United States Commodity Futures Trading Commission v. Monex Credit Co.

931 F.3d 966 (2019)

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United States Commodity Futures Trading Commission v. Monex Credit Co.

United States Court of Appeals for the Ninth Circuit
931 F.3d 966 (2019)

Facts

The Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Commodity Exchange Act (CEA) to expand the enforcement authority of the Commodity Futures Trading Commission (CFTC) (plaintiff). As amended, CEA § 6(c)(1) prohibited “any manipulative or deceptive device or contrivance” in violation of the CFTC’s rules or regulations. The CFTC brought an enforcement action against Monex Credit Company (Monex) (defendant), alleging that Monex committed fraud in connection with the sale of precious metals. However, the CFTC did not allege that Monex manipulated the market. Rather, the CFTC asserted a stand-alone fraud claim against Monex. Monex argued that the CFTC exceeded its authority because, even as amended, the CEA empowered the CFTC to pursue only fraud-based manipulation claims, not stand-alone fraud claims. In support of its contention, Monex cited, among other things, supposed CEA redundancies if the CFTC’s position were accepted and the CEA’s headings, which mentioned manipulation but not fraud. The district court agreed with Monex, holding that the CEA unambiguously required both manipulative and deceptive conduct, and thus dismissed the CFTC’s complaint. The CFTC appealed.

Rule of Law

Issue

Holding and Reasoning (Siler, J.)

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