Prestwick Capital Management, Ltd. v. Peregrine Financial Group, Inc.
United States Court of Appeals for the Seventh Circuit
727 F.3d 646 (2013)
Peregrine Financial Group, Inc. (Peregrine) (defendant) was a futures commission merchant (FCM) under the Commodity Exchange Act (CEA). In 2004 Peregrine entered into a guarantee agreement with Acuvest, an introducing broker registered with the Commodity Futures Trading Commission (CFTC), pursuant to which Peregrine guaranteed Acuvest’s performance of all introducing-broker obligations under the CEA. Under the 2004 guarantee agreement, Peregrine was liable for any fraudulent conduct by Acuvest. During the term of the guarantee agreement, Acuvest advised Prestwick Capital Management, Ltd., Prestwick Capital Management 2, Ltd., and Prestwick Capital Management 3 Ltd. (collectively Prestwick) (plaintiff) to become a limited partner in a commodity trading pool for which Acuvest served as introducing broker. In 2006 Peregrine and Acuvest mutually terminated the 2004 guarantee agreement, entering into a superseding clearing agreement under which Acuvest was recognized as an independent introducing broker, as opposed to a guaranteed introducing broker. The parties’ 2006 agreement explicitly stated that it “supersedes and replaces any and all previous agreements.” Acuvest thus assumed financial responsibility for its own actions. Acuvest and Peregrine later entered into yet another agreement with an effective date of July 8, 2008, pursuant to which the parties restored Acuvest’s status as a guaranteed introducing broker. By then, however, Prestwick had learned that the majority of its investment in the commodity pool was unavailable, allegedly due to fraud on the part of Acuvest that occurred in between the two guarantee agreements. Prestwick filed suit in federal district court against Peregrine, Acuvest, and two of Acuvest’s principals, alleging violations of the Commodity Exchange Act (CEA). Prestwick’s claim against Peregrine was based on guarantor liability. On that claim, the district court awarded summary judgment to Peregrine, and Prestwick appealed. In addition to Prestwick’s arguments relating to contractual interpretation, Prestwick also argued that the district court’s ruling undermined the CFTC’s consumer-protection policies.
Rule of Law
Holding and Reasoning (Barker, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 710,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 710,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,600 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.