• NOTICE OF DISCIPLINARY ACTION

      • #
      • NYMEX 16-0486-BC-2
      • Effective Date
      • 10 September 2018
    • NON-MEMBER:

      ZERICH SECURITIES LIMITED

      NYMEX RULE VIOLATIONS:

      RULE 432. GENERAL OFFENSES (IN PART)

      U. except where a power of attorney or similar document has been executed pursuant to Rule 956, for any party to accept or transmit a customer order which has not been specifically authorized.

      W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

      RULE 433. STRICT LIABILITY FOR THE ACTS OF AGENTS

      Pursuant to Section 2(a)(1)(B) of the Commodity Exchange Act, and notwithstanding Rule 432.W., the act, omission, or failure of any official, agent, or other person acting for any party within the scope of his employment or office shall be deemed the act, omission or failure of the party, as well as of the official, agent or other person who committed the act.

      FINDINGS:

      Pursuant to an offer of settlement Zerich Securities Limited (“Zerich”) presented at a hearing on September 6, 2018, in which Zerich neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the New York Mercantile Exchange Business Conduct Committee (“Panel”) found that Zerich failed to have proper training and procedures in place and failed to supervise its agents in the conduct of its business related to the Exchange. Specifically, Zerich failed to maintain a consistent authentication system for new accounts and failed to exercise due diligence for opening accounts and reviewing account documentation. Zerich also failed to supervise its agents in the handling of client services and account documentation for Zerich clients. The Panel concluded that Zerich violated Exchange Rule 432.W.

      On one or more occasions in July 2016, Zerich’s failure to supervise resulted in one of its agents directing a trader to submit backdated authorization documents as well as alter information on account opening forms, while continuing to allow this trader to trade in the Natural Gas futures market for this account without proper written authorization. Pursuant to Exchange Rule 433, Zerich is strictly liable for the acts of its agent whose conduct the Panel concluded violated Exchange Rule 432.U.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Zerich to pay a $75,000 fine to the Exchange in connection with this case and companion case COMEX 16-0486-BC ($50,000 of which is allocated to NYMEX).