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Court Denies CFTC's Motion to File Supplemental Authority in Cross-Border Guidance Case

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Commentary by Bob Zwirb

After the CFTC's continuing back-and-forth with SIFMA, ISDA and the Institute of International Bankers (the "Associations"), the United States District Court for the District of Columbia denied the CFTC's motion to file a supplemental declaration and two exhibits in the Cross-Border Guidance Case.

The filing consisted of the supplemental declaration of CFTC Assistant General Counsel Martin B. White, as well as two additional documents: (i) SIFMA's "Note Regarding Non-U.S. Affiliate Participation in Swaps Market" and (ii) a copy of an article published by POLITICO Pro, titled "Banks Outline Pushback on Swap Guarantee Worries," which the CFTC believed would serve to weaken the Associations' argument that the CFTC had improperly adopted a rule regulating cross-border activities without compliance with the appropriate administrative procedures.

Related news: Associations Submit Response to CFTC's Second Notice of Supplemental Authority in CFTC Cross-Border Guidance Case (with Zwirb and Lofchie Comments and Lofchie YouTube Selection) (July 29, 2014); CFTC Submits Reply in Support of Its Motion to File Supplemental Declaration in CFTC Cross-Border Guidance Case (with Zwirb Comment) (July 25, 2014); Associations Submit Opposition to CFTC Motion to File Supplemental Declaration in SIFMA v. CFTC Cross-Border Guidance Case (with Zwirb Comment) (July 23, 2014); Parties Submit Supplemental Briefs in SIFMA v. CFTC Cross-Border Guidance Case (with Zwirb and Lofchie Comments) (July 21, 2014); CFTC Files Supplemental Declaration in CFTC Cross-Border Guidance Case (with Zwirb Comment) (July 17, 2014); Associations Submit Response to CFTC's Notice of Supplemental Authority in CFTC Cross-Border Guidance Case (June 26, 2014); Court Requests Supplemental Briefs from Parties in SIFMA v. CFTC Cross-Border Guidance Case (June 24, 2014); SIFMA v. CFTC Cross-Border Guidance Case Reassigned to New Judge (June 19, 2014); Judge Grants Amici Motion for Leave to File Brief in Support of CFTC; CFTC Submits Notice of Supplemental Authority in SIFMA v. CFTC Cross-Border Guidance Case (with Lofchie Comment) (June 18, 2014); Congressional Democrats' Amicus Brief Sides with CFTC in SIFMA v. CFTC (with Lofchie Comment and Energy Metro Desk Article Quoting Commissioner O'Malia) (March 24, 2014); Better Markets Amicus Brief Supports CFTC's Cross-Border Guidance (with Lofchie and Zwirb Comments) (March 20, 2014) CFTC's Legal Memorandum to Dismiss Challenge to Its Cross-Border Guidance (with Lofchie and Zwirb Comments) (March 17, 2014) Chamber of Commerce Submits Amicus Brief Regarding Lawsuit against CFTC Cross-Border Rule (with Zwirb Comment) (February 4, 2014) Market Participants File Amended Complaint Challenging CFTC Cross-Border Guidance (with Zwirb and Lofchie Comments) (January 7, 2014) Market Participants File Lawsuit Challenging CFTC Cross-Border Guidance for Being a Rule Adopted in Violation of the APA (with Lofchie Comment) (December 4, 2013).

Commentary

From the start, the CFTC's attempt to establish an inherent contradiction in the position of SIFMA and other Plaintiffs on whether the CFTC's Cross-Border Guidance is a rule or policy interpretation was beset by two troubling elements. The first was the CFTC's reliance upon a document that was written for lobbying purposes in order to establish the Associations' purported legal position on the central issue of the litigation. The second was the CFTC's strained and even unreasonable interpretation of the content of that document, and its attempt to marginalize the harm resulting from the application of such guidance to cross-border activities. The somewhat forced nature of this exercise runs the risk of diminishing the CFTC's credibility with the court and with knowledgeable observers.