• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX 19-1141-BC-1
      • Effective Date
      • 23 October 2020
    • NON-MEMBER:

      Gulzada Investments, Ltd.

      COMEX RULE VIOLATION:

      Rule 432.W. General Offenses (in part)

      It shall be an offense for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

      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 trades or 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.

      FINDINGS:

      Pursuant to an offer of settlement in which Gulzada Investments, Ltd. neither admitted nor denied the rule violation upon which the penalty is based, on October 21, 2020, a Panel of the COMEX Business Conduct Committee (the “Panel”) found that on May 3, 2019, Gulzada Investments, Ltd. traders executed opposing buy and sell orders in December 2019 Silver Options for which there was common beneficial ownership on both sides of the transactions. The Gulzada Investments, Ltd. traders placed the opposing buy and sell orders with the knowledge and intent that the orders would trade opposite one another, for the purpose of closing positions. The Panel also found that Gulzada Investments, Ltd. failed to properly advise and train its employees as to relevant Exchange rules and Market Regulation Advisory Notices (“MRANs”) regarding wash trading.

      The Panel concluded that Gulzada Investments, Ltd. thereby violated COMEX Rules 432.W and 534.

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Gulzada Investments, Ltd. to pay a fine of $25,000.