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U.S. Futures Exchanges Disciplinary Actions Report - January 2017


NYMEX 15-0087-BC-7


Violation of Rule 432 – General Offenses (in part)

In August a non-member firm was alleged to have failed to respond to Exchange staff requests for information related to an investigation.  Accordingly, the Business Conduct Committee and Hearing Panel Chair found that the firm failed to answer the charge, admitted the charge, and waived its right to a hearing.  In the penalty hearing, the firm was found to have committed the violation.  $50,000 penalty, ten year suspension.

NYMEX 16-0600


Violation of Rule 413 – Summary Access Denial Actions (in part)

As part of an ongoing investigation against a member firm, the firm was denied access to Globex for purposes of trading or entering Trading at Settlement orders in any product for sixty days (or longer if extended by the Exchange).  The suspension, which was issued and took effect in January 2017, was the result of an investigation into firm traders submitting TAS order messages with intentionally incomplete and inaccurate values in the Sender Location ID fields, which gave the firm queue priority.  Once the TAS markets were open and the queue priority had been achieved, the firm then corrected the order messages.  After being twice notified of the investigation and further warned against continuing the practice, traders continued to submit knowingly inaccurate and incomplete data.



Pre-Arranged Trades

Violation of Exchange Rule 4.02(2) – Trade Practice Violations

On a single day in March 2016, two individuals, in an effort to realize separate strategies for separate wholly-owned subsidiaries of a single parent company, executed prearranged wash sales with the intent to match opposite the two subsidiaries.  Pursuant to settlement offers, the individuals neither admitted nor denied the violations.  $7,500 penalty for each individual, cease and desist for each individual.


CBOT 10-04523-BC-3

Pre-Arranged Trades

Violation of Rule 521 – Requirements for Open Outcry Trades; Rule 539 – Prearranged, Pre-negotiated and Noncompetitive Trades Prohibited (in part); Rule 432 – General Offenses (in part)

On multiple occasions between April 2009 and May 2010 a member broker made trades that, while reported and cleared, were found in an evidentiary hearing to not have been competitively executed via open outcry.  $35,000 penalty, six month suspension from the date the penalty is paid in full.

© 2017 Bracewell LLP


About this Author

David Perlman, Energy Practice, Partner, Lawyer, Bracewell law firm

David Perlman is a partner in the energy practice in Bracewell's Washington, D.C. office. He represents and counsels clients before regulatory bodies such as the Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission and state public utility commissions in regulatory and compliance matters, in the conduct of compliance programs and training, and in energy-related transactions and financings.

Mr. Perlman represents a variety of clients, including utilities, commodities merchants, marketers, industrial customers,...

Michael Brooks, Energy, Commodities, attorney, Bracewell, law firm

Michael focuses his practice in the areas of energy, commodities and derivatives law. He represents energy companies and commodity trading companies in a wide variety of regulatory, compliance and enforcement matters and routinely advises clients regarding compliance with federal rules and regulations governing the trading, ownership and transportation of energy commodities.

In addition to actively representing clients in investigations and regulatory matters involving the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC), Michael conducts internal compliance reviews and trainings, works with clients to develop effective compliance programs and collaborates with commercial teams to structure large commodity transactions and acquisitions to comply with FERC and CFTC regulations. He also advises clients regarding the CFTC’s regulation of non-energy commodities, including agricultural commodities, and regarding the U.S. Federal Trade Commission’s (FTC) petroleum market manipulation regulations.

Robert E. Pease, Energy, Attorney, Bracewell law firm
Senior Counsel

Bob Pease represents clients involved in the energy sector in CFTC and FERC regulatory, compliance and enforcement matters involving power, gas, and crude oil, as well as Dodd Frank implementation. Bob has more than 25 years of senior-level experience at CFTC and FERC handling energy-related policy, compliance and enforcement matters, most recently as Counsel to the Director in the Division of Enforcement with the CFTC. Before his time with the CFTC, Bob spent more than 20 years at FERC most recently as Director of Investigations. Bob was involved in some of the...

Jennifer T. Gordon, Energy Regulation Policy Attorney, Bracewell law firm

Jennifer Gordon is an associate in Bracewell’s Washington, DC office, where she focuses her practice on white collar criminal defense and energy regulation. 

Jennifer participates in representing clients throughout the trial and appellate process on a wide range of matters arising under state and federal law. She represents clients in connection with Foreign Corrupt Practice Act (FCPA) compliance, securities fraud, public corruption, and environmental crimes. Jennifer has experience representing clients in government investigations and...