By Lene Powell, J.D.
Over an incredible career spanning 50 years, Mr. Johnson held many prominent leadership positions in the field of derivatives law. Most notably, from 1981 to 1983 he served as chair of the Commodity Futures Trading Commission. Mr. Johnson also served as the founding counsel and first corporate secretary of the National Futures Association (NFA) and was a founding member and chair of the American Bar Association (ABA) Derivatives and Futures Law Committee.
"The CFTC shares in mourning the recent passing of former Chairman Philip McBride Johnson, who served as Chairman from 1981 until 1983," said CFTC Acting Chairman Rostin Behnam. "A true CFTC trailblazer, Chairman Johnson was instrumental in drafting key provisions of the Commodity Futures Trading Commission Act of 1974 that created the CFTC, giving life to a small independent agency that would become a world leader in the regulation and oversight of derivatives."
"We at the CFTC offer our sincere condolences to his family, friends, and colleagues and recognize former Chairman Philip McBride Johnson as one of the CFTC’s most influential leaders," added Mr. Behnam.
Walt Lukken, president and CEO of FIA, the leading global trade organization for the futures, options, and centrally cleared derivatives markets, also honored Mr. Johnson’s leadership and contributions.
"I am saddened to learn of the passing of futures law pioneer and former Chairman of the Commodity Futures Trading Commission Chair Philip McBride Johnson," said Mr. Lukken in an emailed statement. "FIA honored Phil by inducting him into the Futures Industry Hall of Fame in 2009. Phil was a wonderful mentor to a generation of lawyers and market professionals who continue to carry his knowledge and passion for our industry forward. On behalf of FIA and its members, I send my condolences to the Johnson family."
Early years. Mr. Johnson received a B.A. with Honors from Indiana University and received his law degree from Yale Law School, where he was managing editor of the Yale Law Review.
Mr. Johnson played a significant role in shaping the jurisdiction of the CFTC around the time of the agency’s formation.
"Early in his career, he helped draft key provisions of the Commodity Futures Trading Commission Act of 1974 that made the CFTC the sole regulator of the US futures industry," said Mr. Lukken.
According to Futures Magazine, in his capacity as outside counsel for the Chicago Board of Trade (CBOT), Mr. Johnson worked on ensuring the CFTC would have exclusive jurisdiction of all futures contracts. In this way, he helped carve out a coherent sphere of authority for the futures industry and fended off "a multitude of authorities jostling with each other for supremacy, disagreeing on policies, making conflicting demands on the futures community."
Mr. Johnson’s adroit legal drafting also helped establish broad definitions that included financial commodities like interest rate and stock index futures in addition to traditional physical commodities.
Landmark Shad-Johnson Accord. Mr. Johnson’s skillful handling of competing authorities continued as CFTC Chair. In 1981, Mr. Johnson reached an historic agreement with SEC Chair John Shad relating to securities futures and options, resolving contentious interagency disputes.
Gary DeWaal, Special Counsel and Chair, Financial Markets and Regulation at Katten Muchin Rosenman LLP, explained the importance of the landmark accord:
"[F]rom the inception of the CFTC in 1975, the SEC had very expansive views regarding its jurisdiction over futures, consistently arguing that all futures and options based on securities (even futures and options traded on CFTC-designated contract markets) were securities and subject to its jurisdiction."
Mr. DeWaal continued, "After a number of contentious lawsuits addressing this issue, in 1981, Mr. Johnson and John Shad, then SEC Chairperson, entered into a jurisdictional compromise that shortly afterwards was enacted into law. Under this compromise, among other things, the CFTC would have exclusive jurisdiction over futures contracts and options on broad-based-securities indices, foreign currencies (other than options on foreign currencies traded on SEC-approved national securities exchanges) and certain exempt government securities."
Mr. Lukken also emphasized the landmark significance of the Shad-Johnson Accord, saying it "established a clear demarcation of the two agencies’ jurisdiction and allowed futures on broad-based stock indices to flourish under CFTC supervision."
Private practice, publications, and awards. Following his CFTC chairmanship, Mr. Johnson returned to private practice, joining Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates in 1984. He remained with Skadden as head of the firm’s Regulated Derivatives law practice until his announced retirement in 2010.
Mr. Johnson was also a prolific publisher. He co-authored the Wolters Kluwer legal treatise Derivatives Regulation, a book for laypersons entitled Derivatives: A Manager's Guide to the World's Most Powerful Financial Instruments, and several hundred other published works.
Speaking on behalf of the ABA Derivatives & Futures Law Committee, Katie Trkla, partner at Foley & Lardner, said in an emailed statement, "I was disheartened to learn of Phil’s death. We have lost a true industry leader, scholar and visionary. Among his many accomplishments over his 50-year legal career, Phil served as Chair of the Commodity Futures Trading Commission and helped to negotiate, draft and implement key statutes, rules and agreements defining regulation of the derivatives markets, including what became known as the Shad-Johnson Accord, a landmark agreement with the Securities and Exchange Commission delineating the jurisdiction of the two agencies over securities derivatives. Phil also was the founder and first Chair of our ABA Derivatives and Futures Law Committee. We owe Phil a tremendous debt of gratitude for his leadership and foresight in forming the Committee and helping to shape the derivatives laws and markets. Phil will be missed by many. Our hearts go out to his family."
Remembrance. According to a family obituary, Mr. Johnson passed away peacefully after a brief battle with cancer. He is survived by his wife of 40 years, six children, and seven grandchildren.