NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-14-BC

MEMBER:

Peter Iocolano (PI)

(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
(E) No Floor Member on the Floor having an order from another person may take the opposite side of the transactions for himself, directly or indirectly…

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:

8.50 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 Peter Iocolano (also known as Broker “PI”), neither admitted nor denied the findings nor 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, Peter Iocolano engaged in non-competitive, prearranged trading of twenty-two (22) customer orders to buy or sell option spreads on Crude Oil futures, traded opposite these customer orders, and recorded trades out of sequence on his trading cards.

These trades resulted in ill gotten gains for Peter Iocolano in the amount of $15,640. Additionally, the BCC Panel found that on January 22, 2008, Peter Iocolano engaged in non-competitive, prearranged trading of another broker’s customer order to sell options on Crude Oil futures that was partially withheld for his benefit, and failed to produce an original trade record in response to an investigation-related request for all his records for this trade date. The BCC Panel found that Iocolano, therefore, violated legacy NYMEX Rules 6.05(A)(1), 6.41(E), 6.61, 6.90(B), and legacy Exchange Rules 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 Peter Iocolano: (i) pay a fine to the Exchange in the amount of $175,000; (ii) disgorge profits in the amount of $15,640; (iii) cease and desist from subsequent similar rule violations; (iv) 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 four (4) months, starting the first business day after the Effective Date and ending the later of four (4) months after the Effective Date or four (4) months after the sanction amounts are paid in full; and (v) 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 two (2) years, starting the first business day after suspension of his membership privileges ends. This decision became final on March 25, 2011 and effective on April 11, 2011.

EFFECTIVE
DATE:

April 11, 2011