JAYPEE INTERNATIONAL INC.
EXCHANGE RULES: RULE 432: GENERAL OFFENSES (in part)
It shall be an offense:
W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange;
RULE 534: WASH TRADES PROHIBITED
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
Pursuant to an offer of settlement Jaypee International Inc. (“Jaypee”) presented at a hearing on March 26, 2015, in which Jaypee neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“BCC Panel”) found that it had jurisdiction over Jaypee as a COMEX member pursuant to Rules 400 and 402. The Panel found that during the time period July 2010 through March 2011, an employee of Jaypee executed a series of wash trades between Jaypee accounts in order to liquidate concurrent long and short positions and thereby avoid delivery, or to transfer positions between accounts to avoid posting margin. The Panel also found that Jaypee failed to diligently supervise its traders in a manner sufficient to ensure that they were familiar with Exchange rules such as through appropriate compliance training.
The Panel found that as a result of the foregoing, Jaypee violated Exchange Rules 534 and 432.W.
In accordance with the settlement offer, the BCC Panel ordered Jaypee to pay a fine to the Exchange in the amount of $40,000.
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