Amicus Curiae Brief — Atlantic Trading USA, LLC, et al., Petitioners v. BP P.L.C., et al.

NO. 19-1141

In the Supreme Court of the United States

________________

ATLANTIC TRADING USA, LLC, ET AL.,

Petitioners,

v.

BP P.L.C., ET AL.,

Respondents.

________________

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Second Circuit

________________

BRIEF OF AMICI CURIAE FORMER OFFICIALS OF

THE COMMODITY FUTURES TRADING

COMMISSION SUPPORTING PETITIONERS

________________

J. Carl Cecere

Counsel of Record

CECERE PC

6035 McCommas Blvd.

Dallas, Texas 75206

(469) 600-9455

ccecere@cecerepc.com

Counsel for Amici Curiae

April 17, 2020

TABLE OF CONTENTS

Table of contents ..................................................................... I

Table of authorities ............................................................... II

Statement of interest............................................................. 1

Introduction and summary of argument .......................... 4

Argument ................................................................................ 8

I.

The CEA’s focus does not excuse manipulation of

U.S. commodity markets that is performed from

outside the U.S. .............................................................. 8

II. The Second Circuit’s contrary understanding

eviscerates critical barriers to manipulative

conduct and undermines the CFTC’s proper

regulatory authority. ................................................... 14

Conclusion ............................................................................. 16

(I)

TABLE OF AUTHORITIES

Cases:

Bd. of Trade of Chicago v. Olsen,

262 U.S. 1 (1923).................................................................. 9

British American Commodity Options Corp. v.

Bagley,

552 F.2d 482 (2d Cir. 1977) ............................................... 11

CFTC v. Kraft Foods Grp., Inc., 195 F. Supp. 3d

996 (N.D. Ill. 2016). ............................................................. 6

CFTC v. Parnon Energy, Inc.,

875 F. Supp. 2d 233 (S.D.N.Y. 2012) ............................... 13

Hill v. Wallace,

259 U.S. 44 (1922)................................................................ 9

Morrison v. National Australia Bank, Ltd.,

561 U.S. 247 (2010)........................................................ 7, 13

RJR Nabisco, Inc. v. European Cmty.,

136 S. Ct. 2090 (2016). ........................................................ 8

United States v. Sindzingre,

No. 17-CR-0464 (JS), 2019 WL 2290494

(E.D.N.Y. May 29, 2019) .................................................. 13

Administrative Actions:

In re Barclays PLC, CFTC No. 12-25, 2012 WL

2500330 (CFTC June 27, 2012) ....................................... 13

In re Statoil ASA, CFTC No. 18-04, 2017 WL

5517034 (CFTC Nov. 14, 2017)........................................ 13

In re Sumitomo Corp., CFTC No 98-14, 1998

WL 236520 (CFTC May 11, 1998).................................. 11

(II)

III

Statutes:

Commodity Futures Modernization Act of 2000,

sec. 126 (a)(1), Pub. L. No. 106-554, 114 Stat.

2763...................................................................................... 12

Commodities Exchange Act, 7 U.S.C.

§ 1a(9) .................................................................................. 12

§ 5..................................................................................... 6, 12

§ 5(a). ................................................................................... 12

§ 6(c),

§ 9(a)(1) ................................................................... 12, 13, 14

§ 13....................................................................................... 14

§ 13(a) .................................................................................. 13

§13(a)(2), ............................................................................. 12

Futures Trading Act of 1921, Pub. L. No. 67-66,

42 Stat. 187 (’21 Act) ........................................................... 9

Futures Trading Act of 1982, 96 Stat. 2294, Pub.

L. No. 97-444, sec. 101(a) (Jan. 11, 1983) ...................... 11

Grain Futures Act of 1922, Pub. L. No. 67-331,

42 Stat. 998 ....................................................................... 5, 9

§ 3, 42 Stat. at 998 ........................................................... 5, 9

§ 8, 42 Stat. at 1003 ............................................................. 9

Legislative Materials:

H.R. Rep. No. 93-975 (1973) ........................................... 9, 12

S. Rep. No. 93-1131 (1974). ........................................... 10, 12

Other Authorities:

Joseph Albright, The full story of how Amepиka

got burned and the Russians got bread, N.Y.

