NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-10-BC
 

MEMBER:

ROBERT PELLEGRINO (PELL)
 

NYMEX RULES:

(Legacy) NYMEX Division Rule 6.05 Transactions, Bids, and Offers on the Trading Floor, section (A)(1): Except as otherwise specifically provided in the Bylaws and Rules, all purchases, sales, bids and offers for futures and options contracts: … shall be executed openly and competitively by open outcry in the appropriate trading ring during the authorized hours of trading.

 

(Legacy) NYMEX Rule 6.41 Trading Standards for Floor Brokers: section (H): No Floor Member shall withhold or withdraw from the market any order or part of an order for the convenience of another.

 

(Legacy) NYMEX Rule 6.61 Pre-Arranged Trades: Pre-arranged trades are prohibited.

(Legacy) NYMEX Rule 6.90 Trading Card Procedures: section (B): All trading cards shall show the Member’s symbol, the date, price differential or premium, quantity, commodity, delivery month or expiration date, the opposite Floor Member,…. With the exception of trades executed during the opening or closing ranges, members shall record the exact time of the execution to the minute of the first trade made on each trading card…. All transactions must be recorded in exact chronological order of execution on sequential lines of the trading card without skipping lines between trades. A member who executes trades both at open outcry and on an electronic tablet from the ring is not required to, but may elect to record any or all of the electronic executions on the trading card, under the following circumstances: the trade must be clearly designated with an E in the opposite broker column, and must indicate at a minimum side of market, quantity, month and price…

(Legacy) Exchange Rule 8.55 Classification of Offenses, section (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[:], subsection (2): to be guilty of fraud or any act of bad faith.

FINDINGS:

Pursuant to an offer of settlement in which Robert Pellegrino neither admitted nor denied the findings or any rule violations, on April 22, 2010 a Panel of the Business Conduct Committee found that on eight (8) occasions between December 19 and December 26, 2006, Robert Pellegrino engaged in prearranged, non-competitive trading of NYMEX Crude Oil futures and offsetting opposite customer orders withheld by other brokers, without bidding or offering in the ring.
 

The Panel found that in so doing Robert Pellegrino violated legacy NYMEX Division Rules 6.05(A)(1), 6.41(H), 6.61, and 6.90(B); and legacy Exchange Rule 8.55(A)(2).
 

PENALTY:

In accordance with its findings, the Panel:
(1) Ordered Robert Pellegrino to pay a fine to the Exchange in the amount of $60,000;
(2) Ordered Robert Pellegrino to pay customer restitution in the amount of $3,480;
(3) Ordered Robert Pellegrino to Cease and Desist from subsequent similar rule violations; and
(4) Suspended Robert Pellegrino’s membership privileges, including access to any CME Group trading floor and direct access to any CME Group electronic trading or clearing platforms for a period of four (4) months, starting the first business day after the Effective Date.
 

EFFECTIVE DATE:

April 26, 2010