(LEGACY) NYMEX RULES:
6.11 Confirmation of Trades Executed on the Trading Floor
(B) Each Trading Member executing a purchase or sale, on the Exchange trading floor, or his designated authorized representative, shall be responsible for assuring that such Member’s transactions are properly assigned to the appropriate Clearing Member prior to his leaving the premises of the Exchange.
6.19 Type Indicator Codes
(A)(3)(a) CTI Codes: When a Floor Trading Member executes trades for the personal account of another Floor Trading Member, or for an account that the Floor Trading Member knows is controlled by another Floor Trading Member, he/she shall designate the trades as CTI 3.
6.30 Access to the Trading Floor
(B)(4) No floor employee of a Member may trade in any commodity contract traded on or cleared by this Exchange either in his own name or in an account in which he has direct or indirect interest.
(LEGACY) EXCHANGE RULES:
8.55 Classification of Offenses
(A) Major Offenses – No Member, Member Firm, or any employee of the foregoing shall commit a violation of any of the following rules, which shall be deemed major offenses of the Exchange;
(1) to have an interest in, operate, or knowingly represent or make any transaction with or for a bucket shop; and
(2) to be guilty of fraud or any act of bad faith; and
(12) to refuse to appear before the Board, the President or his designee or any investigative and hearing committee at a duly convened investigative hearing, or in connection with any investigation; to refuse to fully answer all questions and produce all books and records at such hearing or investigation, or to testify falsely.
The New York Mercantile Exchange took final disciplinary action against John Kozlik (also known as “John F. Kozlik” and short term lessee “KOZ”), a former employee of a Member of the NYMEX Division. The subject matter of the disciplinary action concerned allegations in Exchange Docket No. 07-26 that between February 2004 and January 2006, John Kozlik violated NYMEX Division Rules 6.11(B): Confirmation of Trades Executed on the Trading Floor; 6.19 (A)(3)(a): Type Indicator Codes; 6.30(B)(4): Access to the Trading Floor - Prohibited Clerk Trading; Exchange Rules 8.55(A)(1): Major Offense of Operating a Bucket Shop; 8.55(A)(2): Major Offense of Fraud or Any Act of Bad Faith; and 8.55(A)(12): Major Offense of Refusing to Appear for Investigation Related Interviews.
After conducting a hearing, the Adjudication Panel (the "Panel"), by Decision and Order dated August 20, 2009, found Respondent John Kozlik, while functioning as a clerk for a NYMEX broker, orchestrated fraudulent bucketing of customer NYMEX Crude Oil futures orders and engaged in the misallocation of fills. In addition, the Panel found that John Kozlik repeatedly failed to appear for scheduled investigation related interviews. The Panel concluded that in so doing, John Kozlik violated legacy NYMEX Division Rules 6.11(B); 6.19(A)(3)(a); 6.30(B)(4); and legacy Exchange Rules 8.55(A)(1); 8.55(A)(2); and 8.55(A)(12).
After consideration of appeal filings, this decision was affirmed by a NYMEX appeal panel in its entirety in an appellate decision dated September 21, 2010, which is effective October 27, 2010.
Based upon the record in this matter and the findings and conclusions set forth above, it is hereby ordered by the Panel that John Kozlik: (1) pay a fine to the Exchange in the amount of $165,000; and (2) accept a permanent bar from access to the Exchange and from re-application to the Exchange in any capacity.
October 27, 2010
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