Dunn v. CFTC
United States Supreme Court
519 U.S. 465, 117 S. Ct. 913, 137 L. Ed. 2d 93 (1997)
- Written by Brett Stavin, JD
Facts
The Commodity Futures Trading Commission (CFTC) (plaintiff) filed a complaint against William C. Dunn and Delta Consultants, Inc. (collectively, Dunn) (defendants), alleging that Dunn had violated the Commodity Exchange Act (CEA). Specifically, the CFTC alleged that Dunn had solicited investments and advised customers that their funds would be invested using options to purchase or sell various foreign currencies. Such options were indeed purchased and sold, but they were traded in off-exchange, or over-the-counter, markets. Options were never sold to the customers themselves. Rather, customers’ positions were tracked using internal accounting. Dunn and its customers lost significant funds. In its defense, Dunn argued that off-exchange transactions in foreign currency options were exempt from the CEA’s coverage. The court of appeals ruled in the CFTC’s favor, holding that the CFTC had authority to regulate off-exchange options for the purchase or sale of foreign currency. The Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Stevens, J.)
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