Times, Nov. 25, 1973), https://nyti.ms/34KlTdx ........... 10

IV

Other Authorities—continued:

Kim Iskyan, Business Insider, Here’s the story

of how the Hunt brothers tried to corner the

silver market (May 17, 2016),

https://bit.ly/3etDPh6....................................................... 10

Benjamin E. Kozinn, Great Copper Caper: Is

Market Manipulation Really a Problem in

the Wake of the Sumitomo Debaucle, 69

Fordham L. Rev. 243 (2000) ............................................ 11

Lower, The Regulation of Commodity Options,

1978 Duke L. J. 1095 (1978) ............................................ 11

Nat’l Futures Assn., Opportunity and Risk: An

Educational Guide to Trading Futures and

Options on Futures (2006). ............................................... 4

Robert O’Harrow, A primer on financial

derivatives, Wash. Post, Apr. 21, 2010, at A13. .............. 5

John A. Schnittker, The 1972-73 Food Price

Spiral, Brookings Institution (1973),

https://brook.gs/2ROyLu9 ............................................... 10

Tokyo Communique On Supervision of

Commodity Futures Markets (Oct. 31, 1997), ............. 13

In the Supreme Court of the United States

_________________________

No. 19-1141

ATLANTIC TRADING USA, LLC, ET AL.,

Petitioners,

v.

BP P.L.C., ET AL.

_________________________

On Petition Writ of Certiorari

to the United States Court of Appeals,

for the Second Circuit

_________________________

BRIEF OF AMICI CURIAE FORMER OFFICIALS

OF THE COMMODITY FUTURES TRADING

COMMISSION SUPPORTING PETITIONERS

_________________________

STATEMENT OF INTEREST1

Amicus Andrea Maharam Corcoran founded her consulting firm Align International in 2008 following a long

career in the public sector. Nationally, she served as the

Director of two Divisions of the U.S. Commodity Futures

Trading Commission (CFTC)—the Division of Trading

and Markets and the Inaugural Office of International Af-

1

Both Petitioners and Respondents received 10-days’ notice that

this brief would be filed and have consented to its filing. No counsel

for any party authored this brief in whole or in part, and no person or

entity other than the amicus, its members, or its counsel made a monetary contribution intended to fund the brief ’s preparation or submission.

(1)

2

fairs. Internationally, she served as the Chair of the International Organization of Securities Commissions’

(IOSCO) Task Force on Implementation of the Objectives

and Principles of Securities Regulation, and led multiple

projects related to setting standards for the oversight of

listed derivatives contracts based on globally traded physical commodities.

Her work in these capacities brought her into close

contact with the cross-border world of financial market

regulation. Ms. Corcoran was the architect of the CFTC’s

original regulations for cross-border derivatives transactions. And she directed policy responses to some of the

largest international commodities manipulation and malfeasance cases in history: the Barings collapse and the impact in the U.S. futures market of the Sumitomo manipulation of the cash forward market at the London Metals

Exchange. She is an expert on the maintenance of market

infrastructure integrity, protection of customer funds, international standards, bankruptcy, self-regulation, and in

U.S. futures law. She provides advice and second opinions

on regulatory design and oversight to both government

and private clients on five continents.

Amicus Jeffrey Bandman in 2017 founded his consulting firm, Bandman Advisors, which advises clients on regulatory and strategic issues in financial services. Before

that, Mr. Bandman served in four senior leadership roles

within the CFTC with deep engagement in cross-border

financial market regulation. Mr. Bandman led the CFTC's

Division of Clearing and Risk, which oversees many of the

world’s largest commodities clearinghouses, and led negotiations on the international status of derivatives clearinghouses resulting in “Clearinghouse Equivalence” with the

3

European Commission. Mr. Bandman also led negotiations with the European Commission on the status of regulated boards of trade, resulting in equivalence for U.S.

futures exchanges. He further served as co-chair of

IOSCO Committee 7 on Commodity Derivative Markets.

