RESPONDENT: Commodity Futures Trading Commission
LOCATION: City Hall
DOCKET NO.: 95-1181
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 519 US 465 (1997)
ARGUED: Nov 13, 1996
DECIDED: Feb 25, 1997
Gary D. Stumpp - Argued the cause for the petitioners
Jeffrey P. Minear - Department of Justice, argued the cause for the respondent
Facts of the case
The Commodity Futures Trading Commission (CFTC) brought an action against William C. Dunn and Delta Consultants, Inc. claiming that they had solicited investments in and operated a fraudulent scheme involving transactions in foreign currency options in violation of the Commodity Exchange Act (CEA) and CFTC regulations. Dunn and Delta Consultants allegedly engaged in the transactions by contracting directly with international banks, rather than using a regulated exchange or board of trade. This is known as "off exchange" trading. Dunn, Delta Consultants, and their customers suffered heavy losses. The District Court appointed a temporary receiver to take control of Dunn and Delta Consultants' property. The court rejecting their defense that the transactions were exempt from the CEA under the "Treasury Amendment," which excepts "transactions in foreign currency" unless they involve a sale "for future delivery" "conducted on a board of trade." The Court of Appeals affirmed.
Does the Commodity Futures Trading Commission have the authority to regulate "off exchange" trading in options to buy or sell foreign currency?
Media for Dunn v. Commodity Futures Trading CommissionAudio Transcription for Oral Argument - November 13, 1996 in Dunn v. Commodity Futures Trading Commission
Audio Transcription for Opinion Announcement - February 25, 1997 in Dunn v. Commodity Futures Trading Commission
William H. Rehnquist:
The opinion of the Court in No. 95-1181, Dunn versus Commodity Futures Trading Commission will be announced by Justice Stevens.
John Paul Stevens:
The question presented by this case is whether Congress has authorized the Commodity Futures Trading Commission to regulate so-called off exchange trading in options to buy or sell foreign currency.
In 1974, Congress enacted a series of amendments to the Commodity Exchange Act that created the Commission and gave it authority to regulate trading in a number of non-agricultural commodities.
One of those amendments, however, provided an exemption for “transactions in foreign currency” unless it involved sales for future delivery conducted on a board of trade.
The case before us today involves transactions and options to buy or sell foreign currencies that were not conducted over a board of trade.
The narrow question of law that we decide is whether such transactions are species of exempt transactions in foreign currencies.
The reasons stated in opinion filed with the Clerk, we hold, that they are included within the exemption.
We, therefore, reverse the judgment of the Court of Appeals.
Our judgment is unanimous.
Justice Scalia has filed an opinion concurring in part and concurring in the judgment.