Zhiyu Wang, a nonmember of the New York Mercantile Exchange, agreed to pay a fine of US $100,000, disgorge profits of US $236,530 and be barred from trading any CME Group product for three years, to resolve exchange charges that, on several occasions between December 18, 2014, and March 30, 2015, he traded ahead of orders for his employer, realizing profits of US $236,500. According to NYMEX, Mr. Wang accomplished this by first entering orders for his own account, and then subsequently offsetting his positions with trades opposite his employer’s account. NYMEX also claimed that Mr. Wang failed to appear for an interview requested by exchange investigatory staff. Separately, CME Group settled a disciplinary action with RBC Capital Markets LLC related to the firm’s alleged reporting the time of execution of a block trade in error, and reporting that the block trade was executed at a lower price than the price agreed to with the firm’s counterparty. RBC agreed to pay a fine of US $30,000 to resolve this matter. In addition, CME Group settled disciplinary actions alleging violations of its wash sales and pre-arranged trading prohibitions.
Compliance Weeds: A panel of the NYMEX Business Conduct Committee recently found that, from April 18, 2012, through December 10, 2012, Jon Ruggles, a nonmember and former trader for Delta Airlines, traded two accounts of his wife, Ivonne Ruggles, relying on confidential information of his employer in a manner that disadvantaged it. According to NYMEX’s BCC, during the relevant period, Mr. Ruggles accumulated profits in excess of US $3.3 million as a result of his unauthorized trading. (Click here for details regarding this disciplinary action in the article, “Trader Sanctioned Over US $3 Million by CME Group for Trading on Confidential Employer Information; Both He and Wife Barred From Exchange Trading” in the June 19, 2016 edition of Bridging the Week.) The Commodity Futures Trading Commission previously has settled an enforcement action against an individual claiming that his trading opposite his employer’s account constituted impermissible misappropriation of confidential information, and a violation of the relatively new provision under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the corresponding CFTC rule that prohibit any person from engaging in “any manipulative or deceptive device or contrivance” in connection with futures trading that uses, attempts to use or employs “any manipulative device, scheme or artifice to defraud” or operates “as a fraud or deceit upon any person.” (Click here to access Commodity Exchange Act Section 6(c)(1)), US Code §9(1), and here to access CFTC Rule 180.1. Click here for details on this CFTC action in the article, “CFTC Brings First Insider Trading-Type Enforcement Action Based on New Anti-Manipulation Authority” in the December 6, 2015 edition of Bridging the Week.)