NYMEX LEGACY 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;
(18) to commit an act which is substantially detrimental to the interests or welfare of the Exchange;
(20) to intentionally violate any Exchange rule that results in harm to a customer;
On November 15, 2012, a Panel of the New York Mercantile (“NYMEX”) Probable Cause Committee charged Clifford Donadio (“CLFY”), a former NYMEX member, with violating NYMEX Legacy Rules 8.55(A)(2), 8.55(A)(18) and 8.55(A)(20) based on allegations that on six separate occasions he intentionally engaged in a scheme to allocate Natural Gas Futures trades intended for a broker’s customers by placing the most profitable fills into CLFY’s personal account.
On January 21, 2013, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that CLFY failed to answer the charges against him. The Hearing Panel Chair further ordered that CLFY was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
On March 20, 2013, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which had jurisdiction over CLFY pursuant to NYMEX Rules 400 and 402 as the conduct occurred while CLFY was a NYMEX member or otherwise had access to the NYMEX trading floor. The BCC Panel found that CLFY had committed the violations charged.
In accordance with NYMEX Rule 402.B. (Sanctions), the BCC Panel ordered that CLFY be permanently barred from (i) applying for membership at any CME Group, Inc. Exchange; (ii) accessing any trading floor operated by any CME Group, Inc.; (iii) directly or indirectly accessing any electronic trading or clearing platform owned or operated by the CME Group, Inc.; and (iv) affiliating with any Exchange Member as defined in NYMEX Rule 400 related to business conducted on or subject to the rules of the Exchange. In ordering this sanction, the BCC considered that CLFY had received a bankruptcy discharge and, thus, monetary sanctions were not available.
April 22, 2013
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