• NOTICE OF DISCIPLINARY ACTION

      • #
      • COMEX-10-07511-BC
      • Effective Date
      • 11 August 2011

    • FILE NO.:

      COMEX 10-07511-BC

       

      MEMBER:

      ERNEST PENNY (ERNI)

       

      COMEX RULE VIOLATION:

       

      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.

       

      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 Ernest Penny (“Penny”) neither admitted nor denied the rule violations upon which the penalty is based for purposes of resolving this matter, on August 9, 2011, a panel of the COMEX Business Conduct Committee (the “Panel”) found that on four (4) occasions from October through December 4, 2008, Penny engaged in prearranged, noncompetitive trades of COMEX Silver and Gold options opposite other traders without bidding or offering in the ring. As a result of these trades Penny profited $5,600 in ill-gotten gains.

       

      The Panel found that in so doing, Penny violated Legacy COMEX Rule 104.21 and Legacy NYMEX Rule 8.55(A)(18).

       

      PENALTY:

      In accordance with the settlement offer, the Panel ordered Penny to (i) pay a fine to the Exchange in the amount of $40,000; (ii) disgorge $5,600 in ill-gotten gains; and (iii) serve a suspension for a period beginning on the effective date of the Committee’s decision and lasting 14 business days 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 11, 2011
       

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