Commodity Futures Trading Commission, Cross-Appellee v. Nelson Bunker Hunt, Cross-Appellants

MARKEY, Chief Judge,

concurring and dissenting.

I concur in upholding Regulation 150.4, in affirming the declaratory judgment of a violation, 1 in holding moot the injunction-against-publication issue, and in affirming dismissal of the counterclaim and third-party claims.

I dissent, most respectfully, from reversal of the injunction denial, because it unjustifiably diminishes, if it does not disregard, the deference due the district judge’s discretion.

I dissent, with equal respect, from remand of the disgorgement issue, because it wastefully compels a busy district judge to attempt the impossible. 2

I. Refusal to Grant Injunction

I would affirm the district court’s refusal of an injunction.

The statute requires that the Commission make “a proper showing,” and that showing must include “some reasonable likelihood of future violations.”

The district court, who heard and observed the witnesses, who entered a carefully considered and reasoned Memorandum Opinion, and who supplied voluminous Findings and Conclusions, stated: “A ‘proper showing’ for preliminary injunctive relief under Section 6c of the Act requires the Commission to establish a prima facie case that there is a likelihood of future violations [emphasis the court’s]. No such showing has been made.” (emphasis added)

To order that a district court enjoin a party, when the other party has not made to that court even a prima facie showing of future violations, is to render merely platitudinous the majority’s references to the district court’s broad “discretion,” and the concept that “injunctive relief is never automatic.”

*1226 The district court also found “no basis for a finding that the violations are likely to continue.” Nowhere does the record reflect a basis for our declaring that finding clearly erroneous.

Importantly, the denial we here review is the second in this case. On May 6,1977 the district court denied a preliminary injunction because the Commission had failed to make a “proper showing” therefor, even if defendants’ positions were aggregated (/. e., if there were a violation). The Commission appealed and this court, after briefs and argument, affirmed the refusal to grant the injunction, in an unpublished order of May 12, 1977. Nothing in the subsequent record adds any fact indicating a likelihood of future violation, or removes that affirmance from its standing as the law of the case.

In all events, this court should not reverse itself without at least some effort to distinguish its contradictory positions on the same facts.

The majority opinion lists various generalized bases on which an injunction can be rested, nowhere indicating, however, wherein the district judge abused his discretion in this case. Whatever may have been the relationship of the views expressed in the majority’s cited cases to the facts in those cases (discussed below), no adequate foundation for application of those views appears in the record of this case.

If past misconduct be so suggestive of future violations as to require reversal, whence a reference to any “discretion” of a district judge? If past misconduct does not “necessarily” lead to a conclusion that future violations are likely, how can an appellate court rely on it to reverse this district judge’s determination that it did not?

I find unhelpful a reference to “factors suggesting that the infraction might not have been an isolated occurrence,” and “systematic wrongdoing,” when no such “factors” are present or cited here. That reference is particularly inapt in this case, which the district court described as involving “the first clear cut application” of Rule 150.4 to family trading activity. 3

That a defendant maintains his innocence, and refuses to cease blameless-in-his-eyes activities until a court declares him wrong, can hardly warrant an appellate court in substituting its judgment for every exercise of a district judge’s discretion to deny an injunction, and in thus destroying all vestige of discretion and all right to an honest belief in one’s own innocence sufficient to warrant a fight.

The facts must control. An honest belief in one’s own innocence is one thing. A knowingly false claim of innocence is quite another. In this “first clear cut” case, defendants submitted extensive evidence indicating differences in trading patterns and lack of centralized trading control. All trades were fully reported on time to the Commission. Intent to aggregate or to manipulate was not shown and was not charged. Nothing whatever of record would justify a conclusion that defendants’ assertion of innocence here was disingenuous, and the majority cites no basis for any such conclusion.

Similarly, it will not do to found a reversal here on the expectation that defendants will continue to trade. Whatever the facts may have warranted in SEC v. Commonwealth Chemical Securities, 574 F.2d 90 (2d Cir. 1978) (see infra), the rule is not whether the future violations “could be possible,” but whether they are likely.

