NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX-10-07512-BC

NON-MEMBER:

FRANK GAILLARD 
 

EXCHANGE RULES:

NYMEX LEGACY 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;
(18) to commit an act which is substantially detrimental to the interests or welfare of the Exchange;
(20) to intentionally violate any Exchange rule that results in harm to a customer;

FINDINGS:

On January 17, 2012, a Panel of the New York Mercantile (“NYMEX”) Probable Cause Committee charged Frank Gaillard (“Gaillard”), a former floor clerk, with violating NYMEX Legacy Rules 8.55(A)(2), 8.55(A)(18) and 8.55(A)(20) based on allegations that on six separate occasions he intentionally engaged in a scheme to cherry-pick Natural Gas Futures trades intended for a his broker’s customer and place them in the account of another trader.

On April 9, 2012, a Hearing Panel Chair of the NYMEX Business Conduct Committee (“BCC”) entered an order finding that Gaillard failed to answer the charges against him. The Hearing Panel Chair further ordered that Gaillard was deemed to have admitted the charges issued and waived his right to a hearing on the merits of the charges.

On May 15, 2012, a penalty hearing was held before a panel of the NYMEX BCC (“BCC Panel”) which had jurisdiction over Gaillard pursuant to NYMEX Rules 400 and 402 as the conduct occurred while Gaillard was a registered floor clerk. The BCC Panel found that Gaillard had committed the violations charged.

PENALTY:

In accordance with NYMEX Rule 402.B. (Sanctions), the BCC Panel ordered that Gaillard (a) pay a fine of $100,000 to the Exchange; (b) pay restitution in the amount of $48,150 (less any restitution paid by other respondents); and (c) be barred for a period of 5 years commencing on the Effective Date below from (i) applying for membership at any CME Group, Inc. exchange; (ii) accessing any trading floor operated by any CME Group, Inc. exchange; and (iii) directly or indirectly accessing any electronic trading or clearing platform owned or operated by the CME Group, Inc. The ban will continue until the fine and restitution are paid in full.

EFFECTIVE DATE:

June 18, 2012