Associations Submit Response to CFTC's Notice of Supplemental Authority in CFTC Cross-Border Guidance Case
SIFMA, ISDA and the Institution of International Bankers ("Associations") submitted a response to the recent filing of supplemental authority, by the Commodity Futures Trading Commission ("CFTC"), which cited the June 4, 2014 decision of the U.S. Court of Appeals for the Second Circuit (the "Second Circuit") in Lotes Co., Ltd. v. Hon Hai Precision Industry Co., Ltd. ("Lotes").
According to the Associations, the CFTC made multiple mistakes in filing Lotes as its supplemental authority, beginning with "erroneously stating" that the central question of the Cross-Border Guidance case is whether CEA Section 2(i)(1) establishes the cross-border reach of the CFTC's regulations. Instead, the Associations asserted, the central question is "whether the CFTC - regardless of Section 2(i)(1)'s meaning - may promulgate regulations that have enormous consequences for the U.S. and global economies without ever delineating how those regulations apply abroad and without ever analyzing their global costs and benefits through rulemaking procedures that comply with law."
Furthermore, the Associations asserted, the CFTC incorrectly characterizes Lotes in saying that it supports the proposition that Section 2(i) affirmatively mandates extraterritorial application of the CFTC rules, as well as the proposition that the Cross-Border Rule properly rejects the Supreme Court's interpretation of the word "direct" in a way that supports the CFTC's use of the word in the Cross-Border Guidance. Rather, the Associations explained, Lotes merely holds that the Foreign Trade Antitrust Improvement Act's restrictions on liability are not jurisdictional, and that a textual difference regarding the word "direct" in the decision in Lotes has no application to Section 2(i).
The Associations went on to say that, even if the CFTC correctly interpreted Section 2(i), "that would only confirm the agency's failure to comply with required administrative procedures", since the CFTC failed to take into account the cross-border application when it adopted the Title VII rules, and then attempted to resolve the matter in unlawfully promulgating the Cross-Border Guidance "whose lengthy exegeses further confirm that the Title VII Rules' extraterritorial reach is not hard-wired into Section 2(i)."
See: Associations' Response to CFTC's Notice of Supplemental Authority.
Related news: 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 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).