Commodity Futures Trading Commission v. GIGFX, LLC
2012 U.S. Dist. LEXIS 21959
D.C. Cir.2012Background
- CFTC alleges GIGFX unlawfully solicited/accepted orders in forex without RFED registration, violating CEA and CFTC Regulations.
- GIGFX was properly served but failed to answer; clerk entered default on Feb. 25, 2011.
- CFTC moved for default judgment under Rule 55(b)(2) seeking injunctive relief and civil monetary penalty.
- Court applies default-judgment framework, finding liability for two distinct violations but damages to be determined independently.
- Court grants permanent injunctive relief prohibiting further commodity-related activity and RFED-related restrictions.
- Court imposes a $280,000 civil monetary penalty (two violations) plus post-judgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment is proper | GIGFX failed to defend; default appropriate | (none) | Default judgment warranted |
| Liability for two violations | Two distinct violations: failure to register and soliciting without registration | GIGFX did not respond; no argument on liability | GIGFX liable for both violations |
| Eligibility for injunctive relief | Injunction necessary to prevent future CEA/CFTC violations | (no response) | Permanent injunction granted |
| Penalty amount | Penalty of $140,000 per violation under 7 U.S.C. § 13a-l(a) | (no response) | Total of $280,000 civil penalty plus post-judgment interest |
Key Cases Cited
- Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372 (D.C.Cir. 1980) (default-judgment standards; protection of diligent party)
- H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689 (D.C.Cir. 1970) (default-judgment rationale and need to protect against delay)
- Adkins v. Teseo, 180 F.Supp.2d 15 (D.D.C. 2001) (damages must be established with reasonable certainty)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (court may determine damages for default judgments without a hearing)
- Commodity Futures Trading Comm’n v. Wilshire Inv. Mgmt. Corp., 531 F.3d 1339 (11th Cir. 2008) (injunctions and penalties in CFTC enforcement)