Ethan Brodsky (EAB)
(LEGACY) NYMEX RULES:
6.05 Transactions, Bids, and Offers on the Trading Floor
(A) Except as otherwise specifically provided in the Bylaws and Rules, all purchases, sales, bids and offers for futures and options contracts:
(1) shall be executed openly and competitively by open outcry in the appropriate trading ring during the authorized hours of trading;
6.61 Pre-Arranged Trades
Pre-arranged trades are prohibited.
(LEGACY) EXCHANGE RULE:
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.
(2) to be guilty of fraud or any act of bad faith;
On January 19-21 and 25, February 8, and March 1, 2010, a hearing was held before a Panel of the NYMEX Business Conduct Committee (the “Panel”). The Panel found, based upon the evidence presented, that on August 10, 2007 Ethan Brodsky (“Brodsky”) engaged in a prearranged, non-competitive trade of NYMEX Natural Gas futures contracts opposite a broker’s customer order without bidding or offering in the ring. Brodsky subsequently offset the prearranged, non-competitive trade which resulted in realized ill-gotten gains for Brodsky in the amount of $16,500 and disadvantaged the customer order by $18,600.
The Panel found that in so doing, Brodsky violated Legacy NYMEX Rules 6.05(A)(1), 6.61 and Legacy Exchange Rule 8.55(A)(2).
Based upon the record in this matter and the findings and conclusions set forth above, the Panel ordered that Brodsky: (i) pay a fine to the Exchange in the amount of $31,500; (ii) accept a bar from re-applying for, owning, or holding a membership of any exchange owned or controlled by CME Group for a period of two (2) months from the later of the effective date of the NFA 9.11 Notice or the date on which the fine penalty amount is paid in full; and (iii) Cease and desist from future violations of legacy NYMEX Rule 6.05(A)(1), 6.61; and legacy Exchange Rule 8.55(A)(2) and similar rule violations. This decision became final on May 10, 2011 and effective on May 27, 2011.
May 27, 2011
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