NOTICE OF DISCIPLINARY ACTION

FILE NO.:

NYMEX 12-8834-BC

MEMBER:

BRIAN STEINHAUSE

NYMEX RULE VIOLATIONS:

539. Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited

539.A. General Prohibition

No person shall prearrange or pre-negotiate any purchase or sale or noncompetitively execute any transaction, except in accordance with Sections B. and C. below.

539.C. Pre-Execution Communications Regarding Globex Trades

Parties may engage in pre-execution communications with regard to transactions executed on the Globex platform where one party (the first party) wishes to be assured that a contra party (the second party) will take the opposite side of the order under the following circumstances:

3. In the case of futures orders, the first party’s order must be entered into the Globex platform first and the second party’s order may not be entered into the Globex platform until a period of 5 seconds has elapsed from the time of entry of the first order.

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.
 

FINDINGS:

Pursuant to an offer of settlement Brian Steinhause (“Steinhause”) presented at a hearing on September 26, 2013, in which Steinhause neither admitted nor denied the findings or rule violations upon which the penalty is based, a Panel of the NYMEX Business Conduct Committee (“BCC”) found that at the time of the conduct, Steinhause was a NYMEX member and thus subject to the jurisdiction of NYMEX, and that on numerous occasions during the time period of January 2011 through December 2012, he executed a series of pre-arranged trades without exposing the futures orders subject to pre-execution communication for a minimum of five seconds on the Globex System.

The Panel found that as a result, Steinhause violated NYMEX Rule 539.A. and C. (Prearranged, Pre-Negotiated and Noncompetitive Trades Prohibited), NYMEX Rule 432.B. (Conduct or Proceedings Inconsistent with the Just and Equitable Principles of Trade) and NYMEX Rule 432.Y. (Improper Use of the Globex System).

PENALTY:

In accordance with the settlement offer, the Panel ordered Steinhause to pay a fine to the Exchange in the amount of $65,000 and serve a 4 week suspension of any access to any CME Group Inc. trading floor and of direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group Inc., including CME Globex. The suspension shall run from September 30, 2013 through October 25, 2013.

EFFECTIVE DATE:

September 30, 2013