NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 10-7443-BC

NON-MEMBER:

LAWRENCE FAVUZZA

NYMEX RULE VIOLATIONS:

NYMEX LEGACY RULE 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

NYMEX LEGACY RULE 6.61 PRE-ARRANGED TRADES

Pre-arranged trades are prohibited.

NYMEX LEGACY RULE 11G.18 TRADING STANDARDS FOR ELECTRONIC TRADING SYSTEMS

(F) A Globex User shall not make any purchase or sale, or shall not enter an order through Globex, to effect a trade that has been prearranged. The foregoing restriction shall not apply to transactions executed pursuant to permissible Pre-Execution Discussions in accordance with the provisions of Rule 11G.19.

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.
(3) to be guilty of any dishonest conduct;
(7) to engage in wash trading or accommodation trading.

FINDINGS:

Pursuant to an offer of settlement Lawrence Favuzza (“Favuzza”) presented at a hearing on June 26, 2013, in which Favuzza neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that at the time of the conduct, Favuzza was a COMEX member and thus subject to the jurisdiction of NYMEX pursuant to Legacy Rule 101.01A, and that on five occasions in March 2008 while acting as a broker on the Floor of the Exchange, Favuzza participated in the execution of noncompetitive trades that he prearranged with another broker in the Palladium and Platinum ring as well as on Globex. On three occasions, he engaged in accommodation trading with another broker in the Palladium and Platinum ring by buying/selling for his account opposite another broker, thereby allowing the broker to take the opposite side of its customer indirectly.

The Panel found that, as a result, Favuzza violated Legacy NYMEX Rules 6.05(A)(1) (Transactions, Bids and Offers on the Trading Floor), 6.61 (Pre-Arranged Trades), 11G.18 (Trading Standards for Electronic Trading Systems), 8.55(A)(3) (Dishonest Conduct) and 8.55(A)(7) (Wash or Accommodation Trades).

PENALTY:

In accordance with the settlement offer, the Panel ordered Favuzza to pay a fine in the amount of $50,000 and to disgorge profits in the amount of $26,185. The Panel also suspended Favuzza from all direct or indirect access to any trading floor or electronic trading or clearing platform owned or operated by CME Group Inc., including Globex, for a period of 8 weeks. The suspension will run from June 28, 2013 through August 23, 2013.

EFFECTIVE DATE:

June 28, 2013