Before the


In the Matter of :                                                         CFTC Docket No. 92-19


NICHOLAS DESALVO, and                                      ORDER                                               JOHN W. SORKVIST

Respondents Stephen F. Reddy ("Reddy") and John W. Sorkvist ("Sorkvist") petition us to stay the sanctions imposed in our opinion and order of February 4, 1998 pending their appeals to the U.S. Court of Appeals for the Second Circuit.(1) In that decision, we ordered them to cease and desist from further unlawful conduct, revoked their floor broker registrations, and imposed a ten-year trading ban and $300,000 civil monetary penalty on Reddy and a five-year trading ban and $150,000 civil monetary penalty on Sorkvist. The Commission's Division of Enforcement opposes a grant of the stays.(2) For the reasons that follow, the motions for stay are denied.

A litigant seeking a stay must show that he has a probability of success on the merits, that he 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. In re Rousso, et al., CFTC Docket No. 91-3 (CFTC Aug. 20, 1997).

Reddy and Sorkvist contend that, if their registration revocations and trading bans are not stayed pending resolution of their petitions for review, they will sustain substantial financial losses and damage to their reputations that can never be recovered if their petitions are successful.(3) They 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. Reddy and Sorkvist assert that the trade practice violations cited by the Commission did not impact on market integrity or result in 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.

Revocation of Reddy and Sorkvist's registrations and their respective 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."

Haltmier v. Commodity Futures Trading Commission, 554 F.2d 556, 564 (2d Cir. 1977) (quoting Associated Securities Corp. v. Securities and Exchange Commission, 283 F.2d 773, 775 (10th Cir. 1960)). A loss of income and damage to one's reputation as a result of a challenged agency action "falls far short" of the type of irreparable injury necessary for injunctive relief. Sampson v. Murray, 415 U.S. 61, 91-92 (1974).

The public interest would not be served by a stay pending judicial review. The record indicates that Reddy and Sorkvist's offenses were not isolated incidents but rather 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 registration revocation and trading ban are not only appropriate but necessary to protect the integrity of the futures markets. Although both respondents assert that a stay is justified since they no longer trade for customers, we note that the standards for registration of floor traders do not differ from those for floor brokers. Reddy and Sorkvist have failed to establish the absence of an adverse impact on the public interest.

Moreover, neither Reddy nor Sorkvist makes a persuasive argument that he has a probability of success on the merits of his appeal. Neither respondent has identified any material flaw in our reasoning nor identified any authority that would cause us to revisit the decision we reached and lead us to conclude that either Reddy or Sorkvist is likely to succeed on appeal. A stay must rest on an adequate showing under all elements of the standard, and Reddy and Sorkvist have failed to make such a showing. The motions for stay are denied.


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


Jean A. Webb
Secretary of the Commission
Commodity Futures Trading Commission

Dated: March 9, 1998

1.  Reddy's Motion for a Stay was filed with the Commission on February 19, 1998; Sorkvist's Motion for a Stay was filed with the Commission on February 18, 1998.

2.  The Division's Memorandum in Opposition to the Motions of Stephen F. Reddy and John W. Sorkvist for a Stay of Sanctions Pending Appeal was filed with the Commission on March 2, 1998.

3.  Reddy and Sorkvist also move for a stay of the civil monetary penalties imposed by the Commission. In his affidavit, Sorkvist states he is prepared to file a bond with the Court of Appeals.