As an advisor to Chairman J. Christopher Giancarlo and

the CFTC’s first FinTech Advisor, he was Founding Director and architect of LabCFTC, the CFTC’s hub for engagement with FinTech innovation—the first established

by a U.S. market regulator. He also led FinTech and RegTech coordination with domestic and international regulators and chaired a new international regulator

workstream on post-trade digital innovation. He joined

the Commission as Special Counsel to Chairman Timothy

G. Massad, and also led the CFTC’s Office of International

Affairs.

Mr. Bandman has spent his career as a lawyer, business executive and regulator in international financial services in Washington, New York and London. Mr. Bandman

is an expert on financial and commodity market structure,

international standards, market infrastructure and derivatives as well as emerging fields such as law, policy and

regulation surrounding innovations in financial technology, regulatory technology, blockchain and virtual currencies. He advises both government and private sector clients in the U.S. and around the world.

Amici have devoted substantial portions of their lives

to the CFTC, which plays a central role in ensuring the

transparency, stability, and integrity of the domestic commodities markets. They write to explain the focus of congressional concern in the Commodities Exchange Act

(CEA), and the jurisdiction of the CFTC in enforcing its

anti-manipulation provisions to oversee global commodity

4

pricing. Regardless of whether the Petitioners’ claims in

this case have factual merit—and amici take no position

about whether they do—amici hope to demonstrate how

the Second Circuit’s decision in this case risks making intentionally wrongful acts that deliberately manipulate

prices on a U.S. CFTC-regulated market fall completely

outside the reach of the CEA—and the CFTC—if performed offshore. This in turn would severely undermine

the CFTC’s enforcement and oversight authority, hamper

its ability to combat global threats, and endanger the

American economy as a whole. Amici also believe it is urgent for the Court to solicit the CFTC’s views on these

critical matters, then grant review in this case and overturn the lower court’s erroneous decision.

INTRODUCTION AND

SUMMARY OF ARGUMENT

At the very core of every commodity transaction—

whether it concerns oil, wheat, natural gas, jet fuel, or

sugar—is confidence in the integrity of commodity prices

and the related markets in which they are formed. It is

that confidence that makes it prudent, not naive, for buyers and sellers to believe they can “mitigate price risk”

through the use of “futures” contracts, a type of financial

transaction in which parties agree to “buy or sell a commodity or financial instrument at a later date” to lock in

an advantageous price as specified in (normally standardized) contract terms. Nat’l Futures Assn., Opportunity

and Risk: An Educational Guide to Trading Futures and

Options on Futures 4, 14 (2006). That confidence also allows commercial parties and sophisticated speculators to

engage in derivative transactions, where futures are bundled and traded in myriad “highly complex” ways, with

their prices tied to those basic future contracts, confident

5

that their projections will not be undermined by hidden

manipulations or frauds. Robert O’Harrow, A primer on

financial derivatives, Wash. Post, Apr. 21, 2010, at A13.

And since prices for many commodities transactions

“are generally quoted and disseminated throughout the

United States” and the world, and are based on transactions occurring everywhere, that same confidence enables

many others throughout our Nation’s economy who never

enter the commodities markets themselves to use valuable

information from established commodities benchmarks to

make economic projections and enter transactions. Pub.

L. No. 67-331, sec. 3, 42 Stat. 998, 999 (the ’22 Act). A restauranteur can decide when it is best to make staples purchases and manage its supply chain. A farmer can know

equally quickly how much seed it makes sense to buy. An

airline can keep an eye on whether it is getting the best

deal on jet fuel. And others, including governments, may

use established market prices as references in long term

contracts, keying the prices in their private contractual arrangements to those established benchmarks (such as a

sale where the unit contract price “is equal to Brent Crude

minus $250.00”on the date of delivery”), simply to provide

an established, easily referenced shorthand. And when

these actors—and many others—trade on these established market prices, that improves the markets themselves, by making price projections more reliable, and

making the markets themselves more efficient, transparent, liquid, and ultimately more stable, allowing markets

to more precisely reflect the laws of economics, of supply

and demand.

