COMMODITY FUTURES—S.D.N.Y.: Consent order closes NYMEX employee leak action - 26 February 2021

This order concludes the CFTC's first enforcement action against an exchange for violations arising from disclosures of material nonpublic information by exchange employees.

The CFTC announced that former energy broker Ron Eibschutz has consented to sanctions for soliciting confidential information from NYMEX employees. The consent order found that Eibschutz aided and abetted the NYMEX employees' illegal disclosures. Eibschutz consented to a permanent ban from trading commodity interests and registering with the CFTC. The order also imposed an injunction and the payment of a civil penalty (CFTC v. Byrnes, February 19, 2021, Broderick, V.).

NYMEX employees. In 2013, the CFTC charged two NYMEX employees with providing material, nonpublic trading data to broker Ron Eibschutz. According to the Commission, on many occasions between 2008 and 2010, Eibschutz solicited and received confidential information about derivatives trading that the employees were privy to via their positions. Eibschutz was given information about trading activity in options on commodity futures in the oil and gas markets such as the identities of counterparties, the volume of contracts traded, the strike price, and the trade price.

Trade information. The NYMEX employees, William "Billy" Byrnes and Christopher Curtin, settled the CFTC's charges against them in August 2020. Byrnes and Curtin were charged with engaging in insider trading and knowingly disclosing material, nonpublic information for purposes inconsistent with the performance of their official duties as exchange employees. NYMEX was alleged to have been vicariously liable for their conduct. In addition to numerous injunctions and trading bans, Byrnes, Curtin, and NYMEX also were ordered to jointly and severally pay a $4 million civil penalty (the amounts applicable to Byrnes and Curtin were capped at $300,000 and $200,000, respectively).

Sanctions. The consent order finds that Eibschutz willfully aided and abetted Byrnes's and Curtin's disclosures of material non-public trade information. The order imposes a $75,000 civil money penalty to be paid within thirty days. Eibschutz is also permanently enjoined from trading commodity interests, having them traded on his behalf, or otherwise controlling such trades or soliciting or receiving funds from them. He is also barred from registering with the CFTC and from employment with any registered person.

The case is No. 13-cv-01174. 

Attorneys: Alejandra de Urioste for the CFTC.

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