NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 09-04-BC

MEMBER:

PETER GIALLUISI (PG)
 

EXCHANGE RULES:

8.50(B) Reports and Records

(B) The Exchange and each Member, Member Firm and employees of the foregoing shall keep a record in accordance with the rules and regulations of the Commodity Futures Trading Commission and as said Commission may direct, showing the details and terms of all cash, futures and options transactions entered into by them, consummated on or subject to the Bylaws and Rules of the Exchange. Such record shall be in permanent form, showing the parties to all such transactions, including the persons for whom made, any assignments or transfers thereof, with the parties thereto, and the manner in which said transactions are fulfilled, discharged or terminated. Such record shall be kept for a period of five years from the date thereof, or for a longer period if said Commission shall so direct, and shall at times be open to the inspection of any representative of said Commission or the United States Department of Justice.

8.55(A)(15) 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.

(15) for a Member, Member Firm, Clearing Member or employee of the foregoing to permit the use of its facilities, any NYMEX electronic trading platform or membership privileges by a Member or non-Member in a manner that impairs the dignity or degrades the good name of the Exchange, or creates a market or other situation detrimental to the Exchange, or results in violation of the speculative limit rules, or effectuates manipulations or corners or attempts at either, or to itself do any of the foregoing.

8.55(A)(23)(a) 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.

(23) Supervision

(a) to fail to supervise any employee of a Member or Member Firm adequately to prevent the violation by such employee of any Exchange Rule that: (i) results in substantial detriment to the welfare and interests of the Exchange; (ii) results in harm to a customer or another Member or Member Firm; or (iii) otherwise constitutes a Major Offense.

FINDINGS:

The New York Mercantile Exchange took final disciplinary action against Peter Gialluisi, (also known “Peter Nicholas Gialluisi” and as Broker "PG," and hereinafter known as "Gialluisi"), a COMEX Division member. The subject matter of the disciplinary action concerned allegations that between May 8, 2006 and May 7, 2007, Gialluisi (i) permitted his clerk Jeffrey Rowland to use his trading systems to enter clerk trades, in violation of Exchange Rule 8.55(A)(15), (ii) failed to supervise his clerk Jeffrey Rowland, in violation of Exchange Rule 8.55(A)(23)(a), and (iii) failed to maintain and produce trading records, in violation of Exchange Rule 8.50(B). The Business Conduct Committee (“BCC”), at a hearing held on November 17, 2009, found Gialluisi 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 Gialluisi was in default, granted Market Regulation’s Motion, and deemed Gialluisi to have admitted violating Exchange Rules 8.55(A)(15), 8.55(A)(23)(a), and 8.50(B).  

PENALTY:

The BCC imposed the following sanctions: (1) an Order to pay a fine in the amount of $40,000; (2) an Order to pay customer restitution in the amount of $67,980; (3) an Order that Gialluisi 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 8.50(B), 8.55(A)(15), and 8.55(A)(23)(a).

EFFECTIVE DATE:

April 12, 2010