Yet the integrity of commodity prices is continually

susceptible to misconduct and depends upon close over-

6

sight of the trading process worldwide. There is an international interconnectedness between the markets for

commodities, as well as between the different kinds of

commodities markets. Futures and derivatives markets

may exist separately from “cash” or “physical” markets

in which the assets themselves are bought and sold, but

the prices of cash commodities and derivatives are closely

linked. At a high level, this is because if a price disparity

arises, arbitrageurs will take advantage of the difference,

and the gap disappears. And the cash and derivative

prices converge at maturity. This process may involve

cash market or derivatives transactions anywhere in the

world.

That interconnectedness means a wrongdoer could deliberately target commodity markets here in the United

States from another part of the world. And the “methods

and techniques of manipulation are limited only by the ingenuity of man.” CFTC v. Kraft Foods Grp., Inc., 195 F.

Supp. 3d 996, 1005 (N.D. Ill. 2016). Many such manipulations have wreaked severe economic disruption throughout our Nation’s history.

The CEA’s manifest objective is to prevent such manipulations from negatively impacting the price integrity

on which commodities markets depend. Indeed, the CEA

contains a statement of findings that “[t]he transactions

subject to [this statute] are entered into regularly in interstate and international commerce” and “are affected with

a national public interest,” including in “liquid, fair, and financially secure trading facilities.” 7 U.S.C. § 5. This national interest shall be protected by, among other

things, “prevent[ing] price manipulation or any other disruptions to market integrity.” Id.

7

Preventing such manipulative conduct from compromising prices is a prime objective of the anti-manipulation

provisions of the CEA at issue in this case. Those provisions aim to prevent manipulation of domestic market

prices, regardless of where the source of that manipulation might be located. It is this concern with the price integrity of American commodities transactions that falls

within the “object[]” of the CEA’s “solicitude,” Morrison

v. National Australia Bank, Ltd., 561 U.S. 247, 226 (2010)

and the core of the statute’s focus. The law of extraterritoriality should therefore not be understood (however it is

interpreted) to inhibit the CEA from reaching egregious

and intentional manipulations of domestic commodity

prices, simply because those manipulations occurred

abroad. And the CFTC has long exercised its regulatory

authority consistent with that legal understanding.

Yet the Second Circuit in this case departed from this

settled understanding of the CEA’s permissible scope,

making its anti-manipulation provisions ineffective

against even devastating, intentional attempts to manipulate American commodities’ markets, so long as the conduct causing the manipulation emanates from abroad.

That result cannot be squared with the CEA’s text, this

Court’s precedent, the connectivity between U.S. futures

and foreign commodity markets, or longstanding regulatory practice. And if applied to the CFTC itself—whose

regulatory authority is tied to those same anti-manipulation provisions, it would have tremendous implications for

the legitimate scope of the CFTC’s authority, reduce the

law’s effectiveness in developing international cooperation

on enforcement issues, and require wholesale changes in

its regulatory practices. Accordingly, leaving the Second

Circuit’s erroneous ruling in place could inhibit the

8

CFTC’s efforts to combat foreign threats to American

commodities markets, leaving wrongdoers free to manipulate our commodities markets, so long as they do so remotely, from safe havens beyond our borders. That would

leave commercial users and investors unprotected and

deal a severe blow to the price integrity upon which the

entire economy depends. That makes this a vitally important case for the Court to consider and to seek the opinion to the U.S. CFTC to ensure that the scope of the CEA

continues to reflect 45 years of experience and international benchmarks in how best to protect the enforcement

of the laws that keep the commodities markets safe.

The petition should be granted.

ARGUMENT

I.

The CEA’s focus does not excuse manipulation of

U.S. commodity markets that is performed from

outside the U.S.

Petitioners do not here contend that the CEA authorizes extraterritorial application, so the analysis in this case

begins and ends with an examination of the CEA’s “focus”—the “second step” required in an extraterritoriality

analysis. RJR Nabisco, Inc. v. European Cmty., 136 S. Ct.

