EXCHANGE RULES: RULE 432. General Offenses (in part)
It shall be an offense:
G. To prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts.
L. 1. To fail to appear before the Board, Exchange staff or any investigative or hearing committee at a duly convened hearing, scheduled staff interview or in connection with any investigation;
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;
RULE 576. IDENTIFICATION OF GLOBEX TERMINAL OPERATORS
Each Globex terminal operator shall be identified to the Exchange, in the manner prescribed by the Exchange, and shall be subject to Exchange rules. If user IDs are required to be registered with the Exchange, it is the duty of the clearing member to ensure that registration is current and accurate at all times. Each individual must use a unique user ID to access Globex. In no event may a person enter an order or permit the entry of an order by an individual using a user ID other than the individual's own unique user ID.
On February 26, 2015, a Panel of the New York Mercantile Exchange (“NYMEX”) Probable Cause Committee charged non-member Yongwen Shao (“Yongwen”) with violating NYMEX Rules 432.G., 432.Q., 432.L.1., and 576 based on allegations that on multiple trade dates during the time period of November 2009 to November 2010 and during March 2013, Yongwen executed 19 round-turn transactions, which resulted in the transfer of $35,700 to Yongwen’s account from accounts owned by two others, as well as entered orders using a Tag50 assigned to other individuals. Yongwen also failed to appear before Exchange staff for a scheduled interview.
On September 8, 2015, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that Yongwen failed to answer the charges against him. The Hearing Panel Chair further ordered that Yongwen was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
On November 5, 2015, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which found that Yongwen had committed the violations charged.
In accordance with NYMEX Rule 402.B (Sanctions), the BCC Panel ordered Yongwen to (1) pay a fine in the amount of $85,000; and (2) be permanently banned from (a) applying for Membership at any CME Group exchange; (b) direct or indirect access to any trading or clearing platform owned or controlled by the CME Group, Inc.; and (c) access to any trading floor owned or operated by any CME Group, Inc. exchange.
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