NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-02-BC
 

MEMBER FIRM:

UBS AG

(LEGACY) NYMEX RULES:

9.27 Expiration and Current Delivery Month Position Limits or Position Accountability

No person may own or control a net long position or a net short position in the expiration or current delivery month (as defined in this rule, for energy, metals and soft contracts respectively).
 

EXCHANGE RULES:

8.25 Cease and Desist Order

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

8.55(A)(18) 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.

(18) To commit an act which is substantially detrimental to the interests or welfare of the Exchange.

FINDINGS:

The New York Mercantile Exchange took final disciplinary action against UBS AG (UBS), a Member Firm of the NYMEX Division of the Exchange. The subject of the disciplinary action concerned an allegation that on January 28, 2008, UBS AG, having consented to an Order to Cease and Desist from violations of Exchange Rule 9.27: Expiration and Current Delivery Month Position Limits, effective December 11, 2007, maintained a position in February 2008 Heating Oil contracts in excess of the applicable speculative position limit in violation of Exchange Rules 8.25: Violation of Cease and Desist and 8.55(A)(18): Conduct Substantially Detrimental to the Exchange, both Major Offenses, as well as Exchange Rule 9.27. This excess constituted the fourth speculative position limit violation in a twelve month period for UBS AG. UBS AG submitted a Supported Offer of Settlement (“Offer”) without admitting or denying the allegations against it. The Offer consisted of an agreement to a finding by the adjudication committee that UBS AG violated Exchange Rules 9.27, 8.25 and 8.55(A)(18), a fine in the amount of $50,000, and the entry of an order to Cease and Desist from subsequent similar rule violations. 

PENALTY:

The Adjudication Committee accepted the Offer and issued a fine of $50,000 and an order to Cease and Desist. The effective date is February 25, 2010.
 

EFFECTIVE DATE:

February 25, 2010