The majority labels the district judge’s exercise of his discretion here as “anomalous,” on the ground that a “violation” having been found, an injunction should have *1227 been granted, again making injunctions automatic and effectively removing all discretion. In total contradistinction to the notion that a declaration of violation renders “anomalous” the denial of an injunction here, that declaration, sought by the Commission as a prophylactic, is, as the district court stated, a fully adequate substitute for an injunction in this case. See Perez v. Ledesma, 401 U.S. 82, 111-112 , 91 S.Ct. 674 , 27 L.Ed.2d 701 (1971) (concurring opinion); 6A J. Moore § 57.05, 7 J. Moore § 65.18(2) n.4.

Nowhere showing the district judge’s action to have been an abuse of discretion, but merely labeling it “incorrect,” the majority opinion begins by calling defendants’ conduct “carefully organized, large scale, and long term,” and “systematic and preconceived.” The district court did not so describe defendants’ activities. 4 The nature of commodity trading futures contracts, the effect on the market of sudden liquidation, and an honest belief in blamelessness, fully justified carrying out the contracts under attack. 5 As above indicated, a defendant should not be penalized for an honest belief in his own innocence. The likelihood that defendants may participate is not the same as a likelihood that they will violate. Nor is capability for violation equatable with likelihood of violation; many are capable. That some offspring had not previously traded is equally meaningless; everyone who trades must start. The explication of the basis for reversing the district judge’s exercise of discretion here would thus appear to be a gathering of zeros.

Further, the supplanting of the district court’s discretion is occurring here: (1) without mention of the district court’s carefully spelled-out reasoning, and without an explanation of why that reasoning is wrong; (2) without reference to or distinguishing of this court’s earlier affirmance on the same facts; (3) without mention of defendants’ having disposed (as found in the district court’s order of October 11, 1977) of all their holdings above an aggregated total of 3,000,000 bushels; (4) without recognition of the immediate availability to the Commission of full information on all of defendants’ future trades; (5) without guidance as to how defendants can be injunctively held to a total of 3,000,000 bushels, as the Commission insists, without centralized reports, one of the two bases for finding a violation here; and (6) without explanation of why an injunction is necessary to effectuate the manifest objectives of the legislation involved.

Still further, the authorities cited by the majority do not support reversal of the present injunction denial. They point toward affirmance. Of the eight cases cited, only two involved a reversal of a district judge’s injunction denial, and the decision in those two cases rested on facts not present here.

Indeed, United States v. W. T. Grant Co., 345 U.S. 629, 633-36 , 73 S.Ct. 894, 898 , 97 L.Ed. 1303 (1953) virtually impels affirmance of the district court in the present case:

*1228 The facts relied upon by the Government to show an abuse of discretion in this case are these: Hancock’s three interlocking directorates viewed as three distinct violations, his failure to terminate them until after suit was filed despite five years of administrative attempts to persuade him of their illegality, his express refusal to concede that the interlocks in question were illegal under the statute and his failure to promise not to commit similar violations in the future.

Were we sitting as a trial court, this showing might be persuasive. But the Government must demonstrate that there was no reasonable basis for the District Judge’s decision.7 In this we think it 7. Cf. United States v. United States Gypsum Co., 340 U.S. 76, 89 [ 71 S.Ct. 160, 169 , 95 L.Ed. 89 ] (1950), on review of particular antitrust decree provisions.

* * * *

fails. An individual proclivity to violate the statute need not be inferred from the fact that three violations where charged, particularly since it is only recently that the Government has attempted systematic enforcement of § 8. The District Court was not dealing with a defendant who follows one adjudicated violation with others. The only material before the District Judge on the supposed five years of administrative persuasion could easily support an inference that during that time the defendant and the Department of Justice were each trying to determine the legality of his directorships. The Government’s remedy under the statute was plain. Postponement of suit indicates doubt on the prosecutor’s part as much as intransigence on the defendant’s. How much contrition should be expected of a defendant is hard for us to say. This surely is a question better addressed to the discretion of the trial court. The same can be said of the limited disclaimer of future intent.

Essentially, the Government’s claim is that it was deprived of a trial on the relief issue. But at no time was objection raised to the procedure by which the case was handled. * * * As to the prayer that the defendants be enjoined from any future violations of § 8, the complaint alleged no threatened violations other than those specifically charged. In these circumstances, the District Judge could decide that there was no significant threat of future violation and that there was no factual dispute about the existence of such a threat.

We conclude that, although the actions were not moot, no abuse of discretion has been demonstrated in the trial court’s refusal to award injunctive relief. Moreover, the court stated its dismissals “would not be a bar to a new suit in case possible violations arise in the future.”

