For Release:December 2, 1996
NEW YORK FEDERAL DISTRICT COURT DISMISSES ACTION
AGAINST CFTC FILED BY AVCO FINANCIAL CORPORATION
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on November 22, 1996, the Honorable John G. Koeltl, Federal District Court Judge of the U.S. District Court for the Southern District of New York, issued an oral opinion and written order dismissing a lawsuit brought against the CFTC by AVCO Financial Corporation (AVCO) of Greenwich, Connecticut, which sought to halt a CFTC investigation. AVCO characterizes itself as a developer and publisher of a technical analysis software program for use in analyzing currency futures, which it markets and sells to the public under the name "Recurrence."
In its complaint filed April 19, 1996, AVCO had asked the court to enjoin permanently the CFTC's investigation and to quash outstanding subpoenas. AVCO contended that the marketing and sale of its "Recurrence" currency trading software did not make it a commodity trading advisor, as defined in the Commodity Exchange Act, and that any effort to investigate the company and subject it to CFTC regulation infringed its right of free commercial speech under the First Amendment. Prior to the dismissal, Judge Koeltl, on June 5, 1996, had denied AVCO's motion to enjoin preliminarily the CFTC's investigation pending a final decision on its complaint.
In its oral opinion, the court granted the CFTC's motion to dismiss AVCO's lawsuit on the ground that the doctrine of sovereign immunity barred actions to block CFTC investigations. The Court ruled in the alternative that AVCO's claims were not yet ready, or "ripe," for adjudication.