NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 07-19-BC

FORMER MEMBER:

JAMES HUGHES
 

(LEGACY) NYMEX RULES:

6.05(A)(1) Transactions, Bids, and Offers on the Trading Floor

(A) Except as otherwise specifically provided in the Bylaws and Rules, all purchases, sales, bids and offers for futures and options contracts;

(1) shalll be executed openly and competitively by open outcry in the appropriate trading ring during the authorized hours of trading.
 

6.61 Pre-arranged Trades

Pre-arranged trades are prohibited
 

EXCHANGE RULES:

8.55(A)(2) Classification 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.

(2) to be guilty of fraud or any act of bad faith

8.25 Cease and Desist Order

A violation of a cease and desist order may be determined to be either a major or a minor offense.
 

FINDINGS:

The New York Mercantile Exchange took final disciplinary action against James Hughes (also known as "James Michael Hughes" and broker "MXR"), a former Member of the NYMEX Division. The subject matter of the disciplinary action concerned allegations that on trade dates April 25 and September 26, 2006, James Hughes violated NYMEX Division Rules 6.05(A)(1): Transactions, Bids and Offers on the Trading Floor; and 6.61: Pre-arranged Trades are Prohibited; and Exchange Rule 8.55(A)(2): Commission of Fraud or Any Act of Bad Faith, a Major Offense, by executing orders for and trading Natural Gas futures opposite another NYMEX member non-competitively, without approaching the ring. In so doing, James Hughes also violated Exchange Rule 8.25: Major Offense of Violation of Cease and Desist Order. After a hearing on April 13, 2008, the Adjudicative Panel found and concluded James Hughes failed to timely file an Answer to the Complaint, and deemed James Hughes in default and to have violated Rules 6.05(A)(1), 6.61, 8.25 and 8.55(A)(2). The Adjudicative Panel granted the Market Regulation Department's motion for default judgment.

PENALTY:

The Adjudicative Panel ordered James Hughes to cease and desist from future violations of the rules cited in the complaint; pay a fine in the amount of $50,000 to the Exchange; pay restitution to harmed customers in the amount of $18,000, and be subject to an eight (8) week suspension of membership privileges.

His suspension shall run from April 21, 2010 to June 15, 2010.

EFFECTIVE DATE:

April 19, 2010