NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-14-BC 

MEMBER:

Craig Cechini (CRAG)

(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;

6.41 Trading Standards for Floor Brokers

(H) Trading Standards for Floor Brokers – Withholding/withdrawing of any order or part of any order for the convenience of another;

6.61 Pre-Arranged Trades

Pre-arranged trades are prohibited.

6.90(B) Trading Card Procedures

All transactions must be recorded in exact chronological order of execution on sequential lines of the trading card without skipping lines between trades; 

(LEGACY) EXCHANGE RULES:

8.25 Cease and Desist Order

Violation of prior Order;

8.50 Reports and Records

(B) The Exchange and each Member, …and employees of the foregoing shall keep a record in accordance with the rules and regulations of the Commodity Futures Trading Commission, …showing the details and terms of all…futures…transactions entered into by them, consummated on or subject to the Bylaws and Rules of the Exchange…. Such record shall be kept for a period of five years from the date thereof.…

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:

Pursuant to an offer of settlement in which Craig Cechini (also known as Craig R. Cechini and as Broker “CRAG”) neither admitted nor denied the findings or any rule violations, a panel of the NYMEX Business Conduct Committee (hereinafter known as the “BCC Panel”), found that on January 8, 9, 10 and 17, 2008, Craig Cechini engaged in non-competitive, prearranged trading of twenty-two (22) customer orders to trade NYMEX options spreads on Crude Oil Futures, and permitted another Broker (“Broker A”) to realize ill-gotten gains by non-competitively trading opposite these orders. On January 22, 2008, Craig Cechini partially withheld a customer order to sell outright NYMEX Crude Oil options for the benefit of Broker A. Craig Cechini also failed to properly record trades, and failed to maintain and produce requested trade records. In so doing, Craig Cechini engaged in conduct that was fraudulent and in bad faith. Craig Cechini’s conduct violated a prior cease and desist order. The BCC Panel found that Craig Cechini, therefore, violated legacy NYMEX Rules 6.05(A)(1), 6.41(H), 6.61, 6.90(B), and legacy Exchange Rules 8.25, 8.50(B), and 8.55(A)(2). The BCC Panel accepted the terms of the offer at a settlement hearing held on March 24, 2011.

PENALTY:

In accordance with the settlement offer and its findings the BCC Panel ordered that Craig Cechini: (i) pay a fine to the Exchange in the amount of $140,000; (ii) cease and desist from subsequent similar rule violations; (iii) serve a suspension of his 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 three (3) months, starting on the Effective Date and ending the later of three (3) months after the Effective Date or three (3) months after the sanction amounts are paid in full; and (iv) be barred from trading for any account he owns or controls on any CME Group trading floor or on any CME Group electronic trading platform, or from entering trades for any account he owns or controls into any CME Group clearing platform for an additional period of six (6) months, starting the first business day after suspension of his membership privileges ends. This decision became final on March 25, 2011 and effective on April 8, 2011. 
 

EFFECTIVE DATE:

April 8, 2011