Antitrust Law Daily Wrap Up, ANTITRUST—S.D.N.Y.: Commodity futures regulatory agencies immune from antitrust claims, (Sep 9, 2014)

By Edward L. Puzzo, J.D.

Antitrust and Federal Tort Claims Act charges brought by an individual against various governmental and self-regulatory agencies governing the commodity futures industry were dismissed by the federal district court in New York City because the agencies have immunity for acts carried out as part of their regulatory activities (McCrudden v. National Futures Association, September 8, 2014, Swain, L.).

Pro se plaintiff Vincent McCrudden brought antitrust and federal tort act claims against the U.S. Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA), the Financial Industry Regulatory Authority (FINRA), the National Adjudicatory Council (NAC) and employees of these entities.

History. McCrudden had a history of being disciplined by these entities. He had been indicted for mail fraud in 2002 and acquitted in 2003. In 2005, he was denied membership in the NFA, and later ordered into a one-year diversion program by the NFA and CFTC after sending a series of anonymous letters to the CFTC. He appealed his denial of NFA membership to the CFTC. The Second Circuit affirmed the denial in 2008, upon which time FINRA fined him and his FINRA license was suspended, banning him from the financial industry. He appealed the suspension to the NAC, and they affirmed FINRA’s suspension in 2010. Separately, the CFTC initiated an enforcement action. In 2011. McCrudden was arrested and later pleaded guilty to using interstate commerce to threaten NFA officials and employees. He pleaded guilty and was sentenced to 28 months in prison.

Antitrust. Federal agencies are immune from claims under antitrust laws, the court explained. Since plaintiff’s antitrust claims against the CFTC arose from its interactions with him in the performance of its governmental functions, McCrudden’s claims against the CFTC must be dismissed, the court ruled.

Likewise, FINRA and the NFA, as congressionally authorized futures industry self-regulatory organizations (SROs), are entitled to absolute immunity from private damage suits in connection with the discharge of their regulatory responsibilities. Thus, McCrudden’s antitrust claims against the SROs must also be dismissed, the court ruled.

Tort claims. McCrudden’s claims against the CFTC brought under the Federal Tort Claims Act (FTCA) also failed because governmental agencies have sovereign immunity for actions arising from their official duties. SROs are also immune, since they were acting under the aegis of their regulatory duties. Since the FTCA is the exclusive remedy available to redress plaintiff’s tort claims, and these claims failed due to the agencies’ immunity for acts arising from their official duties, McCrudden’s tort claims against these entities had to be dismissed, the court ruled.

The case is Civil Action No. 13CV6930-LTS-SN.

Attorneys: Rebecca Sol Tinio, U.S. Attorney's Office, for U.S. Commodity Futures Trading Commission.

Companies: U.S. Commodity Futures Trading Commission; National Futures Association; Financial Industry Regulatory Authority.

Cases: Antitrust NewYorkNews