• #
      • COMEX-10-07511-BC
      • Effective Date
      • 01 August 2011
    • FILE NO.:

      COMEX 10-07511-BC







      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.


      Legacy COMEX Rule 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 and each transaction he has executed, in the exact chronological order of execution…


      (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.



      Pursuant to an offer of settlement in which Martin Desapio (“Desapio”) neither admitted nor denied the rule violations upon which the penalty is based for purposes of resolving this matter, on July 27, 2011, a panel of the COMEX Business Conduct Committee (the “Panel”) found there was a reasonable basis to believe that on October 27, 2008, and November 21, 2008, Desapio engaged in noncompetitive, prearranged trades of COMEX Silver and Gold options while in possession of executable customer orders that he withheld from the marketplace and allowed other select traders to realize gains by noncompetitively trading opposite these orders. As a result of these trades, the customer orders were disadvantaged by $2,940.


      Further, the Panel found a reasonable basis to believe that from October 2008 to December 4, 2008, Desapio engaged in three (3) noncompetitive, prearranged trades of COMEX Silver options opposite another broker’s customer order without bidding or offering in the ring. As a result of these trades Desapio profited $4,250.


      The Panel found that in so doing, there was a reasonable basis to believe Desapio violated Legacy COMEX Rules 104.21, 104.27, 104.34(a), and Legacy NYMEX Rule 8.55(A)(18).


      Finally, the Panel found there was a reasonable basis to believe that on December 4, 2008, Desapio failed to properly keep records of his trades in a fashion required by legacy COMEX Rule 104.80(a).



      In accordance with the settlement offer, the Panel ordered Desapio to (i) pay a fine to the Exchange in the amount of $50,000; (ii) disgorge $4,250 in profits; (iii) pay restitution to Desapio’s customers in the amount of $2,940; (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; and (v) serve a suspension for a period lasting eight (8) months from filling brokerage to begin following the conclusion of the one month suspension described in paragraph (iv).



      August 1, 2011