NYMEX RULE VIOLATIONS: 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;
I. to make a verbal or written material misstatement to the Board, a committee, or Exchange employees;
RULE 984.B. RESPONSIBILITIES/OBLIGATIONS OF EXECUTING BROKERS
1. Customer Order Placement
An executing broker will be responsible for determining that all orders are placed or authorized by the customer. Once an order has been accepted, a broker or the broker's clerk must:
D. transmit such executed order to the Clearing Member as soon as practicable in accordance with Exchange Rules and procedures.
Pursuant to an offer of settlement Matthew Troy (“Troy”) presented at a hearing on December 16, 2014, in which Troy neither admitted nor denied the rule violations or the findings or conclusions herein upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that it had jurisdiction over Troy pursuant to Exchange Rules 400 and 402 as the conduct occurred while Troy was a NYMEX floor clerk and that on trade date July 31, 2009, Troy received a series of buy and sell orders for a customer for the September 2009 Crude Oil Futures (“SEP09 Crude”) totaling 906 contracts. All of the orders were entered on Globex using the executing brokers’ personal trading accounts, rather than the customer’s account. In addition, except for 56 round-turns, none of the trades were allocated to the customer’s account until after the close of open outcry at 2:30 PM EST. The FCM was required to absorb the loss incurred by the customer. Also, during the course of two interviews with Exchange employees, Troy made verbal misstatements regarding the basis for the allocation of the trades, as well as the limit on the quantity the customer was permitted to trade.
The Panel found that Troy thereby violated NYMEX Rules 432.B., 432.I, and 984.B.1.D.
In accordance with the settlement offer, the Panel ordered Troy to pay a fine of $25,000 and serve a 5 year suspension from membership privileges on any CME Group Inc. exchange, access to all CME Group Inc. trading floors and direct or indirect access to all electronic trading and clearing platforms owned or operated by CME Group Inc., including Globex. The suspension will run from December 18, 2014 through December 18, 2019. In imposing this sanction, the Panel took into account Troy’s financial condition.
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