NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 07-16-BC
 

MEMBER:

ROGER SMITH

(LEGACY) COMEX RULES:

104.21 Open Outcry, Non-Competitive Trades

Except to the extent otherwise permitted by the By-Laws and Rules, every order to buy or sell, and every purchase and sale of a futures contract or futures option must be offered or executed openly and competitively by public outcry in a ring during the hours specified in the By-Laws and Rules.

104.27 Prearranged Trades

Except to the extent otherwise permitted by the By-Laws and Rules, members are prohibited from making, or attempting to make, any purchase or sale of a futures contract or futures option which directly or indirectly has been pre-arranged.
 

EXCHANGE RULE: 8.55(A)(7) Classification of Offenses

(A) Major Offenses – No Member, Member Firm, or any employee of the foregoing shall commit a violation of any of the following rules, which shall be deemed major offenses of the Exchange.

(7) To engage in wash trading or accommodation trading.

FINDINGS:

The New York Mercantile Exchange took final disciplinary action against Roger Smith (also known as "Roger K. Smith", "Roger Kerry Smith", and Broker "RGR"), a Floor Broker Member of the COMEX Division. The subject matter of the disciplinary action concerned allegations that on June 14 and 15, 2006, Roger Smith violated COMEX Division Rules 104.21: Open Outcry, Non-Competitive Trades, 104.27: Prearranged Trades, and Exchange Rule 8.55(A)(7): Major Offense - Wash or Accommodation Trading by privately communicating information and then non-competitively executing round turn July '06 Copper (HG) futures trades around customer orders. After conducting a hearing on September 24, 2008, the Business Conduct Committee (formerly COMEX Adjudication Panel), by Decision and Order dated January 22, 2010, found that on June 14, 2006, Roger Smith privately conversed with another member who held customer orders to buy and sell 9 lots of July '06 Copper futures, and then recorded trades opposite these orders without the orders ever being offered to the market via open outcry. The Business Conduct Committee found that in so doing, Roger Smith violated COMEX Division Rules 104.21 and 104.27, and Exchange Rule 8.55(A)(7).

PENALTY:

The Committee imposed the following sanctions with respect to Roger Smith: an Order to Cease and Desist from future violations of COMEX Rules 104.21 and 104.27, and Exchange Rule 8.55(A)(7) and from future violations of similar rules; the payment of a fine to the Exchange in the amount of $15,000; and a one week suspension of Roger Smith's membership and trading privileges (open outcry and electronic).

His suspension shall run from March 22, 2010 to March 29, 2010.

EFFECTIVE DATE:

February 21, 2010