Release: 4040-97

For Release: August 1, 1997


The Commodity Futures Trading Commission (CFTC) announced today that on July 29, 1997, the Honorable Milton I. Shadur, Senior Judge of the U. S. District Court for the Northern District of Illinois, issued a six-page Opinion and Order dismissing a declaratory judgment action brought by Commodity Trend Service, Inc. (CTS) against the CFTC raising First Amendment challenges to the commodity trading advisor (CTA) registration requirement contained in the Commodity Exchange Act (Act).

CTS's declaratory judgment action arose from a CFTC investigation instituted to determine whether CTS or its principals are violating the Act or CFTC regulations by engaging in fraud and acting as unregistered CTAs. The CFTC responded by requesting the Court to dismiss CTS's action.

Characterizing CTS's complaint as an effort to "jump the gun with a preemptive judicial strike," Judge Shadur ruled that CTS's constitutional challenge was not ripe in the absence of any administrative actions having been taken by the CFTC against CTS. The Court stated: "No need is seen here to risk the issuance of an advisory opinion, which would be the result if no Article III 'case' or 'controversy' emerges as a result of the Commission's ongoing investigation."

In addition, the Court separately concluded that CTS could not mount a facial challenge to the Act's CTA registration requirement because "facial challenges on First Amendment grounds . . . do not apply to commercial speech." On the basis of the CFTC's "persuasive" arguments, Judge Shadur dismissed CTS's action in its entirety.

Copies of Judge Shadur's July 29, 1997 Opinion and Order are available through the CFTC's Office of Public Affairs (202) 418-5080.