The precedential and controlling impact of Grant is apparent. The bases for the charge (aggregation of family soybean contracts^ — viewing interlocking directorates as three violations) and the rejected reasons for reversing (continuation of existing contracts — failure to terminate directorships: maintenance of innocence — refusal to concede illegality) are virtually identical. As in Grant, the government here failed to demonstrate absence of reasonable basis for the district judge’s decision. The “recently” attempted enforcement of § 8 in Grant parallels the “first clear cut application” of Regulation 150.4 in this case. The present defendants are not even accused of committing an “adjudicated violation.” The amount of contrition to be expected of defendants here is just as “surely * * * better addressed to the discretion of the trial court.” Here, as in Grant, the government raised no objection to the procedure below and the complaint alleged no future violations other than those charged.

In SEC v. Management Dynamics, Inc., 515 F.2d 801 (2d Cir. 1975), after pointing out that “ * * * illegal activity, without more, does not automatically justify the issuance of an injunction,” id. at 807, the court affirmed issuance of an injunction against Levy and vacated that against Hodge, the difference being a clear showing of a “likelihood that the wrong will be repeated” in the one instance, id. at 807, and its absence, id. at 814, in the second.

*1229 In SEC v. Bausch & Lomb, Inc., 565 F.2d 8 (2d Cir. 1977), the court affirmed the denial of an injunction, because the defendant’s transgression was an isolated occurrence. In so doing, the court said, id. at 18-19:

It is well settled that the Commission cannot obtain relief without positive proof of a reasonable likelihood that past wrongdoing will recur. [Citing cases.] * * * The SEC must show a “cognizable risk of future violation, something ‘more than the mere possibility which serves to keep the case alive.’ ” [Citing cases.] * * * As the party challenging the district judge’s exercise of discretion, the SEC can prevail only if there was no reasonable basis for his decision. [Citing cases.] In this case, the SEC has utterly failed to make such a showing.

* * * *

* * * This court is not inclined to substitute its judgment for that of the experienced trial judge who heard the witnesses and had the “opportunity by observation better to prophecy future conduct than we can on this printed record.” Chris-Craft Industries v. Piper Aircraft Corp., 480 F.2d 341 (2d Cir. 1972). 6

In SEC v. Shapiro, 494 F.2d 1301 (2d Cir. 1974), the court affirmed the imposition of an injunction against a stock market professional who used corporate insider information on seven stock purchases within six weeks, stating “ * * * we do not review the decision of the district court de novo.” Id. at 1308 .

Again, in SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082 (2d Cir. 1972), the court affirmed the issuance of an injunction against defendants who had engaged in repeated acts of fraud described by the district judge as “willful, blatant, and often completely outrageous,” id. at 1101 , and the conflict and inconsistency of defendants’ testimony justified the district judge’s doubts about assurances of no future violations.

In SEC v. Commonwealth Chemical Securities, Inc., supra, the court affirmed the issuance of an injunction against defendants guilty of “repeated and persistent,” 574 F.2d at 100 , acts of fraud, and vacated injunctions against other defendants, saying “we see no likelihood of repetition,” id. at 100 , adding: “It would make a mockery of language such as that we have recently used in Bausch & Lomb [supra ] to hold that the SEC had met its burden of showing a likelihood of recurrence with respect to these two minor participants concerning whom there was no evidence of prior or subsequent violations.” Id. at 100 . The court also said, “It is fair to say that the current judicial attitude toward the issuance of injunctions on the basis of past violations at the SEC’s request has become more circumspect than in earlier days.” Id. at 99 . After pointing out that injunctions can have grave consequences, the court said, “Our recent decisions have emphasized, perhaps more than older ones, the need for the SEC to go beyond the mere facts of past violations and demonstrate a realistic likelihood of recurrence. [Citing cases.]” 7

One such “older” case, SEC v. Advance Growth Capital Corp., 470 F.2d 40 (2d Cir. 1972), is one of the two cited in which an injunction denial was reversed. Defendants knowingly made false statements and omissions in reports and breached fiduciary relationships. The court said, “These were not mere ‘technical’ violations of regulatory legislation, but continual and extensive violations of provisions which lie at the very heart of a remedial statute.” Id. at 53-54 . In our present case: there are no false statements, omissions, or fiduciary breaches; the violation is of “regulatory legislation;” and there is no charge or evidence of *1230 market manipulation, which “lie[s] at the very heart of a remedial statute.”

