UNITED STATES OF AMERICA
COMMODITY FUTURES TRADING COMMISSION
____________________________________ : COMMONWEALTH FINANCIAL GROUP, INC. : : CFTC Docket No. CRAA-95-3 v. : : ORDER NATIONAL FUTURES ASSOCIATION : ____________________________________:
Commonwealth Financial Group, Inc. ("Commonwealth") petitions us to stay the sanctions imposed in our opinion and order of March 18, 1997, affirming the decision of the National Futures Association in this member responsibility action. For the reasons that follow, the petition for a stay is denied.
A litigant seeking a stay must show that it is likely to succeed on the merits, that it will suffer irreparable harm if a stay is denied, and that neither the public interest nor the interests of any other party will be adversely affected if a stay is granted. Freeman v. Cavazos, 923 F.2d 1434, 1437 (11th Cir. 1991); Garcia-Mir v. Meese, 781 F.2d 1450. 1453 (11th Cir. 1986).
Commonwealth cites four issues in support of its contention that it is likely to succeed on the merits: first, that NFA never established the existence of emergency circumstances warranting a member responsibility action under its rules, and therefore erred in not granting Commonwealth's motion to dismiss; second, that the particular remedial actions imposed by NFA on Commonwealth are not expressly mandated in Commission or NFA rules and that, therefore, their application in this case constituted impermissible rulemaking; third, that NFA's decision was invalid under principles of res judicata and collateral estoppel; and fourth, that NFA's Hearing Committee improperly allowed a staff attorney to advise it during this proceeding.
Commonwealth argues that it will be irreparably harmed if a stay is not granted as to one of the remedial measures imposed by NFA, that being a requirement that Commonwealth inform its customers of the existence of the member responsibility action and the nature of NFA's findings and that it provide customers with a copy of NFA's decision upon request. Pursuant to an earlier petition by Commonwealth in this matter, we stayed the disclosure requirement while its appeal was pending before us. Order of March 14, 1995. Our recent decision lifted the stay. Opinion and Order at 24 n.9. Commonwealth urges us to reinstate the stay, arguing that "the disclosure condition . . . would be the proverbial 'death blow' . . . ." Petition at 30.
Commonwealth further contends that neither NFA, as the opposing party, nor the public interest will be harmed if a stay is granted, noting that the Commission reached these conclusions in staying the disclosure requirement in 1995.
NFA opposes the grant of a stay, noting that Commonwealth's arguments have been raised before itself and before us in the course of these proceedings and were found not persuasive. NFA also contends that Commonwealth's claims of injury do not rise beyond "'mere assertions'" (NFA Opposition at 4 (citation omitted)), and that the public interest is best served by allowing its remedial disclosure measure to go into effect against Commonwealth's "pervasive and continuing fraud . . . ." Id. at 5.
After view of its petition, we conclude that Commonwealth is unlikely to prevail on the merits. The four issues addressed in its pleading were raised by Commonwealth on appeal and fully considered in our opinion and order. Commonwealth has identified no material flaw in our reasoning and no authority that would cause us to revisit the decision we reached and lead us to conclude that it is likely to succeed on appeal.
Commonwealth appears to contend that, because we determined it had shown a likelihood of success on the merits when we granted a stay in 1995, we are bound to that position. Two years ago, without benefit of the current record in this case or briefing by the parties, we stayed NFA's sanction to permit the Commission thoroughly to examine whether an emergency existed justifying NFA in instituting a member responsibility action against Commonwealth. After briefing and a full review of this matter, we concluded that NFA had in fact met the standard for its action. In urging its likelihood of success, Commonwealth also insists on clinging to its interpretation of a case that we clearly distinguished in our decision. Opinion and Order at 19- 22. Commonwealth's other arguments were fully dealt with in our decision and do not merit further exploration here.
As to Commonwealth's contention that it will suffer irreparable harm, in the absence of affidavits or documents to support this claim, we are not in a position to assess whether the injury will be "certain and great." See Cuomo v. Nuclear Regulatory Commission, 772 F.2d 972, 976 (D.C. Cir. 1985). In any event, the view expressed in our 1995 stay order that the potential harm to Commonwealth from the disclosure requirement "is substantial and may well threaten its ability to stay in business" (Order at 7) has been tempered by Commonwealth's demonstrated durability. We note that a federal district court in Florida imposed a similar disclosure requirement on Commonwealth in an unrelated case in 1995 and that Commonwealth remained in business throughout the duration of the court order.
The customer notification measure imposed by NFA and affirmed by us is reasonably calculated to address Commonwealth's history of fraudulent conduct. Because the sanction is intended to insure the safety of the investing public, the public interest will be served by allowing the sanction to take effect.
Having failed to make the requisite showing under the applicable standard for the relief it requests, Commonwealth's petition to stay is denied.
IT IS SO ORDERED.
By the Commission (Chairperson BORN and Commissioners DIAL, TULL, HOLUM and SPEARS).
Jean A. Webb
Secretary of the Commission
Commodity Futures Trading Commission
Dated: May 21, 1997