NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 09-15-BC
 

MEMBER:

GUY GRIECO

(LEGACY) EXCHANGE RULES: 11G.530 Priority of Customer’s Orders

A member shall not buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option for his own account, an account in which he has a direct or indirect financial interest, or an account over which he has discretionary trading authority when he is in possession of an executable order for another person to buy (sell) a futures contract, buy (sell) a call option or sell (buy) a put option in the same product, regardless of the venue of execution. All contract months in a given futures product and all options on the futures product, in addition to any corresponding alternative sized (mini or micro) futures or options contracts on a given product, shall be considered the same product for the purposes of this rule. The foregoing shall not apply to DRT orders provided that the customer has previously consented in writing and evidence of such general consent is indicated on the order with the “WP” (with permission) designation. In the case of a floor broker holding a discretionary order for an account described in Rule 547, a "WP" designation on the order shall constitute sufficient evidence of prior consent. No person shall enter an order into the Globex platform for his own account, an account in which he has a direct or indirect financial interest or an account over which he has discretionary trading authority, including, without limitation, an order allowing discretion as to time and price, when such person is in possession of any order for another person that the Globex platform is capable of accepting.

11G.536 Recordkeeping Requirements for Pit, Globex, and Negotiated Trades

(B) GLOBEX Order Entry

(1) General Requirement - Each Globex terminal operator entering orders into Globex shall input for each order: a) the user ID assigned him by the Exchange, a clearing member or other authorized entity and b) the price, quantity, product, expiration month, CTI code and account number (except as provided in Section C.), and, for options, put or call and strike price. The Globex terminal operator’s user ID must be present on each order entered. For a Globex terminal operator with access pursuant to Rule 574, clearing members authorizing such access will be responsible for the Globex terminal operator’s compliance with this rule. With respect to orders received by a Globex terminal operator which are capable of being immediately entered into Globex, no record other than that set forth above need be made. However, if a Globex terminal operator receives an order which cannot be immediately entered into Globex, the Globex terminal operator must prepare a written order and include the account designation, date, time of receipt and other information required pursuant to section A.1. above. The order must be entered into Globex when it becomes executable.

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 Guy Grieco neither admitted or denied the findings or any rule violations, the panel of the NYMEX Business Conduct Committee (hereinafter known as the “BCC Panel”), found that Guy Grieco, who was registered as a clerk on NYMEX and who was registered with the NFA as an introducing broker, entered orders to trade NYMEX products on Globex for his brother’s account while holding legitimate customer orders. In addition, the BCC Panel found that Guy Grieco selectively allocated favorably priced fills from a suspension account to his brother’s account to the disadvantage of the customer orders during various trade dates within the months of October 2007 through December 2007, in violation of legacy Exchange Rule 11G.530. Furthermore, the BCC Panel finds that Guy Grieco failed to properly record customer NYMEX orders for Globex execution on various trade dates during the aforementioned time period in violation of legacy Exchange Rule 11G.536.B.1. Additionally, the BCC Panel finds that Guy Grieco violated legacy Exchange Rule 8.55 (A)(2). On May 13, 2010, Guy Grieco presented a settlement offer to the BCC Panel that was unsupported by the Market Regulation Department, with respect to violations of Exchange Rules. The BCC Panel accepted the settlement offer.

PENALTY:

In accordance with the settlement offer, the BCC Panel hereby orders that Guy Grieco: (1) pay a fine to the Exchange in the amount of $60,000; (2) pay customer restitution in the amount of $12,253.20; (3) refrain from reapplying for clerk privileges or for membership privileges, including but not limited to, access to any CME Group trading floor and direct access to any CME Group electronic trading or clearing platforms for a period of three months from the effective date of the NFA 9.11 Notice; and (4) an order to cease and desist from subsequent similar rule violations. The decision became final on August 4, 2010 and effective on August 11, 2010.

Not to re-apply for clerk or membership privileges from August 11, 2010 through November 11, 2010. 
 

EFFECTIVE DATE:

August 11, 2010