Commodity Futures Trading Commission v. British American Commodity Options Corp., 560 F.2d 135 (2d Cir. 1977), is the other case involving reversal of an injunction denial, and the only cited case involving the present Commission. There the violation was of a statutory requirement for registration, 7 U.S.C. § 6m, entirely different from the regulation here involved. There, also, the decisional matrix was comprised of facts entirely distinct from those now before us. Defendant acted as a commodity trading advisor without being registered. The court, like that in Advance Growth, noted the relationship to the statute, describing registration as “the kingpin in this statutory machinery.” 560 F.2d at 139 . The Commission filed an administrative complaint, citing the prior SEC disbarment of defendant’s president and sole stockholder, John Forma, from the securities markets, and current defrauding by defendant of commodity option buyers, as grounds for denying defendant a registration. When defendant continued its activities for three months thereafter without registration, the Commission sued in court for only a preliminary injunction. 8 The district court denied an injunction in the belief that a likelihood of some fraud or misconduct related to John Forma’s securities law violations must be shown. Pointing out that the injunction merely precluded use of the mails without registration, and that fraud and misconduct of John Forma were not required when the statute merely required registration of defendant, the court held the Commission had established a prima facie case that unregistered activities were likely of repetition, stating, id. at 144:

We do not hold here that the district court must become a rubber stamp and issue an injunction whenever the Commission applies for one. We hold simply that once the Commission has made a prima facie showing that violations of the registration provisions of the Act have occurred and are likely of repetition and that the Commission has a tenable basis for commencing administrative proceedings to inquire into an applicant’s fitness, an injunction must issue.

We share the district court’s concern and unfavorable view of the Commission’s delay at the administrative level, and appreciate the difficulties confronting it in undertaking to resolve the elusive and irrelevant issues raised at the hearing. Nevertheless, we feel that the Commission, albeit confusingly, made out a “proper showing” for relief under § 13a-l, and the injunction should, therefore, have been issued.

The issue here, as I view it, is not whether the district judge could have granted an injunction, but whether he had to; not whether he “incorrectly” exercised his discretion, but whether he abused it.

In the total absence of any showing of a likelihood of future violations, the district judge would have abused his discretion if he had granted the injunction.

The majority opinion reflects broad statements which, if all were applicable here, and if we were considering the matter de novo, might arguably support the grant of an injunction. But we do not sit de novo. There has been a trial, with full opportunity for the Commission to make its case for an injunction. The district judge heard and observed the demeanor of all the witnesses. Where, as here, an executive agency is found by the district court to have made “no showing” (emphasis added), not even prima facie, that future violations are likely, it ill behooves an appellate court to create that showing. In all events, I respectfully suggest that a showing, not merely prima facie but so strong as to require reversal, cannot be constructed on innuendo and speculation drawn from the present printed record.

*1231 In respect for the district judge’s carefully considered exercise of his discretion, in consideration of his having heard and observed all the witnesses, in the light of the Commission’s total failure on appeal to show that the district judge had no reasonable basis for his exercise of discretion in this case, and, above all else, in recognition of his effectively unchallenged finding that the Commission made no showing before him that future violations were likely, as required by law, I would affirm the district judge’s denial of an injunction.

II. Lower Court’s Denial of Commission’s Request for Disgorgement

Concerning the Commission’s request for an order directing disgorgement, the district court said this:

No statutory authority for this dramatic prayer for relief is cited. Further, the evidence of the shifting positions of the Hunts in the market, and the complexity of the evidence relevant to individual responsibility for exceeding position limits when the family holdings are aggregated, make it impossible to fashion a formula by which the profits to be disgorged by the individual defendants could be determined with any measure of equity. [Emphasis added.]

On appeal, the Commission makes no effort to counter the district judge’s finding that an equitable disgorgement formula was impossible. Its only reference thereto is in a footnote, alleging that denial of that remedy was premature and that it had had “no opportunity” to “present [unspecified] information.” As discussed below, that statement is at best disingenuous.

The majority opinion chooses to substitute for the district court’s equitably “impossible” evaluation its description of “merely complex evidentiary problems” in isolating profits and the merely “vexing” problem of determining injured parties.

