NYMEX RULE VIOLATIONS:
NYMEX LEGACY RULE 6.11 CONFIRMATION OF TRADES EXECUTED ON THE TRADING FLOOR, SECTION (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.
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.
Pursuant to an offer of settlement Jason Orzillo (“Orzillo”) presented at a hearing on October 17, 2013, in which Orzillo neither admitted nor denied the rule violations or the underlying facts upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that it had jurisdiction over Orzillo pursuant to NYMEX Rules 400 and 402 as the conduct occurred while Orzillo was a NYMEX clerk, and that on two occasions during the time period of May 2008 to July 2008, he knowingly allocated out-of-the-money Crude Oil futures contracts to dormant or closed accounts which facilitated a customer's margin avoidance scheme. After the period when margin on those contracts were due, pursuant to the customer’s instructions, he reallocated the trades to the appropriate account. On two other occasions during this time period, Orzillo confirmed to the customer the allocation of the trades to the appropriate account.
The Panel found that, as a result, Orzillo violated Legacy NYMEX Rules violated Legacy NYMEX Rule 6.11 (Confirmation and of Trades Executed on the Trading Floor), Legacy NYMEX Rule 8.55(A)(2)(Guilty of Fraud or Bad Faith) and Legacy NYMEX Rule 8.55(A)(18) (Act Substantially Detrimental to the Interests of the Exchange).
In accordance with the settlement offer, the Panel fined Orzillo $45,000 and suspended him from all direct or indirect access to any trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including CME Globex, for a period of 4 weeks. The suspension will run from October 21, 2013 through November 18, 2013.
October 21, 2013
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