NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 10-7546-BC

MEMBER:

DAVID CARTWRIGHT

NYMEX RULE VIOLATIONS:

RULE 432. GENERAL OFFENSES

It shall be an offense:

B. to engage in fraud, bad faith or in conduct or proceedings inconsistent with just and equitable principles of trade;

Y. to improperly use the Globex platform or any electronic trading or clearing platform owned or controlled by CME Group or permit the unauthorized use of such platforms;

LEGACY RULE 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 ^[1].), 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.

RULE 984.B. RESPONSIBILITIES/OBLIGATIONS OF EXECUTING BROKERS

1.  Customer Order Placement

An executing broker will be responsible for determining that all orders are placed or authorized by the customer. Once an order has been accepted, a broker or the broker's clerk must:

D. transmit such executed order to the Clearing Member as soon as practicable in accordance with Exchange Rules and procedures.

FINDINGS:

Pursuant to an offer of settlement David Cartwright (“Cartwright”) presented at a hearing on August 13, 2014, in which Cartwright neither admitted nor denied the rule violations or the findings or conclusions herein upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that it had jurisdiction over Cartwright pursuant to Exchange Rules 400 and 402 as the conduct occurred while Cartwright was a NYMEX member and that on trade date July 31, 2009, Cartwright’s telephone clerk placed a series of buy and sell orders for a customer for the September 2009 Crude Oil Futures (“SEP09 Crude”) totaling 906 contracts. All of the orders were entered on Globex using Cartwright’s, as well as another executing broker’s, personal trading account, rather than the customer’s account. In addition, except for 56 round-turns, none of the trades executed by Cartwright and the other executing broker were allocated to the customer’s account until after the close of open outcry at 2:30 PM EST. The FCM was required to absorb the loss incurred by the customer.

The Panel found that Cartwright thereby violated NYMEX Rules 432.B., 432.Y, 984.B.1.D. and legacy Rule 11G.536.B1.

PENALTY:

In accordance with the settlement offer, the Panel ordered Cartwright to pay a fine of $50,000 and serve a 5 year suspension from membership privileges on any CME Group Inc. exchange, access to all CME Group Inc. trading floors and direct or indirect access to all electronic trading and clearing platforms owned or operated by CME Group Inc., including Globex. The suspension will run from August 15, 2014 through August 15, 2019.

EFFECTIVE DATE:

August 15, 2014

[1] Bunched Globex orders may be entered using a series designation or suspense account.