A short litany of market facts demonstrates the correctness of the district court’s “impossible” evaluation and the inaccuracy of the attempted downgrading to merely “complex-vexing: ”

(1) Defendants’ activities concededly had no effect on the price of soybeans.

(2) Increase or decrease in position value is settled daily.

(3) Profitability of “naked” positions differs from profitability (if any) of “spread” positions.

(4) Futures contracts are fungible, i. e., it is impossible to determine which contracts are being sold when less than the entire position is sold.

(5) A trader’s account reflects only net increases or decreases in all commodities combined where a trader trades in more than one commodity.

(6) Which parts of a long position are “spread” against a short position is impossible to determine.

(7) A commodity future contract fluctuates almost daily in price and traders can take any profit out of the accounts immediately, making tracing impossible.

(8) Delivery wipes out all profits made in a position.

(9) Only the profits on excess holdings are sought to be disgorged, adding to the impossibility of tracing, valuation, cross-account segregation and contract identity described above.

(10) Here there are eight defendants trading in various commodity futures at various times, “trading the crush,” trading the “reverse crush,” going long, spreading, “rolling,” “covering,” going short, and “passing through,” all relating to commodities that don’t yet exist and are likely never to be delivered to any trader holding a contract during the period (January-April) involved in the complaint.

Even if disgorgement were appropriate here (and, I submit infra, it is not) the job of tracing, identification, and valuation would embroil the district court in evidentiary problems of complexity unlimited and of chaos unending. Even then, as the district court so clearly stated, the working out of an equitable formula would be impossible.

*1232 Appellate courts should not, I think, order a district court to attempt the achievement of what the district court sees, and what upon short reflection all can see, from the outset to be impossible. 9

Moreover, we should not order an attempt to do a useless thing. Presumably, disgorgement is limited to what the majority calls “illegally obtained profits,” i. e., the profit made from the fact that defendants held, for a few days between January and April 1977, a total soybean position exceeding 3,000,000 bushels. But, as the record makes clear, there were no such profits. Nor could there be. After a trial involving fourteen live witnesses, 125 multi-page exhibits, and some 30 depositions, there is not even a Commission suggestion that any defendant sold any contract at a price made higher because the defendants’ total positions exceeded 3,000,000 bushels.

On the contrary, the Commission admitted, during the May hearings, that defendants’ activities had no effect on the market. Thus each of defendants’ sales must be presumed to have been made at the same (unaffected) market price at which it would have been made if the total positions had been equal to or less than 3,000,000 bushels. Absence of profits does not preclude declaration of a violation, but it would appear (if, as the majority says, disgorgement is remedial, not punitive) to preclude a requirement to disgorge what is not there.

In SEC v. Manor Nursing Centers, 458 F.2d at 1104-05 , the court affirmed an order to disgorge proceeds from a fraudulent stock offering. It reversed an order to disgorge the profits made on those proceeds, because that order was not remedial relief to the stock purchasers, quoting Levine v. Seilon, Inc., 439 F.2d 328, 334 (2d Cir. 1971) for the proposition that investors are “entitled to recover only the excess of what [they] paid over the value of what [they] got.” In the present case there is not the slightest evidence that any investors anywhere paid anything “over what they got” as a result of defendants’ non-fraudulent violation. Nor does the Commission favor us with any indication of the nature or availability of any such evidence.

It must be remembered that defendants did not “aggregate” their holdings. The Regulation requires that holdings be aggregated after an “agreement or understanding” is found or inferred. A different situation would arise if a group, pursuant to an agreement, combined their holdings and thereby increased the value thereof, or otherwise profited from the combination. Absent that circumstance, there simply are no “illegally” obtained profits to be disgorged.

Even if there were illegally obtained profits, and if it were possible to devise an equitable formula, and if the district court had nothing else to do, I would remain unable to find a basis for an order to disgorge in this case.

The Commission’s attorneys tell us that the Commission “moved only for a preliminary injunction” below, and that it made “no request for disgorgement and no argument on the propriety of that relief.” The majority opinion, accepting that statement, begins with “no hearing on the merits of the propriety of this relief was held in the trial court” and with a characterization of the district judge’s denial of the disgorgement prayer as “precipitous.” That characterization is, I submit, and not to put too fine a point upon it, simply unfair to the district court.