2090, 2100 (2016). And as text, precedent, and longstanding practice all confirm, the CEA’s focus,” and the “focus”

of its anti-manipulation provisions, has remained the

same: preventing manipulation of domestic commodity

prices, regardless of the geographic source of that manipulation.

a. When the CEA was originally enacted, Congress

recognized a national public interest in protecting commodity prices, acknowledging that futures transactions in

them “are susceptible to speculation, manipulation, and

9

control, and sudden or unreasonable fluctuations in the

prices thereof frequently occur as a result of such speculation, manipulation, or control.” ’22 Act, § 3, 42 Stat. at 99.

Even then, Congress discerned that preventing these

abuses domestically might require acting internationally,

in part because it recognized that “conditions * * * in this

and other countries” had potential to “affect the markets”

in the United States. ’22 Act § 8, 42 Stat. at 1003 (emphasis

added).2

By 1974, when Congress created the CFTC to bring

“all futures trading * * * under a single regulatory umbrella,” H.R. Rep. No. 93-975, at 41-42 (1973), Congress

recognized that the international, interdependent world it

had foreseen was occurring. Domestic exchanges had begun to offer futures on many overseas commodities, including coffee, cocoa, and butter. Id. at 41, 62. Indeed today, the Chicago Mercantile Exchange (CME) offers contracts based on Black Sea Wheat, Malaysian Palm Oil, and

Swiss Francs. NASDAQ Futures offers contracts based on

German and Nordic electricity. And NYMEX offers contracts based on Australian coal, Turkish scrap metal—

and numerous contracts based on the price of Brent oil.

And right around the time Congress was deliberating

over the CFTC’s creation, America was coming to understand the extent to which trades in commodities and

events abroad could influence commodity and commodity

derivative prices here. At that time, the so-called “Great

2

The Court struck down the first legislation that would become

the Commodities Exchange Act, Futures Trading Act of 1921, Pub. L.

No. 67-66, 42 Stat. 187 (’21 Act), on constitutional grounds, Hill v. Wallace, 259 U.S. 44 (1922), but upheld the ’22 Act, Bd. of Trade of Chicago

v. Olsen, 262 U.S. 1 (1923).

10

Russian Grain Robbery” was just beginning to unravel. In

that debacle, Russia bought 10 million tons of foreign

wheat, unwittingly subsidized by the United States, causing a worldwide production shortage that almost wiped

out international stockpiles, inducing sharp increases on

the price of domestic grain, and initiating both a food price

crisis and surging inflation. See John A. Schnittker, The

1972-73 Food Price Spiral, Brookings Institution (1973),

https://brook.gs/2ROyLu9; see also Joseph Albright, The

full story of how Amepиka got burned and the Russians

got

bread,

N.Y.

Times,

Nov.

25,

1973),

https://nyti.ms/34KlTdx.

For these reasons, Congress determined that that all

commodities should be regulated equally, regardless of

their geographic source, because whether the commodity

“is produced in the United States or outside” of it matters

little “to those in this country who buy, sell, [] process,” or

use “the commodity, or to the U.S. consumers whose

prices are affected by the futures market in that commodity.” S. Rep. 93-1131, at 19 (1974). That too was prescient,

because events would demonstrate that the Great Russian

Grain Robbery was just the beginning.

1979 saw the great Hunt Silver manipulation, in which

Texas Billionaire brothers Bunker and Herbert Hunt cornered the world market for silver—often through purchases abroad. The Hunts and their Saudi allies succeeded

in buying up 9 percent of all the silver in the world, and 77

percent of the silver in private hands, pushing domestic

silver prices from $6 an ounce to $50 an ounce by 1980. See

Kim Iskyan, Business Insider, Here’s the story of how the

Hunt brothers tried to corner the silver market (May 17,

2016), https://bit.ly/3etDPh6.

11

And in 1986, one of the most audacious financial scandals of all time came to light with the revelation of the Sumitomo copper manipulation, which occurred when Yasuo

Hamanaka, a rogue Japanese employee of the Sumitomo

Corporation, bought over a ten-year period immense

quantities of copper through an American broker and a

Zambian copper producer on the London Metal Exchange, shaking the copper markets worldwide, causing

artificially high prices in cash and futures markets in copper, including those in the United States, and bringing

both Congressional inquiry and CFTC enforcement action. Benjamin E. Kozinn, Great Copper Caper: Is Market

Manipulation Really a Problem in the Wake of the Sumitomo Debaucle, 69 Fordham L. Rev. 243, 244, 270-276

(2000); In re Sumitomo Corp., CFTC No 98-14, 1998 WL

236520 (CFTC May 11, 1998) (copper on the London Metals Exchange) (settlement).

