NOTICE OF DISCIPLINARY ACTION

MEMBER:

KALOTI JEWELLERY INTERNATIONAL DMCC

EXCHANGE RULES: Rule 432. General Offenses

It shall be an offense:

W. for a Member to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.

Rule 534. Wash Trades Prohibited

No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transaction commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.

FINDINGS:

Pursuant to an offer of settlement that Kaloti Jewellery International DMCC (“Kaloti”) presented at a hearing on January 15, 2015, in which Kaloti neither admitted nor denied the rule violations upon which the penalty is based, a Panel of the COMEX Business Conduct Committee (“Panel”) found that Kaloti is subject to the jurisdiction of the Exchange because it is a COMEX member and that on various dates from January 2014 through April 2014, Kaloti’s Co-Chief Executive Officer and trading desk supervisor entered orders in the Gold futures contract and directed Kaloti traders to trade opposite him between accounts owned by Kaloti. The Panel further found that the purpose of these wash trades was to close out Kaloti’s position at one of its clearing firms. The Panel found that Kaloti failed to properly supervise its Co-CEO/trading desk supervisor and its traders in a manner sufficient to ensure that they were familiar with Exchange rules such as through appropriate compliance training.

The Panel found that as a result of the foregoing, Kaloti violated Exchange Rules 432.W. and 534.

PENALTY:

In accordance with the settlement offer, the Panel ordered Kaloti to pay a fine to the Exchange in the amount of $30,000.