Farella Braun + Martel Client Wins Dismissal of Commodity Futures Trading Commission Enforcement Action
Farella Braun + Martel LLP client Monex Deposit Company has won the dismissal of a Commodity Futures Trading Commission (CFTC) enforcement action filed against it for alleged fraud related to the financed sale of precious metals to retail customers. The Honorable James V. Selna, who issued the tentative ruling in March 2018, confirmed the dismissal on May 1.
The court found that the delivery of financed metals to a third-party depository, along with transfer of title to the customer subject to purchase-money liens, constituted "actual delivery," taking the transactions outside of the CFTC’s authority under CEA §2(c)(2)(D) over financed retail commodity purchases. The court also found that the CFTC's authority to combat fraud under CEA §6(c)(1) for such exempted transactions was limited to cases where the CFTC can allege and prove market manipulation. Beyond precious metals, the ruling has significant implications to cryptocurrency exchanges who may wish to offer financed transactions of retail virtual currencies. A copy of the ruling can be found, here.
Representing Monex are Farella partners Neil Goteiner, Brandon Wisoff and Jessica Nall, and associates Elizabeth Dorsi and James Allison.
The case is: Commodity Futures Trading Commission v. Monex Credit Company, et al., U.S. District Court, C.D. California, Case 8:17-cv-01868-JVS-DFM, 2018 WL 2306863, at *1, __ F. Supp.3d__ (C.D. Cal. May 1, 2018).
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