Before the



v. CFTC Docket No. 96-R158




Our review of the record and the parties' appellate submissions establishes that the findings and conclusions of the presiding officer are supported by the weight of the evidence except as noted below.

While respondents' argument that the case is time-barred presents an issue of first impression for the Commission, the issue is not one on which respondents can prevail. Complainant Adams filed the original complaint on August 19, 1996, within the two-year limitations period, and filed an amended complaint on September 11, 1996, curing technical defects after the two-year period had run. Only one defect--the lack of a verification statement--constituted noncompliance with Commission rules governing the filing of a complaint.(1) The Judgment Officer held, without discussion, that the complaint had been timely filed on August 19, 1996, apparently determining that the missing verification statement was not so substantial a defect as to compel the conclusion that the complaint could not be deemed "filed" without it. We believe that the Judgment Officer's position is the correct view and that the correctness of this view is supported by the "relation back" doctrine embodied in Fed. R. Civ. P. 15(c).

Under this doctrine, when a complaint containing formal or technical defects is corrected, the amended filing ordinarily relates back to the date of the original filing of the complaint for purposes of the statute of limitations. An amended complaint filed after a limitations period has expired is not barred by the statute of limitations if the claim asserted in the amended pleading arises out of the conduct, transaction, or occurrence set forth in the original pleading. Fed. R. Civ. P. 15(c)(2). See generally BCS Financial Corp. v. United States, 118 F.3d 522 (7th Cir. 1997); FDIC v. Conner, 20 F.3d 1376 (5th Cir. 1994); SEC v. Seaboard Corp., 677 F.2d 1301 (9th Cir. 1982). Permitting an amended complaint to relate back to claims that have been asserted before the limitations period has run does not offend the underlying purpose of a statute of limitations, which is to prevent the assertion of stale claims. Conner, 20 F.3d at 1385. Application of the relation back doctrine is especially appropriate where dismissal based strictly on technical defects would eliminate all or some of the complainant's claims. Cf. Jordan v. United States, 694 F.2d 833, 836 (D.D.C. 1982).

In the instant case, the Judgment Officer found that complainant's cause of action accrued "no later than August 22, 1994"--the date Adams learned that his last Treasury bond options had expired worthless. When Adams filed his complaint on August 19, 1996, he was still within the two-year statute of limitations. Adams' amended complaint is considered filed within the statute of limitations period because it satisfied the relation back doctrine. Indeed, it contains the same set of facts, identifies the same respondents, and sets forth the same legal theories for relief as the original complaint.

We make one minor modification in the initial decision respecting the amount of the damage award. The Judgment Officer awarded complainant $23,559--the total amount deposited to his account--neglecting to deduct the $2,091 that was returned to complainant by Northstar. The damage award is hereby adjusted to $21,468, plus interest and costs as awarded below. We affirm the initial decision as so modified.


By the Commission (Chairperson BORN and Commissioners TULL, HOLUM, and SPEARS).

Jean A. Webb

Secretary of the Commission
Commodity Futures Trading Commission
Dated: March 18, 1998

1. See Rule 12.13(b)(2), 17 C.F.R. 12.13(b)(2) (1998), providing that "[e]ach complaint shall be signed personally . . . under oath or affirmation under penalty of law" that the facts alleged are true or are believed to be true.

2. Under Sections 6(c) and 14(e) of the Commodity Exchange Act (7 U.S.C. 9 and 18(e)(1994)), a party may appeal a reparation order of the Commission to the United States Court of Appeals for only the circuit in which a hearing was held; if no hearing was held, the appeal may be filed in any circuit in which the appellee is located. The statute also states that such an appeal must be filed within 15 days after notice of the order, and that any appeal is not effective unless, within 30 days of the date of the Commission order, the appealing party files with the court a bond equal to double the amount of any reparation award.

A party who receives a reparation award may sue to enforce the award if payment is not made within 15 days of the date the order is served by the Proceedings Clerk. Pursuant to Section 14(d) of the Act, 7 U.S.C. 18(d) (1994), such an action must be filed in the United States District Court. See also 17 C.F.R. 12.407 (1998).

Pursuant to Section 14(f) of the Act, 7 U.S.C. 18(f) (1994), a party against whom a reparation award has been made must provide to the Commission, within 15 days of the expiration of the period for compliance with the award, satisfactory evidence that (1) an appeal has been taken to the United States Court of Appeals pursuant to Sections 6(c) and 14(e) of the Act or (2) payment has been made of the full amount of the award (or any agreed settlement thereof). If the Commission does not receive satisfactory evidence within the appropriate period, such party automatically shall be suspended from registration under the Act and prohibited from trading on all contract markets. Such prohibition and suspension shall remain in effect until such party provides the Commission with satisfactory evidence that payment has been made of the full amount of the award plus interest thereon to the date of payment.