NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-05-BC

MEMBER:

Ethan Brodsky (EAB)

(LEGACY) NYMEX RULES:

6.05 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) shall 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. 

(LEGACY) EXCHANGE RULE:

8.55 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;

FINDINGS:

On January 19-21 and 25, February 8, and March 1, 2010, a hearing was held before a Panel of the NYMEX Business Conduct Committee (the “Panel”). The Panel found, based upon the evidence presented, that on August 10, 2007 Ethan Brodsky (“Brodsky”) engaged in a prearranged, non-competitive trade of NYMEX Natural Gas futures contracts opposite a broker’s customer order without bidding or offering in the ring. Brodsky subsequently offset the prearranged, non-competitive trade which resulted in realized ill-gotten gains for Brodsky in the amount of $16,500 and disadvantaged the customer order by $18,600.

The Panel found that in so doing, Brodsky violated Legacy NYMEX Rules 6.05(A)(1), 6.61 and Legacy Exchange Rule 8.55(A)(2).

PENALTY:

Based upon the record in this matter and the findings and conclusions set forth above, the Panel ordered that Brodsky: (i) pay a fine to the Exchange in the amount of $31,500; (ii) accept a bar from re-applying for, owning, or holding a membership of any exchange owned or controlled by CME Group for a period of two (2) months from the later of the effective date of the NFA 9.11 Notice or the date on which the fine penalty amount is paid in full; and (iii) Cease and desist from future violations of legacy NYMEX Rule 6.05(A)(1), 6.61; and legacy Exchange Rule 8.55(A)(2) and similar rule violations. This decision became final on May 10, 2011 and effective on May 27, 2011.
  

EFFECTIVE DATE:

May 27, 2011