Monday, January 23, 2012

Securities and Derivatives Groups Must First Challenge CFTC Position Limits Regulations in District Court Says DC Circuit

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit dismissed a challenge by securities and derivatives industry associations to rules establishing derivatives position limits adopted by the Commodity Futures Trading Commission. Citing circuit precedent, the court stated that the “normal default rule” is that “persons seeking review of agency action go first to district court rather than to a court of appeals.”

According to Judges Rogers, Garland and Brown, “Initial review occurs at the appellate level only when a direct-review statute specifically gives the court of appeals subject-matter jurisdiction to directly review agency action …There is no express congressional authorization of direct appellate review applicable to the petition for review in this case.”

SIFMA and ISDA filed a petition for review of the CFTC’s position limits regulations in the DC Circuit. Simultaneously, noting that there may be a question as to the proper forum for the challenge due to lack of direct precedent, the associations also filed a complaint in the District Court for the District of Columbia.

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