NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 10-07511-BC

MEMBER:

BRETT LESCHACK (BJL)

COMEX RULE VIOLATIONS:

Legacy COMEX Rule 104.21 – OPEN OUTCRY

Except to the extent otherwise permitted by the By-Laws and Rules, every order to buy and 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 specified in the By-Laws and Rules.

Legacy COMEX Rule 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 of sale of a futures contract or futures option which directly or indirectly has been prearranged.

Legacy COMEX Rule 104.34 – WITHHOLDING ORDERS

A floor member is prohibited from withholding or withdrawing from the market all or part of an order of another person for the convenience of another member.

NYMEX RULE VIOLATION:

Legacy NYMEX Rule 8.55 – CLASSIFICIATION 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:

Pursuant to an offer of settlement in which Brett Leschack (“Leschack”) neither admitted nor denied the rule violations upon which the penalty is based for purposes of resolving this matter, on July 28, 2011, a panel of the COMEX Business Conduct Committee (the “Panel”) found that on November 13, 2008, Leschack engaged in one (1) noncompetitive, prearranged trade of COMEX Silver options while in possession of an executable customer order that he withheld from the marketplace and allowed other select traders to realize ill-gotten gains by noncompetitively trading opposite this order. As a result of this trade, the customer order was disadvantaged by $5,000.

Further, the Panel found that from October 2008 through December 4, 2008, Leschack engaged in three (3) noncompetitive, prearranged trades of COMEX Silver and Gold options opposite another broker’s customer order without bidding or offering in the ring. As a result of these trades Leschack profited $5,250 in ill-gotten gains.

The Panel found that in so doing, Leschack violated Legacy COMEX Rules 104.21, 104.27, 104.34(a), and Legacy NYMEX Rule 8.55(A)(18).

PENALTY:

In accordance with the settlement offer, the Panel ordered Leschack to (i) pay a fine to the Exchange in the amount of $50,000; (ii) disgorge $5,250 in profits; (iii) pay restitution to Leschack’s customer in the amount of $5,000; and (iv) serve a suspension for a period beginning on the effective date of the Panel’s decision and lasting one (1) month from the date the fine is paid in full of his 1) membership privileges, 2) access to all CME Group Inc. trading floors, and 3) direct access to all electronic trading and clearing platforms owned or controlled by CME Group, including CME Globex.

 

EFFECTIVE DATE:

August 1, 2011