Ikon Global Markets, Inc. v. CFTC

Ikon Global Markets, Inc. (Ikon) (plaintiff) was a futures commission merchant registered with the National Futures Association (NFA), a self-regulatory organization for the derivatives industry regulated by the Commodity Futures Trading Commission (CFTC) (defendant). Under the Commodity Exchange Act, all registered futures associations, including the NFA, were required to provide an arbitration forum for the resolution of customer claims and claims against members of the association. Accordingly, the NFA adopted a code of arbitration, subject to the review and approval of the CFTC. The CFTC approved the NFA’s code of arbitration, which provided that there was no right to appeal a decision from an NFA arbitration panel. Additionally, under regulations promulgated by the CFTC, the CFTC did not review such arbitration decisions. In 2009 two of Ikon’s customers initiated separate arbitrations against Ikon under the NFA rules. The customers’ claims were based on Ikon’s decision to close out certain currency positions in their foreign-exchange accounts, a decision that Ikon believed was required by an NFA rule prohibiting offsetting foreign-exchange accounts. Ikon prevailed in one arbitration and lost in the other. Subsequently, Ikon filed suit against the CFTC in federal district court under the Administrative Procedure Act, alleging that the CFTC was obligated to oversee NFA arbitrations to prevent such inconsistent judgments. In doing so, Ikon sought an order from the CFTC to nullify the two arbitration decisions. The CFTC argued that Ikon lacked constitutional and prudential standing and that even if Ikon did have standing, the decision not to oversee NFA arbitrations was within the CFTC’s discretion.