A foreign currency trading firm was implicated in misconduct when a separate company it had traded with was investigated by a regulatory authority. The second company settled the investigation with the regulator, and the regulator published documents relating to the investigation and settlement on its website. The documents named the trading firm and implied that the firm had engaged in illegal practices. The trading firm sued the regulator, arguing that the regulator had violated its due process rights and defamed it in the documents on its website. The district court dismissed the action, finding that the trading firm had not exhausted its available administrative remedies. The appellate panel affirmed, and also found that the state-law claims for defamation were preempted by the federal regulatory scheme and not available as a remedy to the trading firm.
National Futures Association is a self-regulatory organization under the Commodities Futures Trading Commission Act of 1974. The Commodity Exchange Act requires that SROs set forth many types of regulations and rules, including rules that provide that its members and persons associated with its members shall be appropriately disciplined for any violation of its rules. The NFA is subject to the broad authority of the Commodity Futures Trading Commission. The authority includes review of NFA disciplinary actions or denials of membership.
Effex Capital, LLC is a closely held, foreign-currency trading firm managed and controlled by John Dittami. Effex operates as an institutional over-the-counter, foreign-exchange liquidity provider and engages solely in transactions with other eligible contract participants such as financial institutions or highly capitalized trading counterparts. Because of the nature of Effex’s trading, it is not subject to regulation by the NFA and is therefore not a member of the NFA. Continue reading ›