The Commodity Futures Trading Commission announced that the Honorable Vernon S. Broderick of the U.S. District Court for the Southern District of New York entered a consent order resolving CFTC charges against the New York Mercantile Exchange (NYMEX) and former employees William Byrnes and Christopher Curtin for the employees’ repeated disclosure of material non-public information in violation of the Commodity Exchange Act (CEA) and CFTC regulations.

The order finds Byrnes and Curtin directly liable for their improper disclosures and NYMEX vicariously liable for the misconduct of its former employees. In addition, Byrnes and Curtin are permanently banned from trading commodity interests and registering with the CFTC and are enjoined from future violations of the CEA and CFTC regulations, as charged. The order also enjoins NYMEX to the extent the CEA and CFTC regulations apply under the vicarious liability provision of the CEA. In addition, the order imposes a $4 million civil monetary penalty jointly and severally on NYMEX, Byrnes, and Curtin, with the liability of Byrnes and Curtin capped, respectively, at $300,000 and $200,000.

ENFORCEMENT NEWS: NYMEX and Two Former Employees to Pay $4 Million for Disclosing Material Non-Public Information https://t.co/EBYxPuZv4X

— CFTC (@CFTC) August 4, 2020

The CFTC’s enforcement action against NYMEX and the individual defendants is the first time the CFTC has charged an exchange with violations of the CEA and CFTC regulations’ proscriptions against disclosures of material non-public information by exchange employees. [See CFTC Press Release No. 6519-13]

“Today’s settlement sends a strong message that the CFTC will work tirelessly to protect our market participants against unlawful disclosures of their confidential information to ensure that the fairness and reliability of our markets are not compromised,” said Director of Enforcement James McDonald. “Like any other employer, commodity exchanges are responsible for violations of the CEA or CFTC regulations by their officials, employees, and agents within the scope of their employment or office.”

The order finds that on numerous occasions between 2008 and 2010, Byrnes and Curtin, while acting in the scope of their employment as NYMEX employees, willfully and knowingly disclosed material non-public information obtained through special access. The order finds that Byrnes and Curtin improperly disclosed to commodities broker and defendant Ron Eibschutz the identities of counterparties to crude oil options and natural gas futures trades, trade details such as price and volume, and other confidential information.

The CFTC’s litigation is continuing against Eibschutz for his role in allegedly aiding and abetting Byrnes and Curtin’s misconduct.

The CFTC thanks and acknowledges the assistance of the Alberta Securities Commission.

The Division of Enforcement staff members responsible for this case are Trevor Kokal, Patrick Daly, Alejandra de Urioste, Gabriella Geanuleas, David Newman, James Wheaton, Patryk J. Chudy, David W. MacGregor, Lenel Hickson, Jr., and Manal Sultan.

Source: CFTC