NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 10-04-BC

MEMBER:

JOHN DOUTHIT (JOND)
 

(LEGACY) COMEX RULES: 104.21 Open Outcry

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 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.

104.80 Trading Cards

(a) General Requirements: A floor member shall prepare trading cards on pre-printed and pre-sequenced forms issued or approved by the Exchange on which the floor member shall record, in non-erasable ink, in sequential order without skipping any trade entry lines, each price indication he has announced (during the pre-opening market indication period) and each transaction he has executed, in the exact chronological order of execution, provided that if additional trade type information is required by the By-laws or Rules of the Exchange, such as in the case of transactions involving execution of a differential, exchanges for physicals and cabinet trades, serial trade entry lines may be used to record the transaction as a whole. In addition, any floor member who has placed a verbal order with another floor member for execution as a CTI #3 trade, other than an order for one or more legs of a spread transaction in which the initiating floor member has personally executed at least one leg of the spread, shall simultaneously record the terms of the order and its time of placement on his trading card, in non-erasable ink, if he has not prepared a memorandum of the terms of such order in accordance with Rule 104.81(b).
 

(LEGACY) EXCHANGE RULE: 8.55 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:

After conducting a settlement hearing on October 25, 2010, a panel of the COMEX Business Conduct Committee (“BCC Panel”) found that, based on Mr. Douthit’s Offer of Settlement made without admitting or denying the rule violations upon which a penalty is based, on June 5, 2008, Mr. Douthit executed a five-lot, round-turn, non-competitive, prearranged trade in Silver futures contracts for July 2008 delivery (SIN08) to accommodate the non-competitive, prearranged execution of another floor broker’s customer order to sell SIN08; and that in so doing, John Douthit realized $250 in profits on this round-turn trade. In addition, John Douthit recorded this round-turn trade improperly on his trading card. The BCC Panel found that in so doing Mr. Douthit violated legacy COMEX Rules 104.21 (“Open Outcry”), 104.27 (“Prearranged Trades”), 104.80(a) (“Trading Cards”), and legacy Exchange Rule 8.55(A)(7) (“Classification of Offenses”- Major Offenses”).

PENALTY:

In accordance with the settlement offer and its findings, the BCC Panel ordered that Mr. Douthit: (1) pay a fine to the Exchange in the amount of $15,000; (2) be subject to a suspension of membership privileges, including access to any CME Group trading floor and direct access to any CME Group electronic trading or clearing platforms for a period of one (1) week, starting the first business day after the Effective Date; and (3) Cease and Desist from subsequent similar rule violations. This decision became final on October 25, 2010 and effective on October 27, 2010.

EFFECTIVE DATE:

October 27, 2010