United States Commodity Futures Trading Commission v. Hunter Wise Commodities, LLC
749 F.3d 967
11th Cir.2014Background
- This is an Eleventh Circuit appeal from a district court's grant of a preliminary injunction in a CFTC enforcement action under the Dodd-Frank Act.
- The Commission seeks to regulate retail commodity transactions offered on a leveraged or margined basis and financed by the offeror, counterparty, or related parties.
- The case centers on Hunter Wise Commodities and related entities, Lloyds entities, dealers, and retail customers connected through Hunter Wise's Portal.
- The district court found the Portal transactions to be subject to § 2(c)(2)(D) and entered a preliminary injunction.
- Mart in and Jager appeal, arguing the Commission lacks authority and that exceptions to jurisdiction apply; the court conducts de novo statutory interpretation and factual review.
- The court upholds CFTC authority over the transactions, rejects the exceptions argument, and affirms the injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 2(c)(2)(D) covers retail transactions financed leveragely/margined | Commission argues § 2(c)(2)(D) reaches leveraged/margined retail transactions | Martin and Jager contend no such coverage absent durational similarity to § 23 | Yes, § 2(c)(2)(D) covers the Portal transactions |
| Whether the actual delivery and enforceable obligation exceptions apply | Commission argues exceptions do not apply to these transactions | Defendants argue exceptions remove jurisdiction | Neither exception applies |
| Whether the Commission established a prima facie illegality and likelihood of future violations | Commission showed misrepresentation and illegality with likelihood of continuing violations | Defendants challenge sufficiency of evidence | Yes, prima facie illegality and likely future violations shown |
Key Cases Cited
- Commodity Futures Trading Comm’n v. Muller, 570 F.2d 1296 (5th Cir. 1978) (preliminary injunction standard under the Act; practical showing suffices)
- Commodity Futures Trading Comm’n v. Co Petro Mktg. Grp., 680 F.2d 573 (9th Cir. 1982) (future violations consideration for injunctions in CFTC actions)
- Commodity Futures Trading Comm’n v. Hunt, 591 F.2d 1211 (7th Cir. 1979) (requires likelihood of future violations for permanent injunctions)
- Sec. & Exch. Comm’n v. ETS Payphones, Inc., 408 F.3d 727 (11th Cir. 2005) (abuse of discretion standard for preliminary injunctions; de novo review of law/facts as appropriate)
- Commodity Futures Trading Comm’n v. Walsh, 658 F.3d 194 (2d Cir. 2011) (reviewing injunction in CFTC enforcement action; de novo on legal questions)