About the trial below, the Commission’s attorneys told its ALJ, in its concurrent administrative proceeding:

The order of the District Court in the matter of the CFTC v. N. B. Hunt, et al., (77 C 1489) satisfies this test. After the District Court Denied the Commission’s original motion for a preliminary injunction, the matter was set for trial. Extensive discovery was conducted by both parties. Several days of testimony was heard by the Court in both June and July *1233 of 1977. Findings were proposed by both sides, briefs submitted, and a final decision rendered. In short, both the CFTC and respondents were accorded a full opportunity for an adversary hearing. Additionally, the District Court ruling is a final order for purposes of appeal; it carries the label of a final order; it disposes of all of the claims between parties ; jurisdiction has passed from the District Court to the Court of Appeals; and the nature of the proceedings was such that the District Court had jurisdiction to render a final decision on the issues. [Emphasis added.]

At no time did the Commission lack opportunity to press for the disgorgement remedy it specifically sought and separately emphasized in its complaint. The prayer for disgorgement was present throughout the trial and figured prominently in the district court’s Memorandum Opinion and Order. Just as in Grant, the present Commission waited until it got here to complain “that it was deprived of a trial on the relief issue,” and, as in Grant, “at no time was objection raised to the procedure by which the case was handled.” If the Commission here was “deprived,” who deprived it? Certainly not the district court. If the Commission had any objection to the procedure below, why was it not made below? In sum, where was there reversible error on the part of the district court?

It is not, of course, the function of an appellate court to encourage piecemeal litigation, or to provide a second opportunity to a litigant who waits until the appeal to merely say it had not argued for one of the remedies it sought in its complaint, or to a litigant who makes no showing of any additional evidence submittable on remand, or, particularly to a litigant who insists, to its advantage in another tribunal, that it had been accorded by the district court here, “a full opportunity for an adversary hearing” and had received a final order which “disposes of all the claims between the parties.”

In all events, it would appear that under the circumstances a characterization of the district court’s denial of disgorgement as “precipitous” is at best inappropriate.

The remainder of the majority opinion on this issue is devoted to the “close” question of whether disgorgement is a permissible remedy for violation of the Commodity Exchange Act. The absence of the remedy from the statute is met by reliance on the general equity powers of the courts (and silence in the Act regarding them), and on analogies drawn to the Securities Exchange Act and the Emergency Price Control Act. Because I believe disgorgement totally inappropriate in this case, I would await an appeal from a judgment in which the remedy was applied to discuss these questions.

For the moment, I would offer two caveats. The Commission argued in the May hearings below that Congress gave the Commission access to the courts where a violation was causing an emergency remediable only by injunction. If that be so, there is no basis in law for disgorgement here. Further, Congress’ failure to provide the remedy may well lie in the impossibility of its application. 10 Securities and price controls relate to things in existence and to specific, individual dealings, having to do with a stock, a bond, or a prospectus, or the price of a specific product or products. Hence, both the amount of “profit” and the person or persons to whom retribution is owed may be determined in most cases with relative ease. The law of commodity futures contracts, as above indicated, deals with “contracts” on commodities not yet harvested or processed and from no specific farm or orchard. Decisions are made daily, to buy, sell, go “long” or “short” etc., etc., solely on the investor’s estimate of what the market price of a particular commodity will be in the future. “Buyers” of “contracts” on specific future deliveries are normally unknown to “sellers” of those particular “contracts,” and vice versa. The involved commodities may not be, and rarely if ever are, delivered to the personal possession of *1234 the investor-speculator. Disgorgement of what and to whom is thus, as the district court stated, equitably impossible.

Even if the district court had granted the remedy, and the impossibility of its equitable application had first appeared on the appeal, this court would have been warranted in reversing that grant. As was said by the Court in Meccano, Ltd. v. John Wanamaker, 253 U.S. 136, at 141 , 40 S.Ct. 463, at 465 , 64 L.Ed. 822 (1920): “[I]f insuperable objection to maintaining the bill clearly appears, it may be dismissed and the litigation terminated.”

Coming full circle, I would affirm the district judge’s denial of the disgorgement remedy, (1) because the Commission had full opportunity to, and did, submit all of its evidence of defendants’ activities, making no objection to the procedure below, and (2) because the district judge’s finding of the impossibility of equitable application has not been shown to have been clearly erroneous.

