07/13/2005
By way of background, on November 22, 2002, NYMEX amended its Rule 3.03, which addresses disqualification from Board and Committee service, to remove the provision that fines from reporting or recordkeeping violations (amounting to an aggregate amount of more than $5,000 in any calendar year) be considered a Disciplinary Offense disqualifying a Member from service on the Board or on Exchange Committees. The issue of whether audit trail fines exceeding $5,000 in one year would be considered a barrable offense for Board or disciplinary committee service would be determined on a case-by-case basis.
The amended Rule puts in place an affirmative program to evaluate the fitness of a candidate who has accumulated summary fines, such that the Member needs to appear before a disciplinary panel at such time for repeated failure to conform to audit trail standards — Rule 8.55(b)(8). The Compliance Review Committee ("CRC") proposed, and the Board of Directors concurred, that a determination as to whether a settlement should be considered barrable be made at the time that any Member comes before a disciplinary panel seeking to settle charges for repeated failure to conform to audit trail standards. Compliance staff will make a written recommendation to the disciplinary panel regarding whether a bar from Board or disciplinary committee service is appropriate in all cases involving a member with repeated audit trail offenses. The recommendation will take into account steps taken by a respondent to correct the situation, the reputation and disciplinary history of the respondent, and whether the repeated failure to conform to audit trail standards is a serious offense. In making this determination, Staff will look for any indication that customers may have been harmed, investigations intentionally corrupted or rule violations masked by the pattern of audit trail offenses. The Department's recommendation may call for a complete bar, a recommendation of a conditioned probationary period or a recommendation for no bar. Whether or not the recommendation of Compliance Staff differs from the settlement to be reviewed by the Board, the recommendation and rationale for the recommendation will be presented to the Board for their consideration.
Click here to view the amendments to the rule.