April 24, 2014
Topical Highlights for Securities provides summaries of significant federal and state judicial decisions and legislative and administrative activities affecting Securities law. A Westlaw subscription is required to access the documents linked from this page.
Commodity Futures: Commodity Futures Trading Commission (CFTC) had authority to regulate brokerage firm’s off-exchange and fraudulent retail commodity transactions. U.S. Commodity Futures Trading Com’n v. Hunter Wise Commodities, LLC, 2014 WL 1424435 (C.A.11 (Fla.)) In a matter of first impression, the Commodity Futures Trading Commission (CFTC) had the authority, as expanded under amendments to the Dodd-Frank Act, to regulate a brokerage firm’s off-exchange and fraudulent retail commodity transactions in precious metals. Customers who entered contracts through the firm’s technology platform for precious metals transactions were not eligible contract participants and were not eligible commercial entities. Also, dealers, in cooperation with the firm, financed the transactions, thereby causing them to be “leveraged” or “margined” and covered under the Act. The firm itself characterized its business to include financing and providing a “back office” platform for a network of dealers that transacted leveraged sales in precious metals. Finally, when customers’ trading positions fell below minimum margin requirements, dealers would initiate a margin call and liquidate open trading positions. 2014 WL 1424435. (The full-text of the rest of the Topical Highlights is available within Westlaw Next, subscription required).
Fraud: Investor stated fraud claim against bank that structured CDO backed by securitized subprime mortgages. LBBW Luxemburg S.A. v. Wells Fargo Securities LLC 2014 WL 1303133 (S.D.N.Y.)