NOTICE OF DISCIPLINARY ACTION

FILE NO.:

COMEX 11-8507-BC

MEMBER:

John P. Byrne

EXCHANGE RULES:

Rule 432. General Offenses

It shall be an offense:

G. to prearrange the execution of transactions in Exchange products for the purpose of transferring equity between accounts;

Rule 539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

539.A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

539.C. Pre-Execution Communications Regarding Globex Trades

Parties may engage in pre-execution communications with regard transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

4. In the case of options orders, subsequent to the pre-execution communication, a Request for Quote (“RFQ”) for the particular option or option spread or combination must be entered into Globex. Thereafter, in equity and interest rate options, a Request for Cross (“RFC”) order which contains both the buy and the sell orders must be entered into Globex no less than five (5) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade. In all other options, the RFC order must be entered no less than fifteen (15) seconds and no more than thirty (30) seconds after the entry of the RFQ in order to proceed with the trade. The RFQ and the RFC order must be entered within the same trading session. Failure to enter the RFC order within 30 seconds after the entry of the RFQ will require a new RFQ to be entered prior to the entry of the RFC order, which must be entered in accordance with the time parameters described above in order to proceed with the trade.

FINDINGS:

Pursuant to an offer of settlement that John P. Byrne (“BRNZ”) presented at a hearing on February 12, 2013, in which BRNZ neither admitted nor denied the findings or the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that on June 17, 2011, and July 12, 2011, BRNZ prearranged round-turn trades in Silver Options on the trading floor for the purpose of passing money to another COMEX member.

The Panel found that as a result of the foregoing, BRNZ violated Exchange Rules 432.G and 539.A. and C.

 

PENALTY:

In accordance with the settlement offer, the Panel ordered BRNZ to pay a fine to the Exchange in the amount of $10,000. The Panel also suspended BRNZ from all membership privileges and direct or indirect access to any trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including Globex, for a period of 15 business days. The suspension will run from February 14, 2013 to March 7, 2013, inclusive.

EFFECTIVE DATE:

February 14, 2013