And it was in 1982, in response to yet another disaster,

the “London Options Scandal,” that Congress amended

the CEA to grant CFTC authority to regulate foreign actors seeking to participate on American exchanges with

the Futures Trading Act of 1982, 96 Stat. 2294, Pub. L. No.

97-444, sec. 101(a) (Jan. 11, 1983). See British American

Commodity Options Corp. v. Bagley, 552 F.2d 482 (2d Cir.

1977) (discussing the London Options Scandal); see also

Lower, The Regulation of Commodity Options, 1978 Duke

L. J. 1095, 1111-1117 (1978) (same). Then, in 1997, the

CFTC created the Office of International Affairs within

the CFTC, and Congress encouraged the CTFC to participate more robustly in international standard setting bodies like International Organization of Securities Commissions (IOSCO), recognizing that “derivatives markets

serving United States industry are increasingly global in

12

scope—and that “strengthening of international cooperation for customer and market transactions” ought therefore to be encouraged. Commodity Futures Modernization

Act of 2000, sec. 126 (a)(1), Pub. L. No. 106-554, 114 Stat.

2763.

Today, Congress has retained in the CEA a statement

of purpose to “deter and prevent price manipulation or

any other disruptions to market integrity,” regardless of

the source of those manipulations. 7 U.S.C. § 5. It has retained broad prohibitions against all forms of manipulation, 7 U.S.C. §§ 6c, 9(a)(1), 13(a)(2), knowing that this

brought “transactions that are entered into regularly in

interstate and international commerce” into the Act’s regulatory ambit. Id. § 5(a). And it has deliberately included

overseas commodities within the scope of the CEA, to ensure that foreign manipulations do not escape the CEA’s

reach—or that of the CFTC. Id. § 1a(9); S. Rep. No. 931131, at 19; H.R. Rep. No. 93-975, at 41, 62-63. An express

purpose of the CEA is therefore to protect the national interest in fair trading facilities that are free of market manipulation. 7 U.S.C. § 5. The statute contains no loophole

that would permit such intentional and wrongful acts as

Petitioners allege, based simply on the fact that the alleged wrongdoer was operating from a foreign country using a means located offshore.

b. Since its inception in 1975, the CFTC has acted consistently with the understanding that the CEA’s focus

might be trained on domestic manipulation, but that international action might be necessary to fulfill that mission.

The CFTC has passed regulations to control foreign commodities investment in the United States, and participated

in international standard-setting bodies that have recognized that “the potential for market integrity concerns is

13

compounded by the increasingly global nature of commodit[ies],” and “interlinkages among markets,” which

create the potential that “manipulative or other abusive

activities” anywhere could “damage the integrity and ultimately the liquidity of markets” everywhere. Tokyo Communique On Supervision of Commodity Futures Markets 4, 28 (Oct. 31, 1997), and related reports on oversight

of commodities markets. See www.IOSCO.org/publicreports.

The CFTC and DOJ have, since Morrison, continued

to protect American markets and investors against wrongdoing by overseas actors, and overseas actions, for behavior that affects U.S. markets and exchanges. United

States v. Sindzingre, No. 17-CR-0464 (JS), 2019 WL

2290494, at *1-3 (E.D.N.Y. May 29, 2019) (prosecution

based on banks’ overseas manipulation of the London Interbank Offered Rate, the benchmark interest rate for the

British Bankers’ Association); CFTC v. Parnon Energy,

Inc., 875 F. Supp. 2d 233, 238 (S.D.N.Y. 2012) (manipulators located in the U.K., Switzerland and Australia); In re

Statoil ASA, CFTC No. 18-04, 2017 WL 5517034 (CFTC

Nov. 14, 2017) (far east propane) (settlement); In re Barclays PLC, CFTC No. 12-25, 2012 WL 2500330 (CFTC

