NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 09-04-BC

CLERK:

JEFFREY ROWLAND
 

EXCHANGE RULES:

8.55(A)(2) 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.

(2) to be guilty of fraud or any act of bad faith

8.55(A)(4) 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.

(4) to make or report a false or fictitious trade

8.55(A)(18) 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.

(18) to commit an act which is substantially detrimental to the interests or welfare of the Exchange

FINDINGS:

The New York Mercantile Exchange took final disciplinary action against Jeffrey Rowland, (hereinafter known as "Rowland"), a clerk for a COMEX Division member. The subject matter of the disciplinary action concerned allegations that during the time period of December 2004 through May 2007, Rowland orchestrated fictitious cross trades for the purpose of facilitating “money passes” for various members’ accounts, including the personal account of Peter Gialluisi. Rowland was charged with violation of Exchange Rules 8.55(A)(2), 8.55(A)(4), and 8.55(A)(18). The Business Conduct Committee (“BCC”), at a hearing held on November 17, 2009, found Rowland failed to timely submit an Answer or in any way respond to the Complaint, failed to respond or oppose the Compliance Department’s Motion for default judgment, and failed to provide any explanation for his failure to submit an Answer. Further, the BCC found and concluded that Rowland was in default, granted Market Regulation’s Motion, and deemed Rowland to have admitted violating Exchange Rules 8.55(A)(2), 8.55(A)(4), and 8.55(A)(18).

PENALTY:

The BCC imposed the following sanctions: (1) an Order to pay a fine in the amount of $120,000; (2) an Order to pay customer restitution in the amount of $116,900; (3) an Order that Rowland accept a permanent ban of Exchange clerk, membership, and trading privileges, which includes access to, and the ability to work in any capacity on, any CME Group Exchange Trading Floor and direct access to CME Group electronic trading and clearing platforms; and (4) an Order to cease and desist from future violations of Exchange Rules 8.55(A)(2), 8.55(A)(4), and 8.55(A)(18).

EFFECTIVE DATE:

April 12, 2010