• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 16-0569-BC-2
      • Effective Date
      • 16 November 2018
    • NON-MEMBER:

      Thomas Poulose

      EXCHANGE RULES:

      Rule 534. Wash Trades Prohibited

      No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

      Rule 539.C. Pre-Execution Communications Regarding Globex Trades

      Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

      3. Permissible Entry Methods for Orders

      a. Globex Cross

      the first party’s order is entered into the Globex platform first. The second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

      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 uder ID other than the individual’s own unique user ID.

      Rule 432.L General Offenses

      It shall be an offense:

      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.

      FINDINGS:

      On August 9, 2018, a Panel of the Commodity Exchange (“COMEX”) Probable Cause Committee (“PCC”) charged non-member, Thomas Poulose (“Poulose”) with violating Exchange Rules 534, 539.C., 576 and 432.L.1., based on allegations that between February 11, 2016 and July 14, 2016, Poulose, while active in various COMEX Gold, Silver, and Copper futures markets, often using a unique user Tag 50 ID registered to another individual, executed numerous trades between two proprietary accounts with common beneficial ownership with the intent that the buy and sell orders for each account match, in addition to participating in the execution of pre-arranged trades for accounts with different beneficial ownership in which the buy and sell orders were entered within approximately one second of each other and failing to appear before Exchange staff for a scheduled interview.

      On October 17, 2018, a Hearing Panel Chair of the COMEX Business Conduct Committee (“BCC”) entered an order finding that Poulose failed to answer the charges against him. The Hearing Panel Chair further ordered that Poulose was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

      On October 30, 2018, a penalty hearing was held before a panel of the COMEX BCC (“BCC Panel”) which found that Poulose had committed the violations charged.

      PENALTY:

      In accordance with Exchange Rule 402.B. (Sanctions), the BCC Panel ordered Poulose to (1) pay a fine in the amount of $45,000; 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. exchange, including CME Globex.