULE 532 (DISCLOSING ORDERS PROHIBITED)
With the exception of transactions executed in accordance with the requirements of Rules 526, 538 and 539, no person shall disclose another person's order to buy or sell except to a designated Exchange official or the CFTC, and no person shall solicit or induce another person to disclose order information. An order for pit execution is not considered public until it has been bid or offered by open outcry. No person shall take action or direct another to take action based on non-public order information, however acquired. The mere statement of opinions or indications of the price at which a market may open or resume trading does not constitute a violation of this rule.
Pursuant to an offer of settlement Zhiyu Wang (“Wang”) presented at a hearing on July 25, 2016, in which Wang neither admitted nor denied the findings or rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that, Wang was subject to the jurisdiction of the Exchange pursuant to NYMEX Rules 402 and 418 and that on several trade dates between December 18, 2014 and March 30, 2015, Wang, while trading for his employer, executed multiple transactions between his personal trading account and the account he traded for his employer. Specifically, Wang traded ahead of his employer’s account by entering orders and executing trades for his personal account and subsequently offsetting those trades opposite the employer’s account. As a result of this trading activity Wang realized profits in the amount of $236,530.
Furthermore, the Panel found that Market Regulation requested that Wang appear for an interview in connection with the conduct at issue. Interviewing subjects of an investigation is a standard but critical investigative procedure employed by Exchange staff. Despite receiving a request to appear for an interview, Wang, through his counsel, declined to be interviewed.
Accordingly, the Panel found that Wang violated NYMEX Rules 432.B.1., 432.B.2., 432.C., 432.L.1., 530 and 532.
In accordance with the settlement offer, the Panel ordered Wang to pay a fine in the amount of $100,000, to disgorge profits in the amount of $236,530, and to serve a three year suspension from (1) applying for membership on any CME Group Inc. Exchange; (2) access to any CME Group Inc. trading floor; (3) and 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 July 27, 2016 through July 27, 2019, inclusive.
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