UNITED STATES OF AMERICA
COMMODITY FUTURES TRADING COMMISSION
__________________________ : In the Matter of : : CFTC Docket No. 91-3 DAVID L. ROUSSO, et al. : : ORDER __________________________:
David L. Rousso ("Rousso"), Neil T. McGoldrick ("McGoldrick") and Richard Henriksen ("Henriksen") petition us to stay the sanctions imposed in our opinion and order of July 29, 1997, affirming an Administrative Law Judge's Initial Decision in this administrative enforcement action.(1) The Division of Enforcement opposes the grant of stays.(2) For the reasons that follow, the motions for stay are denied.
Rousso, McGoldrick and Henriksen contend principally that, if the registration revocation and ten-year trading ban are not stayed pending resolution of their petitions for review, they will sustain substantial financial losses that can never be recouped if their petitions are successful.(3) They further argue that the facts in this case demonstrate that there is no risk of harm that would result if they are permitted to continue trading. Rousso, McGoldrick and Henriksen assert that the trade practice violations cited by the Commission did not impact on market integrity or result in significant customer losses and, accordingly, there is no rational basis for imposing a trading ban during the pendency of their appeals. Finally, they argue that in light of their otherwise clean disciplinary records, neither the integrity of the futures markets nor the investing public would be threatened by their continued trading during the pendency of their appeals.
A litigant seeking a stay of governmental action taken in the public interest pursuant to a statutory or regulatory scheme must establish, along with irreparable injury, a probability of success on the merits. Virginia Petroleum Jobbers Association v. Federal Power Commission, 259 F.2d 921, 925 (D.C. Cir. 1958); Plaza Health Laboratories, Inc. v. Perales, 878 F.2d 577, 580 (2d Cir. 1989); see also Union Carbide Agricultural Products Co. v. Costle, 632 F.2d 1014, 1018 (2d Cir. 1980), cert. denied, 450 U.S. 996 (1981). He or she must also show that neither the public interest nor the interests of any other party would be adversely affected if a stay were granted. Virginia Petroleum Jobbers, 259 F.2d at 925; WMATA v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); Cuomo v. United States Nuclear Regulatory Commission, 772 F.2d 972, 974 (D.C. Cir. 1985).
Revocation of respondents' registrations and ten-year trading bans may result in the loss of income to them. However, [t]his type of personal detriment . . . is suffered by many persons who commit derelictions resulting in civil or other sanctions, but "the necessity of protection to the public far outweighs any personal detriment resulting from the impact of the applicable laws."
Associated Securities Corp. v. SEC, 283 F.2d 773, 775 (10th Cir. 1960), quoted with approval, Haltmier v. CFTC, 554 F.2d 556, 564 (2d Cir. 1977). The public interest would not be served by a stay pending judicial review. The record indicates that Rousso's, McGoldrick's and Henriksen's offenses were not isolated incidents but part of a pattern of illegal trading. Such a pattern of fraudulent conduct establishes a strong likelihood that the wrongdoing will be repeated. In such circumstances, both a revocation of registration and a trading ban are not only appropriate but necessary to protect the integrity of the futures markets. Rousso, McGoldrick and Henriksen have failed to establish the absence of an adverse impact on the public interest.
Moreover, neither Rousso, McGoldrick nor Henriksen makes a persuasive argument that he is likely to succeed on the merits of his appeal. A stay must rest on an adequate showing under all elements of the standard, and the respondents have failed to make such a showing. The motion for stay is denied.
IT IS SO ORDERED.
By the Commission (Chairperson BORN and Commissioners DIAL, TULL, HOLUM and SPEARS).
Catherine D. Dixon
Assistant Secretary of the Commission
Commodity Futures Trading Commission
Dated: August 20, 1997
1. Rousso, McGoldrick and Henriksen seek stays pending review of the Commission's decision in the United States Court of Appeals for the Second Circuit. See Rousso's Affidavit in Support of a Motion for Stay of Sanctions filed with the Commission on August 6, 1997; McGoldrick's and Henriksen's Affidavits in Support of Motion for a Stay of Sanctions filed with the Commission on August 13, 1997.
2. The Division's Memorandum in Opposition to the Motion of David L. Rousso For a Stay of Sanctions was filed with the Commission on August 15, 1997.
3. Rousso and McGoldrick also move for a stay of the civil penalties imposed by the Commission. Both are prepared to file bonds with the Court of Appeals. Pursuant to the Commission's Order, Henriksen was given thirty days to show cause why the $100,000 civil monetary penalty imposed by the Commission was excessive in light of his net worth. He intends to file a separate affidavit detailing his financial condition. See Henriksen Affidavit.