CHRISTOPHER DILORENZO (CFD)
Legacy NYMEX Rule 6.41(B). Trading Standards for Floor Brokers
(B) No trading Member shall sell any commodity for future delivery, sell any call option or purchase any put option for his account, or for any account in which he has an interest, while holding an order of another person for the sale of any future, any call option, or purchase of any put option, in the same commodity which is executable at the market price or at the price at which such transaction can be made for the Member’s own account or the account in which he has an interest.
Legacy NYMEX Rule 8.00(E). Reports and Records
(E) The Compliance Department shall investigate the conduct and transactions of Members, Member Firms and employees of the foregoing and may examine the books and records of Members, Member Firms and employees of the foregoing. Members, Member Firms and employees of any of the foregoing shall make their books and records available to the Compliance Department and shall respond to all inquiries of the Compliance Department at the time, place, and in the manner designated by the Compliance Department.
Legacy NYMEX Rule 8.55(A). Major Offenses
(A) 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.
(18) to commit an act which is substantially detrimental to the interests or welfare of the Exchange;
(a) To fail to supervise any employee of a Member or Member Firm adequately to prevent the violation by such employee of any Exchange Rule that: (i) results in substantial detriment to the welfare and interests of the Exchange; (ii) results in harm to a customer or another Member or Member Firm; or (iii) or otherwise constitutes a major offense.
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 432. General Offenses
It shall be an offense:
B. to engage in fraud, bad faith or in conduct or proceedings inconsistent with just and equitable principles of trade;
C. to engage in dishonest conduct;
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;
Pursuant to an offer of settlement Christopher DiLorenzo (“CFD”) presented at a hearing on January 15, 2013 in which CFD neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“Panel”) found that on nine occasions between March 2008 and February 2009, CFD, while acting as a broker on the floor of the Exchange, traded ahead of executable customer orders in his possession resulting in financial benefit to CFD and harm to his customers. The Panel found that on one of these occasions, CFD failed to provide his trading records to the Exchange. The Panel also found that CFD failed to adequately supervise his clerk who was engaged in a scheme to fraudulently allocate trades for the benefit of another broker. As a result of these findings, the Panel determined that CFD violated legacy NYMEX Rules 6.41(B), 800(E), 8.55(A)(2), 8.55(A)(18) and 8.55(23), as well as NYMEX Rules 530 and 432.B, C and Q.
In accordance with the settlement offer and the Panel’s findings, the Panel ordered that CFD: (1)disgorge profits in the amount of $6,000; (2) pay restitution in the amount of $28,305; (3) pay a fine to the Exchange in the amount of $30,000; (4)be barred for a period two years from (a) applying for membership at any exchange owned, controlled or operated by CME Group Inc.; (b)affiliating with any exchange Member as defined in NYMEX Rule 400 related to business conducted on or subject to the rules of the exchange; and (c) directly or indirectly accessing, placing orders or executing trades on any trading or clearing platform owned, controlled or operated by CME Group Inc., including, but not limited to, CME Globex. The two-year bar shall begin running on the Effective Date, January 17, 2013, and last until the later of January 17, 2015 and full payment of the fine, restitution and disgorgement ordered by the Panel.
January 17, 2013