. The “violation” is technical. The Commission conceded that defendants’ trading had no effect on, and represented no threat to, the market. The evidence from which an “implied agreement or understanding” could be inferred is feeble. No intent to manipulate, or to aggregate, no “sinister” intent of any kind, was charged or shown. Defendants point to evidence of independent trading and the absence of an overall pattern. The district court, however, declared a violation on the basis of some instances reflecting non-exercise of independent judgment and the use of centralized reports. The question is not without doubt, but I cannot say that the district court’s declaration was clearly erroneous.

I would add a dissent to the majority’s discussion of what constitutes a violation. Even if, as the majority impermissibly does, one substitutes “acting in concert” for “acting pursuant to an * * * implied agreement or understanding,” the need for inferring some scienter remains. Persons cannot act “in concert” without knowing it. To say that “nothing” in the act requires intent is to ignore the statute’s own words “agreement or understanding.” Even if the majority’s phrase be substituted, it is difficult to see how persons may be held to have acted “in concert” with no evidence of any intent to act in concert. Both the district court and the majority here, I respectfully submit, skate dangerously close to the thin ice, whereat a post-hoc aggregation equals violation. Absent some “understanding” the positions of any two or more traders could be “aggregated” and a “violation” be thereby found. Though the evidence here might well support a finding of no “agreement or understanding” of any kind, we do not sit de novo, and I agree with the majority in its deference to inferences drawn by the trial court. Fed.R.Civ.P. 52(a).

. The Commission briefs on appeal make no argument in support of its request below for liquidation of excess holdings, perhaps because, as the district court stated in its Memorandum Opinion and Order of October 11, 1977, the aggregate holdings of the defendants “do not exceed the three million bushel limit.”

. In Kent v. Hardin, 425 F.2d 1346 (5th Cir. 1970), there was control by the father-in-law, and a letter expressing agreement to trade identically. Neither control nor express agreement is even alleged here, and neither was shown or inferable.

United States v. Cohen, 448 F.2d 1224 (2nd Cir. 1971), cert. denied, 405 U.S. 954 , 92 S.Ct. 1172 , 31 L.Ed.2d 232 (1972), was a criminal prosecution, in which a father totally controlled all trading, holding daily family meetings to instruct on strategy, placing and financing all trades personally, forging his sons’ names, and keeping all funds in his own account. None of those acts occurred here.

. Use of pejoratives like “secret” or “clandestine” is precluded, because defendants themselves reported all of the their trading activities to the Commission, and it was that information which led to the Commission’s complaint.

The pejoratives employed by the majority are not supported in the record. Far from “carefully organized,” some offspring sold when fathers bought, some holdings never approached the limit, and the centralized reports were after-the-fact reports. Far from “large scale,” defendants’ total net long positions in soybeans was less than 2% of the total contracts. Far from “long term” the entire period involved is January-April 1977. There is no evidence whatever justifying “systematic” or “preconceived.”

. By letter dated April 14, 1977, the Commission notified defendants that their trading activities were aggregatable. At that time, the fathers, W. H. Hunt and N. B. Hunt, had each been at limit for eight months. The Commission filed its complaint in the district court on April 28, 1977. Trial began immediately. The majority’s reference to “persistence” up to the day of trial seems at best inappropriate under those circumstances.

Moreover, the Commission’s rush to the press, with disclosure of defendants’ positions, and the consequent effect thereof on the market, virtually required completion of the existing contracts, and that completion was carried out with permission of the district judge who lifted a restraining order for that very purpose.

. Compare the present case, where the violation is an isolated “first,” the Commission made no showing, and the proposal is to substitute the panel’s judgment for that of a most experienced trial judge.

. Compare our present case, where the district judge found that the Commission made no showing, not even prima facie, of any likelihood, much less a “realistic likelihood,” of recurrence.

. Unlike the situation here, where the Commission filed no administrative complaint prior to suit, but sought a full panoply of relief from the courts, filing an administrative complaint only after the final order of the district court and on the same facts and allegations then pending on appeal before this court. See our decision of even date in appeal no. 78-1055 (Hunt II), 7th Cir., 591 F.2d 1234 .

. The majority opinion defers to the inference of a violation drawn by the district court, but disregards the same court’s unequivocal statement (not merely an inference) that devising an equitable formula is impossible.

. That fact may also account for Congress’ provision of criminal sanctions and fines of $100,000 for each day on which a violation continues. 7 U.S.C. §§ 9 and 13(b), (c) (1976).