EXCHANGE RULE 432. GENERAL OFFENSES (IN PART)
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;
EXCHANGE RULE 575.A. DISRUPTIVE PRACTICES PROHIBITED
No person shall enter or cause to be entered an order with the intent, at the time of order entry, to cancel the order before execution or to modify the order to avoid execution.
On December 6, 2018, a Panel of the New York Mercantile Exchange (“NYMEX”) Probable Cause Committee charged Chengdao Zhou (“Zhou”) with violating Exchange Rules 432.L.1. and 575.A. based on allegations that between August 1, 2017 and August 8, 2017, Zhou engaged in disruptive trading activity in the Crude Oil Futures markets by entering orders without the intent to trade. Specifically, Zhou typically entered a larger order on one side of the market and then cancelled them after resting smaller orders on the opposite side of the book were executed. Further, Zhou failed to appear before Exchange staff for a scheduled interview.
On January 24, 2019, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that Zhou failed to answer the charges against him. The Hearing Panel Chair further ordered that Zhou was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.
On February 13, 2019, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which found that Zhou had committed the violations charged.
In accordance with Exchange Rule 402.B (Sanctions), the BCC Panel ordered Zhou to pay a total monetary fine in the amount of $60,000, e.g., $50,000 of the monetary fine is allocated to NYMEX 17-0784-BC and $10,000 is allocated to COMEX 17-0784-BC, and to be permanently banned from membership privileges, access to any CME Group, Inc. trading floor, and direct and indirect
access to all electronic trading and clearing platforms owned or controlled by CME Group, Inc.