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;
L.2. to fail to fully answer all questions and produce all books and records at such hearing or in connection with any investigation, or to make false statements;
On October 7, 2014, a Panel of the New York Mercantile (“NYMEX”) Probable Cause Committee charged member Robert McMahon (“McMahon”) with violating NYMEX Rules 432.B., 432.C., and 432.L.2. based on allegations that in three instances between two trade dates between June 2010 and July 2010, McMahon intentionally engaged in a fraudulent scheme with a former NYMEX member in which block trade activity resulted in the former NYMEX member “cherry-picking” trades, intended for his customer, for McMahon, thereby causing the customer to be filled non-competively at inferior prices.
On February 25, 2015, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that McMahon failed to answer the charges against him. The Hearing Panel Chair further ordered that McMahon was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
On March 18, 2015, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which found that McMahon had committed the violations charged.
In accordance with NYMEX Legacy Rule 402.D (Actions Against Non-Members), the BCC Panel permanently barred McMahon from (i) applying for Membership at any CME Group exchange; (ii) direct or indirect access to any trading or clearing platform owned or controlled by the CME Group, Inc.; and (iii) access to any trading floor owned or operated by any CME Group, Inc. exchange.
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