UNITED STATES OF AMERICA
COMMODITY FUTURES TRADING COMMISSION
AMERICAN FUTURES GROUP, INC.,
GEORGE J. PERK, THOMAS G.,
REEVES, and EVAN TUCKER III
NATIONAL FUTURES ASSOCIATION
CFTC Docket Nos. CRAA 98-1, 98-2, 98-3,
Our review of the record and the parties' appellate submissions establishes that the result reached by the National Futures Association ("NFA") was substantially correct and that the NFA committed no error material to the outcome of this proceeding. Accordingly, we affirm the NFA decision.1 Nonetheless, respondents have raised one issue that merits discussion.
In affirming the initial decision ("I.D.") of an NFA Hearing Panel ("Panel"), an NFA Appeals Committee ("Committee") found that the Panel's findings of fact were supported by the weight of the evidence. (NFA Dec. at 13.) The Committee also found that respondents American Futures Group, Inc. ("AFG"), George J. Perk, and Thomas G. Reeves stipulated to the facts supporting: (1) the Panel's findings of recordkeeping violations in Count I; (2) its findings of sales practice violations in Count II; and (3) its findings in Counts III and IV. (NFA Dec. at 13.) The Committee thus concluded that discussion of the supporting evidence was not necessary. (NFA Dec. at 13.)
We believe that the intention of the parties was to stipulate only that the recited facts would be testified to by certain witnesses. While the Panel considered the stipulations in this manner, the Committee apparently believed that the respondents had instead stipulated to the truth of the stipulated testimony.
Nevertheless, the error, if any, was harmless. An error is harmless if it did not affect a substantial right of a party or materially affect the outcome. See, In re JCC, Inc., [1992-1994 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶ 26,080 at 41,574 and n.19 (CFTC May 12, 1994) citing Munn v. Algee, 924 F.2d 568, 572-573 (5th Cir. 1991), cert. denied, 502 U.S. 900 (1991); In re Haltmier, [1975-1977 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶ 20,160 at 20,977 n.4 (CFTC May 5, 1976). The Panel's decision was not predicated solely on the stipulations. Regarding Count I, the Panel found that AFG did not contest the factual allegations and that, in his hearing testimony, Perk admitted that AFG violated some of the recordkeeping requirements. (I.D. at 2, 4.) Concerning Count II, the Panel found the customers' testimony credible because it was consistent in salient respects with the admissions of employees who testified regarding deceptive and misleading sales practices. (I.D. at 30.) Regarding Count III, the Panel concluded that the conduct of AFG, Perk, and Reeves violated a prior settlement agreement and was inconsistent with just and equitable principles of trade, based upon stipulated testimony of NFA staff, a copy of the settlement agreement, and the absence of any record of reports required by the agreement. (I.D. at 35-36.) In Count IV, the Panel relied on hearing testimony and documentary evidence. (I.D. at 25-27, 37-38.)
We have examined the record and have determined that the Panel's factual findings were supported by the weight of the evidence and that the Committee's error, if any, was harmless and not material. Accordingly we affirm the result of NFA's decision. See 17 C.F.R. 171.33(b).
IT IS SO ORDERED.
By the Commission (Chairperson BORN and Commissioners HOLUM, SPEARS, and NEWSOME).
JEAN A. WEBB
Secretary of the Commission
Commodity Futures Trading Commission
Dated: May 13, 1999
1 The requests for oral argument are denied. Respondent George G. Perk's motions to strike and requests for production are denied. Respondent Evan Tucker, III's motions to strike, to compel production, to investigate NFA, to introduce additional evidence, to submit a reply brief, and to consider additional legal arguments and to preserve them for future appeals are denied. Richard Macintosh's motion to withdraw as AFG's counsel and Perk's motion to appear as AFG's counsel are granted.