June 27, 2012) (LIBOR) (settlement).

c. In each of these cases, the CFTC applied the same

specific anti-manipulation provisions being applied here:

Section 9(a), 7 U.S.C. § 13(a), which contains a long-established prohibition against “manipulat[ing] or attempting

to manipulate the price of any commodity in interstate

commerce,” and Section 6(c)(1), a newer provision prohibiting use of a manipulative device “in connection with any

swap, or a contract of sale of any commodity in interstate

commerce.” id. § 6(c)(1), 7 U.S.C. § 9(a)(1). In none of

14

these cases did CFTC’s foreign enforcement raise concerns of extraterritorial application.

The reasons why are clear. Both provisions may focus

on the “manipulation” of domestic transactions, whether

through a “device,” 7 U.S.C. § 9(a)(1), or more generally,

id. § 13, serving the CEA’s general concern with protecting integrity in the price of those transactions and preventing manipulation of that price. But the statute is agnostic about where the conduct that provides the mechanism for the manipulation must occur, because that mischief is not regulated in the abstract. It is regulated only

in “connection” with how it affects U.S. commodities

transactions and U.S. commodities markets. 7 U.S.C. §

9(a)(1). It therefore makes no difference if those actions

occurred overseas. They remain within the CEA’s focus.

d. Petitioners here allege that they were parties to derivatives transactions that took place in the United States

on a CFTC-registered futures exchange. Pet. at 11. Regardless of whether their claims have merit—and amici

take no position about whether they do—those claims directly implicate the focus of congressional concern in the

integrity of U.S. markets, and the CEA’s concern that

those markets remain free from manipulation and misconduct originating from abroad that impacts them.

II. The Second Circuit’s contrary understanding

eviscerates critical barriers to manipulative

conduct and undermines the CFTC’s proper

regulatory authority.

a. Yet the court of appeals in this case interpreted the

scope of the CEA’s anti-manipulation provisions to be entirely confined to domestic activities, excluding from their

scope any action where the manipulative conduct did not

15

occur entirely within the United States. The CFTC relies

on those same anti-manipulation provisions for its enforcement operations, and thus if the Second Circuit’s ruling in this case were applied to the Commission, the consequences would be tremendous. The CFTC would no

longer be able to pursue enforcement actions for manipulative conduct that occurred abroad—even manipulative

conduct whose intentional, harmful, tangible effects on

American commodities markets could be proved. In that

scenario, wrongdoers could freely and brazenly engage in

manipulative conduct in markets and transactions regulated by the CFTC, so long as they did so from outside the

country. There would be no recourse against them—civil,

regulatory, or criminal.

b. That is not, and cannot be, a correct interpretation

of Congress’s intent as clearly manifested in the CEA. It

is a result that would deal a devastating blow to the integrity of the commodities markets and thereby their usefulness to commercial users, customers and investors who

trade and use them based on expectations of price integrity, in turn potentially adversely affecting the economy as

a whole. As such, it could be devastating to the price integrity upon which virtually all commodities trading depends.

Amici thus believe it is critically important that the Court

take this case to undo this erroneous result.

c. At the same time, of course, amici do not speak for

the Commission, and the Court deserves to hear from the

Commission itself. Accordingly, the Court should solicit

the CFTC’s views on whether the Second Circuit’s extraterritoriality rulings are correct and ask it to explain the

impacts the Commission anticipates those rulings will

have on the integrity of America’s derivatives markets and

the Commission’s regulatory authority. That said, amici

16

feel confident, based on their years of experience with

commodity derivatives markets and the Commission, that

this is a critically important case to take, to ensure that

the law takes a properly nuanced approach to the oversight of our financial markets—one that recognizes their

complexity and scope and protects the integrity of our Nation’s markets.

CONCLUSION

The petition for writ of certiorari should be granted.

Respectfully submitted,

J. Carl Cecere

Counsel of Record

CECERE PC

6035 McCommas Blvd.

Dallas, Texas 75206

(469) 600-9455

ccecere@cecerepc.com

Counsel for Amici Curiae

April 17, 2020